FAQ

 

What is Accrued interest?

Interest that accumulated, adding to the amount owed.

What is ARM?

Adjustable Rate Mortgage.  This is a mortgage on which the interest rate can be changed by the lender.

What is an Amortization schedule?

This schedule shows the monthly mortgage payment, the loan balance, and the accrued interest.

What is APR?

Annual Percentage Rate. This is a number used to compare loans.

What is a Balloon mortgage?

This is a mortgage that is payable in full after a period that is shorter than the term. 

What is a Jumbo loan?

This is a loan that is greater than $417,000.

What are Points?

This is an upfront cash payment required by the lender and considered as part of the loan.  Points are expressed in terms of percentage of the loan.

When should one Refinance?

The most common reason for refinancing is to save money. Saving money through refinancing can be achieved in two ways:

1. By obtaining a lower interest rate that causes one's monthly mortgage payment to be reduced.
   
2. By reducing the term of the loan, thus saving money over the life of the loan. For example, refinancing from a 30-year loan to a 15-year loan might result in higher monthly payments, but the total of the payments made during the life of the loan can be reduced significantly.
   
   
Other reasons to refinance


3. Convert their adjustable loan to a fixed loan. The main reason behind this type of refinance is to obtain the stability and the security of a fixed loan. Fixed loans are very popular when interest rates are low, whereas adjustable loans tend to be more popular when rates are higher.
   
4. To consolidate debts. The loans being consolidated may include second mortgage, credit lines, student loans, credit cards, etc. In many cases, debt consolidations , results in tax savings, since consumers loans are not tax deductible, while a mortgage loan is tax deductible.