What is the difference between a fixed-rate and an adjustable-rate mortgage?
A fixed-rate mortgage is a mortgage having the same rate of interest for the life of the loan, usually 15 or 30 years. This means your payments remain constant throughout the term of the loan. An adjustable-rate mortgage differs from a fixed-rate in that the rate changes based on a specific index determined by the lender. This means your mortgage payments may change throughout the life of the loan. This benefits you when rates decline because your payment may be reduced. However, you could pay more when rates rise.
What are points?
Points are fees charged by a lender to cover certain processing costs in connection with the mortgage loan. A point represents one percent of the total amount of the loan.
What is an LTV?
Loan-to-value is a ratio of the amount of the mortgage to the value of the home. If your home is worth $200,000 and your mortgage is $160,000, your loan-to-value ratio is 80%. This is an important ratio for the lender in determining the amount you can borrow for your mortgage.
What is an APR?
An APR or Annual Percentage Rate is the actual rate the borrower pays when all the costs of obtaining credit are included. In other words, the APR is the cost of credit expressed as an annual rate. This rate includes a combination of the interest rate, points and other fees paid to a lender when acquiring a mortgage. When comparing mortgage rates of various lenders, the APR is a good indicator to use.
What is the difference between Mortgage Insurance, Mortgage Disability Insurance and Mortgage Life Insurance?
Mortgage Insurance (MI) is insurance written by an independent Mortgage Insurance Company (MIC) protecting the lender against loss incurred by a mortgage default. Often, MI is required by lenders when the Loan-to-Value ratio (the amount of the loan divided by the value of the home) is greater than 80%. Mortgage Disability Insurance is a disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time. Mortgage Life Insurance is a term life insurance policy that covers the declining balance of a loan secured by a mortgage, and is payable upon death of a covered borrower.
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For more information stop by your local branch, the FSB mortgage center or call us at: 718.961.5400. Our mortgage center hours are weekdays 9:00 AM - 5:00 PM.
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