Mortgage FAQs

The following is a list of Frequently Asked Questions that William Raveis Mortgage has compiled for your convenience.

1. How do I determine how much I can afford?

   In most cases, you should qualify for a monthly housing expense (the monthly payment for principal, interest, property taxes and homeowner’s insurance) equal to 30%* of your gross monthly income.  

2. What is a credit (FICO) score?

   Credit scores have been developed for use in making lending decisions for all types of consumer products. They are based on credit data compiled by the major credit bureaus. Credit scores can range from approximately 400 to 900. The lower the score, the greater the credit risk.
   
   Under the Fair Credit Reporting Act, consumers can obtain a copy of their credit reports by calling the credit bureaus:
   • EquiFax: 800.685.1111
   • Trans Union: 800.916.8800
   • Experian: 800.682.7654
   Our Loan Professionals can also provide you with your credit report during the loan approval process.

3. What are Discount Points?

   Discount points are equal to a percent of the loan amount. For example, 1 point is equal to 1% of the loan amount. On a $100,000 mortgage that would be $1,000. Generally, paying discount points will lower the interest rate.

4. What is a Loan Origination Fee?

   Loan Origination Fees are shown as points or as a percentage. A one point or one-percent Origination Fee is equal to 1% of the loan amount.

5. What is the APR?

   The APR is also known as the Annual Percentage Rate. It is the cost of credit expressed as a yearly rate after combining the interest rate, points and other related fees.

6. What is a Finance Charge?

   The Finance Charge is the cost of credit expressed as a dollar amount. It includes all charges payable directly or indirectly by the borrower and charged directly or indirectly by the lender as a condition for receiving credit.

7. What are Escrows?

   Escrow accounts are established at the time of closing by the lender to manage the payments of property taxes, hazard insurance and other fees on behalf of the borrower.

8. What is Mortgage Insurance?

   Mortgage Insurance is a type of insurance provided to protect the lender in the event of a loan default by the borrower. The premium is collected monthly as part of the mortgage payment and is generally required on loans where the borrower has less than 20% equity in the property.

9. What is an ARM (Adjustable Rate Mortgage)?

   An Adjustable Rate Mortgage is a loan that allows the lender to adjust the interest rate periodically based on the change of a specific index. The rates are typically lower than traditional fixed rates and enable borrowers to afford a larger loan amount.

10. What is a Rate Lock?

    A Rate Lock is needed to close a mortgage loan. The Rate Lock guarantees a specific interest rate from any time from application to closing. Rate Locks can range from 15 to 360 days depending on the loan program and the lender. There is usually a cost to the borrower for locking the rate. The longer the Rate Lock, the higher the cost.

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