Predatory lending warning signs
Frequently Asked Questions
Straight answers to the questions we hear most.
Yes, ARMs have built-in consumer protections called caps.
Periodic Cap: Limits how much your interest rate can increase from one adjustment period to the next (e.g., no more than 2% per year).
Lifetime Cap: Limits how much your interest rate can increase over the entire life of the loan from the initial rate (e.g., no more than 5% over the initial rate).
Periodic Cap: Limits how much your interest rate can increase from one adjustment period to the next (e.g., no more than 2% per year).
Lifetime Cap: Limits how much your interest rate can increase over the entire life of the loan from the initial rate (e.g., no more than 5% over the initial rate).
A cash-out refinance makes sense when you have a specific, valuable need for the funds, such as home renovations that increase your property’s value, consolidating high-interest debt (like credit cards), or funding a major investment. It’s crucial to have a disciplined plan for the cash and to understand that you are increasing your mortgage debt.
A mortgage pre-approval is a comprehensive evaluation by a lender that determines how much money you are qualified to borrow for a home purchase. It involves verifying your income, assets, credit, and debt, resulting in a conditional commitment for a specific loan amount.
No, a pre-approval is a conditional commitment. The final loan approval is contingent on a satisfactory home appraisal, a clear title search, and no material changes to your financial situation (like job loss or new debt) between pre-approval and closing.
An escrow account is a holding account managed by your mortgage lender.
You pay a portion of your annual property taxes and homeowner’s insurance into this account with each monthly mortgage payment.
The lender then pays these large bills on your behalf when they come due.
This helps you budget for these expenses in smaller, monthly increments rather than facing one large annual bill.
You pay a portion of your annual property taxes and homeowner’s insurance into this account with each monthly mortgage payment.
The lender then pays these large bills on your behalf when they come due.
This helps you budget for these expenses in smaller, monthly increments rather than facing one large annual bill.
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