Some combinations of loan terms — such as a small down payment — may require the buyer to pay mortgage insurance. (See the video on Private Mortgage Insurance here to learn a bit more about it.) PMI can add yearly costs to your mortgage, but you may not be required to continue carrying for the whole term of the loan. If your loan was consummated after July 29, 1999, and your payments are current, you have some options. Your lender must terminate PMI when principal balance is 78% of the original value of the home. Your lender must terminate PMI if you reach the halfway point of hte loan term (e.g. 15 years on a 30-year fixed loan.) You can request cancellation of the PMI policy yourself when principal reaches 80% of original value. Logically, that suggests that the lender didn’t cancel automatically, so if you’ve hit the 78% market, ask them in writing. Consumers have the right to ask for the date that either of these balances will be in force. If your mortgage is relatively new, ask for the date and put a followup note on your calendar or phone to check — even if it’s years in the future. Follow any steps the lender requires, do everything in writing and keep copies.

The term "appraisal" has a specific meaning in the home-and-mortgage process. Its not an inspection; it is a professional assessment of thevalue of the property. The companies and individuals that do this assessment are called "appraisers". Its important to understand that the appraiser works for the lender, not the buyer or the seller. While a professional opinion about value seems like a useful thing in negotiating price, thats not their job. Because the property will be used as loan collateral, the lender really needs to know what its worth; thats the job. Appraisers have the training and experience to put numbers on key aspects of a property: Size Condition How it compares with other properties in the local market They have the training to focus on things that will affect value; as the video says, damage and neglect affect value but a sink full of dishes does not. The appraised value can affect transaction details. If the value is lower than the offered price, the offer might have to change — for example, reducing the price, or increasing the down payment. Appraisal results are a good point-in-time thing to know. Just remember that the appraisers customer is the lender, not you.

When you apply for a mortgage and provide the 6 required pieces of information, a lender must provide a Loan Estimate within 3 business days if the loan is approved. This video explains the basics. The Loan Estimate is a standard form, with required information. Yours will include: Loan terms, including interest and loan schedule Projected payments Costs at closing, including: Total Interest Percentage APR (Annual Percentage Rate) Estimates of costs from lender-recommended providers ("Cant Shop"). Final costs must be in defined limits of these estimates. Estimates of costs that you can shop; these will vary based on your decisions. Be clear that the Loan Estimate is anestimate - not a final, binding contract for loan costs and terms. It will give you a ballpark understanding about this loan, and some limits on the possible changes in final costs. For more assistance (and additional videos) on the specific parts and pages of a Loan Estimate, search "Loan Estimate" on this site.

Intimidated by mortgage loan terms and the list of fees? This short explainer video will help you get a handle on all of it. While a mortgage involves borrowing money for a home, there can be quite a few items and fees in the stack of papers. "Loan origination" -- the process of documenting and evaluating your loan application -- is not free. The "loan application fee" is one of the key components to understand. This fee generally covers: The lenders costs to verify, evaluate and underwrite the loan. This fee also pays for appraisal of the property — a professional valuation for the lender (not for the buyer.) Fees to "pull" your credit history. Other surcharges; ask the lender for a detailed list. Loan application fees are generally non-refundable.

Heres a short explainer video to help you compare mortgage loan options from different lenders. Most of us arent involved in mortgages every day, so the terminology and decision factors can be intimidating. Creating a simple, structured process to compare your loan options can make it a bit easier. Devise your own "checklist", and keep the same details for each lender and loan program as you shop. Your checklist should include company-level details: How big is the lender? (Offices, personnel, number of loans per year, or something other measurable factor.) Do they have local representation? Who is the key contact, and how can you reach them? For each loan, youll want to track consistent details. Some recommended items: Type of mortgage — fixed (15? 30?), ARM, balloon and so on. Minimum down payment required Current interest rate Points options and terms, if applicable. Closing costs Prepayment terms If the lender provides information on loan-processing timelines, that may be helpful to know. Because interest rates can change rapidly — even daily — accumulating this information gradually may not be effective. If you can arrange to call the lenders on your list on the same day, youll have a better basis for comparison. If you are already working with a real estate agent, they may have a list of lenders to help you get started.

The video puts this in more visual terms, however your individual scenario will figure out the very best sort of loan for you. Lenders can assist you utilize your responses to choose which loan best fits your requirements. Do you expect your finances to change over the next few years? Are you planning to live in this home for a long period of time? Are you comfortable with the idea of a changing mortgage payment amount? Do you wish to be free of mortgage debt as your children approach college age or as you prepare for retirement? Lenders can assist you in using your replies to decide which loan is the best fit for you.

Heres a short article and helpful explainer video, giving you some tips on choosing a lender for your mortgage loan. While applying for a mortgage can be intimidating, remember that lenders want your business! You are the customer, making one of the biggest purchases of your life. Companies you consider should be responsive, professional and helpful as you start sizing up your options. There are many advantages to working with a lender that has a local presence. They will have connections with the other businesses and government organizations involved in the purchase, and will know "how to do this" in your particular state and locality. A local presence also helps the lenders personnel be up-to-date on home values and conditions in the area, which could potentially be a factor in your search. Companies without a local presence should not automatically be rejected. Your communication preferences and record-keeping habits might make a national lender with a robust digital loan-processing system a fit. You should be comfortable with calls and video, rather than face-to-face conversation, if that looks like a fit. Advice from friends and family may be helpful, but keep this in mind. People do not buy homes as often as they buy groceries, or even cars. Verify the advice you receive with your own homework, online research, and feel for the situation.