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mortgage

A collection of 11 issues

What Is the Mortgage Underwriting Process?

Introduction The mortgage underwriting process is the behind-the-scenes review that determines whether a lender will approve your home loan application. While you may interact mostly with a loan officer or broker, an underwriter is the professional who combs through your finances, evaluates the property, and ultimately decides if the risk

What Is a Participation Mortgage? A Complete Guide for Real-Estate Investors and Borrowers

What Is a Participation Mortgage? A participation mortgage—sometimes called a shared-appreciation or equity-participation loan—is a financing arrangement in which the lender receives not only scheduled interest and principal payments but also a contractual share of income or profits generated by the underlying real estate. These mortgages are popular

What Is an Adjustable-Rate Loan Cap?

Introduction: Why Adjustable-Rate Loan Caps Matter When you shop for a mortgage or any other adjustable-rate lending product, you will encounter a term that can have a profound impact on your monthly payments: the adjustable-rate loan cap. Because adjustable-rate mortgages (ARMs) and other variable-interest loans periodically change their rates, caps

What Is a Mortgage Rate Lock?

Understanding the Mortgage Rate Lock A mortgage rate lock is a written agreement between a borrower and a lender that guarantees a specific interest rate on a home loan for a set period of time, usually ranging from 15 to 60 days, though some lenders offer longer windows. By locking

What Is an Interest-Only Mortgage?

Understanding the Basics of an Interest-Only Mortgage An interest-only mortgage is a home loan that allows borrowers to pay just the interest charge on the principal balance for a set introductory period, typically five to ten years. During this phase, monthly payments are lower because they do not reduce the

Understanding PMI and How to Avoid It on Your Mortgage

What Is PMI and Why Does It Exist? Private mortgage insurance (PMI) is an insurance policy that protects the lender if a borrower defaults on a conventional home loan. PMI is typically required when your down payment is less than 20% of the home’s purchase price or when your

Understanding Mortgage Rates: Fixed vs Adjustable Loans

Introduction: Why Mortgage Rate Types Matter Buying a home is one of the biggest financial steps most people ever take, and the mortgage product you choose can influence your budget for decades. While down payments, credit scores, and loan terms get plenty of attention, the structure of your interest rate—

Understanding Mortgage-Backed Securities: A Guide for Investors

What Is a Mortgage-Backed Security? Mortgage-backed securities, commonly called MBS, are investment products backed by a pool of home loans. When homeowners make monthly mortgage payments, the cash flows are passed through to investors, creating relatively predictable income streams tied to the U.S. housing market. How MBS Work An

Loan-to-Value (LTV): What It Is, How To Calculate, and Why It Matters

Loan-to-Value (LTV): What It Is, How To Calculate, and Why It Matters Loan-to-Value (LTV) ratio is one of the first numbers lenders check when you apply for a mortgage, auto loan, or home equity line of credit. Expressed as a percentage, it compares the size of your loan to the

What Is a Jumbo Loan? Requirements, Benefits & Tips for 2024

Understanding Jumbo Loans A jumbo loan is a mortgage that exceeds the conforming loan limits set annually by the Federal Housing Finance Agency (FHFA). Because it is too large to be purchased by Fannie Mae or Freddie Mac, a jumbo mortgage carries stricter underwriting guidelines and slightly higher interest rates.