Frequently Asked Questions

The interest rate is the annual rate you pay on the money you borrow for your mortgage. It establishes 
the initial amount of your monthly principal and interest payments, and will vary unless it’s locked in. 
The APR, which is usually higher than the interest rate, includes certain fees, and other closing costs.

A 1/1 ARM will adjust up or down for the first time after one year, then every year thereafter. A 3/1 
ARM will adjust up or down for the first time after 3 years, then every year thereafter. A 5/1 ARM will 
adjust for the first time after 5 years, then every year thereafter.

When you borrow more than 80% of your home's value, your lender will sometimes require you to obtain Private Mortgage Insurance or PMI. This insurance protects the lender against loss if you default on your home loan. The cost of PMI varies. It is based on the size of the down payment, the type of mortgage, credit score, type of home, and amount of coverage. Pemiums are typically folded into your monthly mortgage payment. Some lenders may offer PMI as a financed premium along with the mortgage. 

There are two different types of title insurance policies when it comes to mortgage loans. When you 
are purchasing a home, the seller provides you, the buyer, with an “Owner’s Title Policy”. This policy 
protects you from anyone making a claim against the home before your purchase. The other title policy 
is known as the “Lender’s Title Policy”. This policy protects the lender incase of any title issues with the 
property after the purchase. The title search that is completed verifies all owners of record and if there 
are any mortgage liens or judgements against the property. Any issues that exist would need to be 
cleaned up prior to closing.

Mortgage escrow account is a federally regulated holding account for homeowners’ insurance premiums, mortgage insurance, and property tax payments. If required or requested, it is set up by your mortgage lender with your loan closing, to ensure timely payments of tax and insurance bills. After a pro-rated initial deposit, the account is funded each month, as part of your total monthly payment, so that the needed billing amounts can be collected over a 12-month period. These accounts are also analyzed each year and will adjust your monthly payment in accordance with the most recently paid out premium or tax bill.