How do mortgage lenders calculate monthly payments?
For most mortgages, lenders calculate your principal and interest payment using a standard mathematical formula and the terms and requirements for your loan. The total monthly payment you send to your mortgage company is often higher than the ...
How can I find the loan limit for an FHA loan in my county?
None You can check the loan limit for FHA mortgage loans in your county on the Department of Housing and Urban Development (HUD) website. If you’re interested in getting a Federal Housing Administration (FHA) loan, knowing the maximum loan amount ...
How can I find the loan limit for a conforming loan in my county?
You can check the loan limit for a conforming mortgage loan in your county on the Department of Housing and Urban Development (HUD)’s website. To find the conforming loan limit for your county use HUD's tool to check loan limits. ...
What are Fannie Mae and Freddie Mac?
Fannie Mae and Freddie Mac are large companies that guarantee most of the mortgages made in the U.S. Together, they are also known as the government sponsored enterprises (GSEs). Historically, they were private companies operating with government ...
What is a prepayment penalty?
None A prepayment penalty is a fee that some lenders charge if you pay off all or part of your mortgage early. If you have a prepayment penalty, you would have agreed to this when you closed on your home. ...
What is a “piggyback” second mortgage?
A “piggyback” second mortgage is a home equity loan or home equity line of credit (HELOC) that is made at the same time as your main mortgage. Its purpose is to allow borrowers with low down payment savings to borrow ...
What is mortgage insurance and how does it work?
Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. None Typically, borrowers making a down payment of less than ...
With an adjustable-rate mortgage (ARM), what are rate caps and how do they work?
Adjustable-rate mortgages (ARMs) typically include several kinds of caps that control how your interest rate can adjust. None There are three kinds of caps: Initial adjustment cap. This cap says how much the interest rate can increase the first time ...
For an adjustable-rate mortgage (ARM), what are the index and margin, and how do they work?
For an adjustable-rate mortgage, the index is a benchmark interest rate that reflects general market conditions and the margin is a number set by your lender when you apply for your loan. The index and margin are added together to ...
If I am considering an adjustable-rate mortgage (ARM), what should I look out for in the fine print?
If you are considering an ARM, make sure to read the terms carefully and ask lots of questions until you understand exactly how each of these features of the mortgage works. Adjustable rate mortgages can be very complicated. There are ...
Are condo/co-op fees or homeowners’ association dues included in my monthly mortgage payment?
Usually not. Condo/co-op fees or homeowners’ association dues are usually paid directly to the homeowners’ association (HOA) and are not included in the payment you make to your mortgage servicer. None Condominiums, co-ops, and some neighborhoods may ...
How does paying down a mortgage work?
The amount you borrow with your mortgage is known as the principal. Each month, part of your monthly payment will go toward paying off that principal, or mortgage balance, and part will go toward interest on the loan. Interest is ...
On a mortgage, what’s the difference between my principal and interest payment and my total monthly payment?
The difference between your principal and interest payment and your total monthly payment is that your total monthly payment usually includes additional costs like homeowners insurance, taxes, and possibly mortgage insurance. The principal and ...
What is a mortgage loan modification?
A mortgage loan modification is a change in your loan terms. The modification is a type of loss mitigation. Carefully consider what kind of modification best addresses your needs. If you receive a loan modification and you still can’t make ...
What is an escrow or impound account?
An escrow account, sometimes called an impound account depending on where you live, is set up by your mortgage lender to pay certain property-related expenses. None The money that goes into the account comes from a portion of your monthly ...