Real Estate Financing FAQ:
What is a mortgage?
A mortgage is a loan that uses your property as collateral, in case you can not pay your loan. These payments can be refinanced to lower rates, if you are having trouble paying them. Some properties can not be sold if they have pending mortgages due.
What are closing costs?
Closing is the day a sale or purchase of a home is complete, also known as settlement day. Closing costs are expenses paid during closing or settling that are in addition to your down payment, house insurance, and property tax. You may opt to have sellers pay part of this cost.
What is title insurance and do I need it?
Title insurance protects the lender and homeowner against any title dispute or error. It protects the homeowner until the property is sold, and is often required on many types of mortgages.
What is home equity?
Home equity is the value of a homeowner’s interest in real estate. You can obtain home equity loans, which are commonly referred to as ‘second mortgages’. These are commonly used for paying college loans or home improvement. They often come with fixed interest rates.
Refinancing can save you some extra money. When interest rates are at least one to two points below your current interest rates, it is recommended that you refinance. This is also a good option for those who wish to lower their payments, to free up money for other debts or expenses.
What is a home equity line of credit loan?
These loans are secured, variable-rate loans that allow you to borrow money against the equity available in your house. Home equity line of credit loans, or HELOC, are commonly used for education fees, vacation fees, or home improvements.
How much mortgage will I pay monthly?
This is different from bank to bank, but this is usually based on a few factors. Principal is the portion of money you are repaying on your debt. Interest is the amount of money the bank charges each payment, and is a percent of what you owe. Insurance is the portion of payment paid for homeowners insurance. All of these factors come down to what you owe, the term of your loan, and current interest rates.
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