1. Personal
  2. Business
  3. The HSA Authority
  4. About Us
  5. Customer Service

Loans & Credit Cards

Mortgage FAQs

What is the difference between a fixed rate mortgage and an adjustable rate mortgage (ARM)?

With a fixed rate mortgage, your interest rate remains constant for the life of the loan. Many fixed rate mortgages are 15-year or 30-year loans, but other terms are available. The interest rate on an ARM fluctuates according to an index and a margin agreed to in advance by the borrower and lender.

What is a Convertible ARM?

A Convertible ARM has traits similar to a traditional ARM loan, with an added option for the borrower to convert the mortgage to a fixed-rate loan during an early interest rate adjustment period.

What does it mean to lock a rate?

“Rate locks” during mortgage processing protect you from a possible jump in interest rates. Generally speaking, if you choose to lock for an extended period of time, the cost of your loan increases.

What does annual percentage rate (APR) mean?

The annual percentage rate is the cost of credit as a yearly rate. Your APR includes the effect of the origination fee and any other pre-paid finance charges paid in connection with your loan.

What is an appraisal?

It’s a report prepared by a qualified person (appraiser) which gives an opinion or estimate of a property’s value.

How do I decide what mortgage to choose?

There are a number of factors that impact which mortgage type is best suited for you, including your lifestyle, budget and credit history. A mortgage specialist can help you determine which mortgage best meets your needs.

What is a credit report?

This is a report generated by one of three large credit reporting agencies detailing your credit history. It shows any delinquent payments, failure to pay, bankruptcies, foreclosures or other legal proceedings. Your credit report typically includes your FICO score, which is a standard formula used to calculate your credit history.

How do I improve and protect my credit rating?

  • Avoid unnecessary credit inquiries—they actually lower your credit score.
  • Don’t max out your credit cards—the ratio of available credit to your total credit balances is very important.
  • Don’t apply for multiple credit lines; this triggers an inquiry of your credit, which lowers your credit score.
  • Avoid co-signing on loans, if possible.

What are points?

A point is equal to 1% of the principal amount of a mortgage loan. Discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan. For instance, one percent of a $100,000 loan is equal to $1,000.

When should I pay points?

Generally speaking, the longer you plan to keep a loan, the more sense it makes to pay points to get a lower interest rate. Taxes are another consideration. Points paid on a new home loan are immediately deductible as interest.

What is a Good Faith Estimate?

When you apply for a loan, the lender must provide you with a Good Faith Estimate of likely settlement services. The estimate may be stated as a dollar amount or a range for each charge.

What is an Origination Fee?

This is a fee or charge paid by the borrower for evaluating, preparing and submitting a proposed mortgage loan. The origination fee is paid to the lender and is sometimes referred to as points. (For FHA and VA loans this fee is limited to 1% of the loan amount).

What does P.I.T.I. stand for?

It stands for Principal, Interest, Taxes and Insurance - the four components of a monthly mortgage payment.

What is Private Mortgage Insurance (PMI)?

PMI is an insurance policy the borrower buys to protect the lender from nonpayment of the loan. PMI is normally required when the down payment is less than 20%. PMI is referred to as MIP if speaking of a government loan.

What are escrowed funds?

Escrowed funds are paid to the lender on a monthly basis to hold until the occurrence of a specified event. Funds in escrow cover yearly expenditures such as mortgage insurance premiums, taxes, hazard insurance premiums and special assessments.

What is hazard insurance?

More commonly called homeowner’s insurance, this is a required policy that protects the insured from specified losses, such as fire, wind damage and vandalism.

How to you define loan-to-value?

Loan-to-value is the ratio of your loan amount to the value of the home you plan to purchase. For example, if you purchase property valued at $100,000 and borrow $75,000, your loan-to-value (LTV) is 75%.

Here's what you can do next

Apply Online
Contact Us
Visit Us

Related Information

How much of a payment can you afford? Use our simple online mortgage calculators to find out.