Mortgage Information

Mortgage approvals: This process can be easy, or it can be hard. It depends on the preparation of the buyer and the efficiency of the Mortgage Company. Here are some resources specifically useful during the Mortgage approval process

• Pre-qualification and preapproval
• Mortgage Questions
• Mortgage Hints and Tips
• Glossary of Terms
• Mortgage Mistakes

The money from mortgage payments is split and put towards these categories.

• Principal: The original money borrowed.
• Interest: The charge for borrowing the money.
• Taxes: Real Estate taxes.
• Insurance: This includes both homeowner's insurance and mortgage insurance.

This total is the PITI (Principal/Interest/Taxes/Insurance) payment.

Types of Mortgages

Fixed: This can refer to a fixed term mortgage or a fixed rate mortgage. "Fixed" simply means that they do not change over the course of the loan. This means that the monthly payment will not change either.

Adjustable: Often referred to as an ARM (Adjustable Rate Mortgage). The interest rate on your mortgage will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down with these rate changes. These mortgages may include "Interest Only" type of loans.

How much down payment?

One of the first questions that home buyers ask is "how much down payment are we going to need?" Unfortunately, there is no standard answer. Down payments will vary from 0% (with a VA--Veteran's Administration loan) to upwards of 25% (with certain "non-conforming" loans). As an average, most home buyers make down payments in the 5%-15% range, although your own personal situation may dictate more or less down payment. When you are factoring money for a downpayment, don't forget about closing costs, which will total in the 2-5% range, payable in cash at the time of closing.

What is Prequalification? Does it mean that the loan is approved?

Prequalification is the initial step in securing a mortgage. A lender will analyze your current income, debt and basic credit history situation in order to qualify you for a maximum loan amount. This gives you a clear picture of your financial parameters and a maximum housing price (the mortgage amount plus your down payment). With preapproval, the lender verifies your income, debt and financial picture, approving the loan subject to a favorable appraisal of the property you select. See the discussion on mortgage prequalification and preapproval for more information. Looking for a source for preapproval? Try LendingTree (see information in the next section).

Mortgage Glossary and Additional Information

If you want additional information on "Mortgage Speak", see our Mortgage Glossary for definitions of the most common Mortgage terms. If you want an excellent overview and gameplan for getting the best deal on a mortgage, get hold of Randy Johnson's best selling book How to Save Thousands of Dollars on Your Home Mortgage available at bookstores or at a 30% savings here. Whether you know nothing, a little or a great deal about mortgages, this book will most likely save you money. We have reviewed it extensively and highly recommend it. require("bottom.include.php"); ?>