Understanding Mortgages

Front

What is the purpose of an escrow account in a mortgage?

Back

To collect and pay property taxes and homeowners insurance.

Front

What is PMI?

Back

Private Mortgage Insurance.

Front

What might cause your monthly mortgage payment to change?

Back

Changes in property taxes or homeowners insurance if you have an escrow account.

Front

What does it mean if a mortgage is 'secured'?

Back

It is backed by collateral, such as the home.

Front

What is a fixed-rate mortgage?

Back

A mortgage with an interest rate that stays the same through the term.

Front

What is a down payment in the context of a mortgage?

Back

The initial upfront payment made when purchasing a home, typically a percentage of the purchase price.

Front

What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

Back

A fixed-rate mortgage has a constant interest rate, while an adjustable-rate mortgage has an interest rate that may change periodically.

Front

What is the role of a mortgage lender?

Back

A mortgage lender provides the funds needed to purchase a home, which the borrower repays over time with interest.

Front

What is the significance of the loan-to-value (LTV) ratio?

Back

The LTV ratio compares the amount of the loan to the appraised value of the property, influencing loan terms and insurance requirements.

Front

What are closing costs?

Back

Fees and expenses incurred during the closing of a real estate transaction, including loan origination fees, title insurance, and appraisal fees.