Home Loan Frequently Asked Questions

What is a mortgage?

A Mortgage (also called a home loan) is a legal contract made between a lender and a borrower that uses property as collateral to secure the loan. The lender can take possession of the property if the borrower fails to pay the prearranged home loan payments.

What is a mortgage refinance?

A homeowner acquires a new loan to pay off an existing loan. Reasons homeowners refinance is to lower their interest rates and/or access cash from their home equity.

What is a home loan?

It is a loan by a lender to the homeowner secured by a “lien” on the real estate.

What is a home equity loan?

It is a closed-end home loan secured by the borrower’s residential asset. The reasoning to usually get a home equity mortgage loan would be to pay off debt or to make home improvements.

What is a home equity line of credit or HELOC?

A HELOC is simply an open-end loan set up as a line of revolving credit for some maximum draw, instead of a fixed loan amount in which your home is collateral. This is an open-end loan that permits the borrower to repay and re-borrow the funds available. HELOCs can be used to pay for several important items such as college education tuition, private school education, high interest debt, home improvements, home renovation, and major medical bills.

What is a second mortgage?

Mortgage loan taken out after the first mortgage and secured against the same asset as the first mortgage loan. Mortgage loan is based on the amount of equity or ownership interest you have in your home.

What is a reverse mortgage?

This loan program is for the benefit of seniors giving them the ability to supplement their income. It is a contract between the lender and the homeowner in which the lender makes regular payments to a homeowner for a specific period of time. The monthly payment received by the homeowner is based on the amount of equity the homeowner has in the home. The monthly payment is a non-recourse loan hence; the payment is tax free to the homeowner. The homeowner is allowed to reside in the home until they relocate or till death of homeowner. At that period, the lender sells the home and recovers his loan.

What is a mortgage lender?

A mortgage Lender is a financial institution that provides prospective homeowners with the funds over a long-term period to pay off their home loan mortgage. Borrowers are required to pay monthly installments to their lender which includes principle, interest, and additional lender fees.

What is a the difference between a mortgage broker and a mortgage banker?

A mortgage broker is the middleman who helps match borrowers with lenders based on corresponding needs and standards. Mortgage brokers arrange more than 80% of all transactions between borrowers and lenders, yet mortgage bankers actually finance and distribute the largest portion of home loans compared to all other lenders.

What is a mortgage principle?

The mortgage principle is the amount of loan money that a homeowner borrows excluding interest.

What does APR mean?

Annual Percentage Rate ( APR ) is the percentage used to figure out the total cost of your cash advance loan by taking into account all fees charged by your lender in addition to your loan principle and interest.