What’s the difference between a 15-year and 30-year mortgage?

A 15-year fixed rate home mortgage gives you the ability to own your home free and clear in 15 years. While the monthly payments are somewhat higher than a 30-year loan, the interest rate on a 15-year mortgage is usually a little lower, and more importantly—you’ll pay less than half the total interest cost of the traditional 30-year mortgage.

However, if you can’t afford the higher monthly payment of a 15-year mortgage, don’t feel alone. Many borrowers find the higher payment out of reach and choose a 30-year mortgage. It still makes sense to use a 30-year mortgage for most people.

What does it mean to lock in a rate?

The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time that your lock is confirmed to the day that your lock period expires. You can lock in your interest rate and discount points as soon as a mortgage lender has reviewed your information.

The lock is an agreement by the borrower and the lender and specifies the number of days for which a loan’s interest rate and discount points are guaranteed. Should interest rates rise during that period, the lender is obligated to honor the committed rate. Should interest rates fall during that period, the borrower must honor the lock.

What are closing fees?

A home loan often involves many fees, such as an appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Any lender should be able to give you an estimate of their fees, but it is more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. We take quotes very seriously. We’ve completed the research necessary to make sure that our fee quotes are accurate.

What is title insurance and why do I need it?

The title insurance company works to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.

Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders, and others who have interest in real estate transfer. Title companies typically issue two types of title policies:

  1. Owner’s Policy: This policy covers you, the homebuyer.
  2. Lender’s Policy: This policy covers the lending institution over the life of the loan.

Lenders require that you purchase a Lender’s Policy. This policy only insures that the financial institution as a valid, enforceable lien on the property. It does not protect you. An Owner’s Policy on the other hand is designed to protect you from title defects that existed prior to the issue date of your policy. It also covers the full costs of any legal defense of your title.

What is mortgage insurance and when is it required?

Home Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. It may be possible to cancel private home mortgage insurance at some point. Federal Legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized down to 78% of the original property value.