FAQ's

Listed below are some frequently asked questions and answers to assist you during the mortgage process:

Q: What are Discount Points?
A: Discount Points are an amount paid at closing to lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (e.g., two points on a $100,000 mortgage would total $2,000).


Q: What is PMI (Private Mortgage Insurance) used for?
A: PMI is purchased by the borrower to protect the lender against losses if the borrower defaults. PMI is normally required when purchasing a home with less than a 20% downpayment.


Q: What is Title Insurance?
A: Title Insurance protects against most financial losses resulting from problems related to the property title.


Q: What is the Truth-In-Lending Disclosure?
A: Truth-In-Lending Disclosure is a federally required notice that provides details of the cost of obtaining a mortgage loan. This notice includes the mortgage’s annual percentage rate (APR). The APR should not be confused with the mortgage’s note rate, which is used to calculate the payment.


Q: What does Annual Percentage Rate (APR) mean?
A: APR is a calculation expressing the total cost of credit as a yearly percentage. An APR must be provided under the Federal “Truth in Lending Act.” It includes up-front costs (i.e. prepaid interest) and any other finance charges associated with obtaining the loan. For this reason, the APR is usually higher than the interest rate on the mortgage note. The APR should not be confused with the mortgage’s interest rate, which is used to calculate the payment.


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