A monthly mortgage payment reflects the following costs: principal, interest, taxes, and insurance. (Insurance can consist of both homeowners insurance and mortgage insurance, if applicable.)
The lender's title insurance policy insures your home against claims that you do not have clean title to your property and that the lender has a first lien on your property.
You may want to consider purchasing owner's title insurance to protect you against claims that you do not have clean title to your property
A pre-qualification is a free test run of the loan application process that usually takes a few hours. The mortgage lender uses your credit, financial, and employment information to come up with an estimate of the mortgage amount you can afford. It is not binding.
A pre-approval may require a complete application, along with an application fee. Usually, a pre-approval is your bank's guarantee of the amount they will lend you toward a home.
When you apply for a mortgage loan, the lender is required by law to provide a Truth-in-Lending disclosure, which includes a summary of the total cost of credit, such as the annual percentage rate (APR) and other specifics of the loan.
Know how to spot a predatory lender: offers of loans with high interest rates, broker fees, unnecessary costs like pre-paid credit life insurance, and unaffordable repayment terms are all signs that you may be dealing with a disreputable lender.
Now that you’ve completed the All About Mortgages section put your knowledge to the test.
True or False: The amount of your mortgage is typically equal to the price you pay for the home.
True
False
That's correct. The amount of your mortgage is typically the purchase of the home less your down payment.
That's incorrect. The amount of your mortgage is typically the purchase of the home less your down payment.
When you apply for a mortgage loan, the lender will often look at "the four Cs" to decide whether you're creditworthy. Which of the below is NOT one of "the four Cs"?
A. Capacity
B. Character
C. Capital
D. Collateral
That's correct. Character is not one of "the four Cs." They are capacity, capital, collateral, and credit.
That's incorrect. Capacity is one of "the four Cs."
That's incorrect. Capital is one of "the four Cs."
That's incorrect. Collateral is one of "the four Cs."
True or False: It is okay to sign a document that has blanks as long as your mortgage broker fills them in before submitting them.
True
False
That's correct. Never sign anything that has blank fields.
That's incorrect. Never sign anything that has blank fields.
True or False: A Good Faith Estimate is a document that gives an estimate of the costs of obtaining a loan.
True
False
That's correct. And your mortgage lender is required to provide you with one.
That's incorrect. A Good Faith Estimate is a document that gives an estimate of the costs of obtaining a loan - and your mortgage lender is required to provide you with one.
Typically your monthly mortgage payment will consist of which of the following?
A. Principal only
B. Interest only
C. Principal, interest, taxes, and insurance
D. None of the above
That's correct.
That's incorrect. Your monthly mortgage payment will consist of the principal, interest, taxes, and insurance.
That's incorrect. Your monthly mortgage payment will consist of the principal, interest, taxes, and insurance.
That's incorrect. Your monthly mortgage payment will consist of the principal, interest, taxes, and insurance.
