The S crow is kind of a mascot here, because there is no such bird. You wont hear the word "escrow" for years, and then youll hear it all the time if youre buying a home. Heres what the word means. Some of the charges connected to a home: Real estate taxes Mortgage insurance Homeowners insurance are applied annually. The escrow account is a bucket where part of monthly mortgage payments accumulate to pay these costs. Escrow account costs may — and usuallydo — change each year, because these charges change. Its useful to understand that the lender is responsible for making those payments on time, from the escrow account. If somethings late, make sure you are not fined or punished.

Your credit history will matter in your application for a mortgage. It pays to check it regularly - use annualcreditreport.com - and address errors and issues. Basic factual errors can usually be remedied by writing to the credit bureau; explain the mistake and provide clear evidence that it is an error. If an issue isnt an error, and an explanation would help, you may request to have your own remarks attached. For example, if you missed a payment because of an accident, add that to the record. In the long run — and in the mortgage — the better your credit history, the better your mortgage terms are likely to be.

Like the video states, there are no simple methods with which to enhance your credit history. However, you can work to keep it appropriate by keeping an excellent credit report. Pay your expenses on time. Pay for cards and keep month-to-month financial obligations sustainable. Limitation your general financial obligations, and examine your credit report yearly for precision and remedy any mistakes.

Your credit history will have a direct effect on your mortgage loan. Its in your interest to check your history, and address any issues, as early as possible. Federal law entitles everyone to a free annual credit report. You can request your free credit report at this site: annualcreditreport.com You can also request it directly from the 3 credit bureaus: Trans Union – www.transunion.com 1-800-916-8800 Experian – www.experian.com 1-888-397-3742 Equifax – www.equifax.com 1-800-685-1111 Look for other videos on credit history and credit score here to learn more.

"Well pull your credit." is the bland phrase you might hear from a lender. What does that mean? Three companies — Experian, TransUnion and Equifax — maintain records of peoples debts and payments. They issue a credit score for you, based on this data. From a lenders perspective, the credit score provides a consistent measure to assess the possibility of a borrower defaulting on a loan. Your credit score can directly affect qualifying for a loan, rate and other terms. The better your score, the better your borrowing situation. A good credit score saves you money, which can help you maintain a good credit score. Its worth checking your credit score regularly, but particularly before a big transaction like a mortgage. If there are issues, start addressing them early. This video may help you understand the score; look for other videos here on credit scores and credit history for more.

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.

Companies involved in the mortgage loan process are required to follow detailed regulations. Many of these are detailed in the Real Estate Settlement Procedures Act — the Federal law commonly called "RESPA." The RESPA rules spell out the information that a lender has to provide to potential customers, step-by-step. They mandate detailed, full information about all costs, servicing details, account and escrow practices. They also mandate that lenders disclose any business relationships that they have with other parties involved in the transaction. In plain English, that means that you should be informed of existing relationships. If the mortgage process requires you to get your car washed, and the lender gets a commission from the car wash across the street, they have to tell you. Same for other not-so-silly business arrangements. The Dept of Housing and Urban Development - HUD - provides information on the RESPA regulations. Here are some of the current links: RESPA page that says nothing particularly useful. Settlement Costs Booklet The Settlement Costs booklet is quite useful and detailed — a recommended resource if youre starting the mortgage journey. HUD also sponsors housing counselors. Some consumers can qualify for counseling without any charges; where charges are involved for counseling, HUD requires that any counseling fees be "commensurate with the level of services provided." The HUD housing counseling agencies directory is here: https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

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.