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Frequently Asked Questions
Rates and Fees
- I've heard about a discount point, what is it?
A discount point is a percentage of the loan paid to the
lender to permanently buy down or lower an interest rate.
Each point represents 1% of the loan amount. (Example:
1 point on a $100,000 loan is $1000).
- So can I pay additional discount points to lower my
interest rate even more?
Yes, most lenders allow you to reduce your interest rate by
paying additional discount points. Ask your loan officer for
more details.
- What do lender's fees consist of?
These are fees that help offset the cost of producing the loan,
such as underwriting fees, application fees, origination fees,
processing fees, and fees for your credit report and appraisal.
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How are rates determined?
They are determined by the stock market and other financial
indicators. Rates can change daily or even more than once a
day and are based on various economic indicators in the financial
markets. Contact your mortgage lender for the current rates.
- Prepaid interest, what's that?
This is the interest that accrues on the mortgage loan from the
date of the loan closing to the beginning of the period covered
by the first monthly payment. (i.e., If your closing date is
scheduled for Oct 15th, the first mortgage payment isn't due
until December 1st. The lender will calculate the per-day
interest amount to be collected at closing to cover the interest
accrued until you make your first mortgage payment.)
- What is the difference between locking
in and floating?
Locking in a mortgage rate gives you a period of time of
protection from financial market fluctuation of interest
rates by setting the range of pricing available to you.
If you choose to float your rate, your rate fluctuates as
the market changes. The benefit to floating is that if interest
rates decrease, you have the option to lock in at a lower rate.
- When can I lock in and what does it cost?
It varies from lender to lender, but most will allow you to
lock in once you have found a property to purchase, but the
lock in rate does have an expiration date. Check with your
lender for their deadlines. Lock in fees also vary from lender
to lender, so discuss this with your loan officer.
- What is PITI?
PITI is an acronym for "Principal, Interest, Taxes and Insurance.
These are the components that comprise most monthly mortgage payments.
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All information contained herein is believed accurate, but not warranted. Subject to errors, omissions, change, and withdrawal without notice
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