What is the difference between a fixed-rate and adjustable-rate mortgage (ARM) loan?
With a fixed-rate mortgage, the interest rate is set when you take out the loan and will not change. With an adjustable-rate mortgage, the interest rate may go up or down. Don't assume you'll be able to sell your home ...
What is an "interest-only" loan?
An interest-only mortgage is a loan with scheduled payments that require you to pay only the interest for a specified amount of time. Don't assume you’ll be able to sell your home or refinance your loan if your payment increases. ...
What is an option or payment-option ARM?
An option or payment-option ARM is an adjustable rate mortgage with several possible payment choices. Some of the payment choices do not cover the full amount needed to pay down the loan. The payment “options” usually include: Paying an amount ...
What is negative amortization?
Amortization means paying off a loan with regular payments, so that the amount you owe goes down with each payment. Negative amortization means that even when you pay, the amount you owe will still go up because you are not ...
What is a balloon payment? When is one allowed?
A balloon payment on a mortgage is a large, one-time payment at the end of the loan term. If you have a mortgage with a balloon payment, your payments may be lower in the years before the balloon payment is ...
What is a second mortgage loan or "junior-lien"?
A second mortgage or junior-lien is a loan you take out using your house as collateral while you still have another loan secured by your house. Home equity loans and home equity lines of credit (HELOCs) are common examples of ...
How can I avoid debit card overdrafts?
You can avoid debit card overdraft fees by declining to opt in to debit card overdraft or by cancelling debit card overdraft coverage if you have opted into it. There are alternatives to debit card overdraft. If you have a ...
I bounced a check. Will this show up on my credit report?
It depends on what you wrote the check to pay. None If you wrote the check to pay a bill, such as a credit card or mortgage, the creditor may report that you were late in paying your bill to ...
A home equity loan (sometimes called a HEL) allows you to borrow money using the equity in your home as collateral. Equity is the amount your property is currently worth, minus the amount of any existing mortgage on your property. ...
What is a home equity line of credit (HELOC)?
A home equity line of credit (HELOC) is an “open-end” line of credit that allows you to borrow repeatedly against your home equity. Before you borrow, find out What You Should Know About Home Equity Lines of Credit (HELOCs). Our ...
A construction loan is usually a short-term loan that provides funds to cover the cost of building or rehabilitating a home. In general, construction loans have higher interest rates than longer-term mortgage loans used to purchase homes. The money ...
A subprime mortgage carries an interest rate higher than the rates of prime mortgages. Prime mortgage interest rates are the rates at which banks and other mortgage lenders may lend money to customers with the best credit histories. Prime mortgages ...
The Federal Housing Administration (FHA) administers a program of loan insurance to expand homeownership opportunities. FHA provides mortgage insurance to FHA-approved lenders to protect these lenders against losses if the homeowner defaults on the ...
The Department of Veterans Affairs (VA) offers loan programs to help servicemembers, veterans, and their families buy homes. The VA sets the rules for loan qualification, arranges the terms under which mortgages may be offered, and guarantees any loan ...
What is a USDA Rural Housing Service loan?
The Rural Housing Service (RHS) offers mortgage programs that can help low- to moderate-income rural residents purchase, construct, and repair homes. The RHS both lends directly to qualified borrowers and guarantees loans that meet RHS program ...
A conforming mortgage loan is one that satisfies the terms and conditions set forth by Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Finance Agency (FHFA).
Each year Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Finance Agency (FHFA), set a maximum amount for loans that they will buy from lenders. In general, the loan limits are $766,550, although they go as high as ...
A conventional loan is any mortgage loan that is not insured or guaranteed by the government (such as under Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs). Conventional loans can be ...
What do I do if I think a lender discriminated against me?
If you believe a lender discriminated against you, you can submit a complaint with the Federal Trade Commission (FTC) or with the CFPB online or by calling 1-855-411-CFPB (2372). You can also file a complaint with your state attorney general ...
How can I figure out if I can afford to buy a home and take out a mortgage?
Focus on a mortgage that is affordable for you given your other priorities, not how much you qualify for. Lenders will often tell you how much you are qualified to borrow – that is, how much they are willing to ...
No, a creditor such as a lender is generally not allowed to make credit decisions based on your age alone. Lenders are not allowed to refuse to consider income from your part-time employment, pension, and certain other sources. A lender ...
What are some of the financial considerations of buying a home?
Becoming a homeowner is a significant financial step and commitment. There are a few considerations to keep in mind, including understanding the costs of homeownership. Buying a home and taking out a mortgage might make sense if: You’re willing to ...
There are many options for making down payments. The amount of your down payment will vary by the loan you choose and the lender’s requirements. Generally, the larger the down payment you are able to make, the lower the interest ...
What is a loan-to-value ratio and how does it relate to my costs?
The loan-to-value (LTV) ratio is a measure comparing the amount you are financing with the appraised value of the property. The higher your down payment, the lower your LTV ratio. Learn how mortgage rules may help you when you shop ...
Does having a reverse mortgage impact who can live in my home?
As long as you still live in the home, having a reverse mortgage does not change who can live with you. Having a reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), does not change who can live ...
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