What is a prepayment penalty and should I have one?
A prepayment penalty allows the lender to charge the borrower a fee if they close their low within a certain period, usually the first five years of the loan. This fee is usually equal to about six months worth of interest payments on a loan. In some cases you may be able to get a lower rate if the lender includes a prepayment penalty, but it is usually better to try and avoid it.

What is the difference between pre-qualification and pre-approval?
Pre-qualification is when a prospective buyer discloses, either verbally or by providing documentation of, their income, assets and credit so that a lender can determine how much a borrower will be likely to afford in loan payments. A pre-approval involves an underwriter and is a more formal review of your credit and income. A pre-qualification will commonly only provide you with an idea of what you can afford while a pre approval will actually guarantee you a loan of a certain amount.

Am I required to get financing from the lender that my real estate agents recommends?
A recommendation is just that, a suggestion, you are never required to choose the lender that anyone suggests to you. The best way for you to find a lender is to shop around and compare deals.

What are points?
Also called discount points, a point is 1% of the amount of the loan. Points are a one-time fee added to your closing costs and generally results in a slightly lower interest rate on your loan.

What is a good faith estimate?
A Good Faith Estimate is an estimate that outlines the costs you will incur during the mortgage process. This is provided to you when you apply for your loan.

What is an Escrow Payment?
The portion of your monthly payment that is held by the lender to pay for taxes, hazard insurance, mortgage insurance and other items as they become due is known as an escrow payment.

What is amortization?
Amortization is the period it would take you to pay off your mortgage in full. As long as you maintain the same terms and payment periods of your loan your amortization period will be whatever the term of your mortgage was when it was first taken out.

What is the advantage of weekly payments over monthly payments?
By making weekly payments you will make one extra payment per year. Though the amount of money you will be paying will not be severe doing this will lower the period in which your mortgage is paid off.

When is refinancing a good option?
There are a number of reasons why someone would refinance. You can refinance if the interest rate has gone down, which will lower your monthly payment. Some people refinance when they have built equity in their home and would like to take some of that money out. Many people also refinance their loan when the initial period of their adjustable rate mortgage is coming to an end and they want to switch to a fixed rate mortgage.

Do I need to appraise my home if I am refinancing?
Yes, essentially refinancing is paying off your mortgage with a new mortgage. Especially if you are changing lenders, they want to make sure the property they are funding is worth the cost that is being mortgaged.