Measuring your existing debts against your existing income is one part of a lender’s required assessment of your ability to repay a loan. Like the video says: debts are existing financial commitments; a car payment is a debt a grocery bill is not. To calculate your debt-to-income ratio add up your monthly debt payments […]
Mortgages:
What Is A Qualified Mortgage?
As this video explains, Federal laws put into effect in 2014 and supervised by the Consumer Financial Protection Bureau define lending practices and loan terms for a new category called “Qualified Mortgages.” They provide stable loan features for consumers and improve legal protection for lenders who follow the guidelines. These guidelines require lenders to assess each borrower’s ability to […]
What Does Ability To Repay Mean?
What are the “Ability to repay” rules about? In a nutshell, as this video shows, new laws require lenders to make a good-faith assessment of a borrower’s capacity to pay back their loan over time. It’s a longer-term view that goes beyond immediate income, debt and credit rating. These new Federal laws- supervised by the CFPB […]
What Is Equity?
Equity is the value YOU own in property such as a house. It’s the difference between what’s OWED and what the property is WORTH in the current market. The example this video shows – you have a house worth $300,000 today and you owe the bank $200,000. Your equity would be $100,000. If the […]
What Is “Prime”?
The Prime Lending Rate – sometimes just called “Prime” – is the interest rate that banks charge each other for overnight loans. Some consumer rates – like ARMs – are set in relation to Prime. In the US, Prime is affected by the Federal Reserve lending rate to banks; historically, Prime is about 3 […]
What Are Discount Points?
Discount points allow you to lower your interest rate. While this video simplifies things to help you remember, “points” are essentially prepaid interest with each point equaling 1% of the total loan amount. Generally, for each point paid on a 30-year mortgage the interest rate is reduced by 1/8 (or.125) of a percentage point. […]
What Is Included In A Monthly Mortgage Payment?
The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes homeowner’s insurance, and mortgage insurance, if applicable. If you are refinancing compare what is and isn’t included in your financing options. Watch this video and it’ll make sense.
What Factors Affect Mortgage Payments?
Well, as this story shows, the amount of the down payment the size of the mortgage loan, the interest rate the length of the repayment term and payment schedule will all affect the size of your mortgage payment. In bullets: down payment loan size interest rate – fixed or adjustable repayment term – how […]
How Does The Interest Rate Factor In Securing A Mortgage Loan?
As you’ll see in the video, a lower interest rate allows you to borrow more money than a high rate with the some monthly payment. Interest rates can fluctuate as you shop for a loan so ask lenders if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period […]
What Is A Mortgage?
The original phrase “mort gage” translates as “death pledge”! But as this video explains, a mortgage is a loan obtained to purchase real estate. The “mortgage” itself is a lien – a legal claim on the home or property that secures the promise to pay the debt. All mortgages have two features in common: […]