Mortgage FAQ
What is a mortgage?
A mortgage or home loan is a binding contract made between you and the mortgage lender. The home is used as collateral to secure the loan. If the mortgage isn’t paid, the mortgage lender can take possession of your home.
What is a mortgage refinance?
A mortgage refinance is a method of lowering your monthly mortgage payment by acquiring a new home loan with better interest rate terms. The new home loan will pay off your existing loan.
What is a home loan?
A home loan or mortgage is a loan provided by a mortgage lender that is secured by a "lien" on your home.
What is a home equity loan?
A home equity loan can be accessed if you have equity built up in your home. Just like any other home loan, it is secured against your home. It can be beneficial in consolidating debt, paying off high interest debt or to make home improvements.
What is a home equity line of credit or HELOC?
A home equity line of credit (HELOC) is home loan that is used as a line of revolving credit for some maximum draw. So, instead of a fixed home loan amount, your HELOC permits you to repay and re-borrow the cash as needed. Like home equity loans, HELOCs can also be used to consolidate debt, pay off high interest debt, make home improvements, pay for college education tuition, or major medical bills.
What is a second mortgage?
It is a home loan on top of any existing first home loan. Also, it is secured against the same home as your first home loan. In order to get a second mortgage you must have equity in your home.
What is a reverse mortgage?
Exactly what it says, it is a reverse mortgage in which the mortgage lender pays the homeowner’s monthly payments. This type of home loan program is mainly used by elderly homeowners who need to supplement their monthly income. The mortgage lender will make payments to the lender for a certain period of time agreed upon in the loan contract.
Since the monthly payment is a non-recourse loan, the payment is tax free to the homeowner. The homeowner can stay in their home until their death or relocation at which time the mortgage lender sells the home to recover his loan.
What is a mortgage lender?
A mortgage lender provides home loan borrowers with the mortgages to finance their next homes. The homeowners’ payback the home loan to the lender over a set period of years. The home loan is usually paid to the mortgage lender in monthly installments which includes principle, interest, and additional lender fees. Mortgage lenders can be large financial institutions, mortgage brokers, or mortgage bankers.
What is the difference between a mortgage broker and a mortgage banker?
While mortgage brokers position more than eighty percent of all home loan transactions between lenders and borrowers, mortgage bankers provide home loan financing and allocate the majority of home loans compared to all other lenders.
What is a mortgage principle?
The mortgage principle is the sum of money that the home loan borrower initially finances his/her home with, excludes interest.
What does APR mean?
Annual Percentage Rate ( APR ) is essentially the effectual interest rate that the home loan borrower pays on a loan, takes into account all associated loan fees. The total cost of the loan includes fees, interest, and principle.
What does the word “naviscreen” mean?
Naviscreening allows buyers (mortgage) to connect with regional prescreened mortgage lenders through the completion of a secure and universal form.
What is a fixed rate mortgage?
A mortgage whose interest rate and monthly payments remain fixed for the tenure of the loan. In other words, the mortgage rates do not change.
What is the adjustable rate mortgage?
An adjustable rate mortgage is a home loan mortgage whose interest rate is periodically adjusted based on an index. The monthly mortgage payments fluctuate during the entire length of the mortgage. Herein, the interest rate risk passes from the mortgage lender to you.
What is an interest-only mortgage?
An interest-only mortgage allows you to pay interest only on the principal of the loan for a period of time in monthly installments.
What is an amortized mortgage?
An amortized mortgage is a home loan that is paid by you to the lender in monthly installments comprised of both principle and interest over a predetermined period of time.
How do you calculate LTV or loan-to-value ratio?
The loan-to-value ratio or LTV ratio allows you to approximate the equity you have in your home. LTV ratio can be calculated by dividing the home loan balance of your home by its market value.
What are lender fees?
These are fees that usually range anywhere from 2 to 5 percent. These fees may also include appraisal costs, application costs, and document preparation.
What is the Truth in Lending Act?
The Truth in Lending Act is part of the Consumer Protection Act; a federal law that requires lenders to reveal all information and detail all costs associated with the transaction to the borrower.
Real Estate FAQ
Who is a Listing Agent?
A listing agent works on the home seller’s behalf to sell the property by listing it on the market as to attract potential buyers. The listing agent is also known as the seller’s agent.
Who is a Selling Agent?
A selling agent is also known as a buyer’s agent who has an agreement with a buyer to work for their best interest in a real estate transaction.
Who is a Dual Agent?
A dual agent has to be careful as they represent both parties in the home buying transaction. Herein, in most states being a dual agent is illegal unless, the agent has written consent from of the buyer and seller. The agent must disclose to both parties their duel agency status before the process begins and cannot disclose either party’s personal information with the other.
Who is a Full-Service Real Estate Agent?
Full-service agents offer complete real estate services, most are appropriate for sellers. The agents charge higher commission rates than discount real estate agents, thus rarely charge additional fees. Their complete services include comprehensive marketing activities such as listing the home on the Multiple Listing Service (MLS), direct mail, promotion, and advertising. They are also known as full-service brokers.
Who is a Discount Real Estate Agent?
Discount real estate agents receive less commission than full-serve agents. However, the lower commission doesn’t mean that there is any compromise in their service. It does mean that the depths of their marketing services are not to the extent of higher commission full-service agents. They are also known as discount brokers.
Who is a Fee-For-Service Real Estate Agent?
Fee-for-service real estate agents transact services that only the client wants. It is a type of a la carte real estate service.
What is the Multiple Listing Service?
It is a real estate database of all homes placed for listing on the MLS. It doesn’t list homes that are “For Sale by Owner” and not placed for consideration in the MLS database.
What is a Listing Agreement?
This is a binding legal agreement between the seller and the listing agent. The agreement is comprehensive in that it includes conditions for the sale, description of property, services rendered, list price, length of the agreement, and compensation of agent.
What is an Open Listing Agreement?
This is a non-exclusive agreement that allows the homeowner the ability to sell the home by themselves; if the real estate agent is unable to locate a buyer. The homeseller reserves the right to sell the home themselves and not pay commissions to the real estate agent.
What is an Exclusive Agency Listing Agreement?
An exclusive listing agreement is between the homeseller and a real estate agent. The real estate agent is the exclusive agent for the sale of the property under the terms of the contract. Most importantly, the homeseller has the right to sell the home without compensating the exclusive agent if the potential buyer was not introduced or claimed by the agent.
What is an Exclusive Right-to-Sell Listing Agreement?
The exclusive right-to-sell listing agreement is different from an exclusive agency listing agreement; inasmuch that the former agreement provides for an agent commission by the homeseller, even if the property is sold by someone else, including the owner during the term of the agreement.
What is a Safety Clause?
This clause is part of an exclusive right-to-sell listing agreement that permits the real estate agent to compensation even after the listing has expired or is canceled. The clause can be enforced if a prospective buyer introduced to the homeseller by the listing agent purchases the home even after the listing has been expired or canceled.
It is also known as the protection clause because it "protects" the listing agent from complicity between the seller and buyer.
What is a Residential Purchase Agreement?
This agreement is also known as Contract to Purchase Real Estate which is a binding agreement (among two or more parties) to purchase real estate property. The contract binds the seller to sell to the buyer and vice versa at an agreed upon price within a specified time.