Buyers Ed Test tips
You should know and understand the following points covered within the Getting Your Mortgage section:
- According to the Fair Housing Act, no lender may charge excessive fees or refuse to make a mortgage loan based on your race, national origin or ethnicity, or religious background.
- Predatory mortgage lending, the practice of knowingly lending more money than a borrower can afford to repay, strips borrowers of home equity and destroys the benefits of homeownership.
- The types of mortgages are FHA and VA, fixed-rate and adjustable-rate and 15-year and 30-year.
- An advantage of a fixed-rate mortgage is that the monthly principal and interest payment are predictable and unchanging throughout the life of the loan.
- Nonfixed-rate mortgages are designed for borrowers who are able to handle payment increases down the road.
- If your mortgage loan allows for negative amortization, it's possible that you would eventually owe more on the house than the amount of the original loan.
- In order to choose the most appropriate loan for your needs, you need to consider the possibility of significant rate increases, the amount of time you intend to live in the house and whether your income is stable or fluctuating.
- Points are a one-time fee from the lender that cover its cost of doing business. One point equals 1% of the loan amount.
- A Good Faith Estimate could include the amount you will pay in points on your loan, estimated charges for title insurance and an estimate of closing costs.
- The APR is typically higher than the interest rate because the APR includes points, interest, and other finance charges.
- A lender may require the following documents to review your income: W-2s covering the most recent two tax years; most recent year-to-date pay stub; and bank statements showing child support maintenance.
- Benefits of mortgage insurance include that it allows a buyer to purchase a home with little or no money down; it financially protects the lender making it possible for them to do more low-down-payment loans; and it allows the buyer to purchase a home sooner and build equity faster.
