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When you apply for a loan, your lender takes these factors and others into consideration to determine your rate. Submit a loan request or contact a Loan Specialist at 1-877-941-4622 see hours of operation to learn more.
The Interest Rate is the amount the lender charges you for borrowing money.
The Annual Percentage Rate (APR) shows you the "true cost" of your loan over time. It includes the interest rate on your loan plus prepaid interest, closing costs and mortgage insurance premiums, if any.
Pay attention to APR while you're shopping rates—it will help you understand just how much that loan is really going to cost you. The higher the APR, the more expensive your loan will be over its term.
When you apply for a loan, the lender will send you a Truth in Lending (TIL) disclosure form that shows the APR for that loan.
See our mortgage calculators to find out how interest rates affect your loan.
Your mortgage payment is made up of principal and interest payments and, if you set up an escrow account, taxes and insurance payments. Your monthly payment is also referred to as PITI:
Your lender may also require private mortgage insurance (PMI) if your down payment or the equity in your home is less than 20%. PMI protects the lender if you default on the loan. Generally, PMI is automatically canceled when you pay down your balance to 78% of its original amount.
Use our mortgage calculators to explore your own mortgage estimates and loan scenarios.
Discount points, also called points, let you lower the interest rate on your home loan. When you buy a point, you are purchasing a lower interest rate. One discount point will cost you 1% of the loan amount.
You get a lower rate when you buy points but you also owe more at closing. So you'll want to make sure buying points makes sense for you over the long term.
| 1 point purchased | No points purchased | |
|---|---|---|
| Months Required to Break Even | 34 | n/a |
| Purchase Price | $250,000 | $250,000 |
| Down Payment | $50,000 | $50,000 |
| Loan Amount | $200,000 | $200,000 |
| Interest Rate | 4.25 | 4.75 |
| Points Paid to Lower Rate | 1 | 0 |
| Closing Cost for Points | $2,000 | $0 |
| P & I Payment | $984 | $1,043.29 |
| Monthly Payment Reduction | $59.41 | $0 |
If this homeowner bought 1 point, it would take 3 years to break even. Find out how long it will take after you refinance to break even.
To find out how much discount points can reduce your rate, please call a Loan Specialist:
1-877-941-4622 see hours of operation.
The Good Faith Estimate (GFE) is a document your lender will send you that shows your estimated closing costs. Your GFE will be mailed to you within 3 business days after you apply for a loan, as required by the Real Estate Settlement Procedures Act (RESPA).
Your GFE contains, among other items, important dates related to your loan application, escrow account information, and an itemized list of all the estimated loan and settlement charges (or closing costs).
Learn more about closing costs.
The GFE also includes a chart to compare GFEs from other lenders so you can shop for the right loan for you.
Your GFE is both an estimate of how much money you'll need to bring to closing and a great mortgage shopping tool. Closing costs can vary by lender, so it's wise to compare GFEs from at least two different lenders. Review your GFE and ask your lender about anything you don't understand.
See a sample Good Faith Estimate.
Remember; your GFE is only an estimate. Your final closing costs may be higher or lower than your GFE, depending on your loan program, terms and the interest rate at which you lock your loan.
So how will you know what you actually have to pay? That's all in your HUD- 1 statement.
The HUD-1 Settlement Statement lists your actual costs and fees due at closing. You will receive your HUD-1 at least one business day before your closing date.
Your HUD-1 lists every fee associated with closing your loan. It also includes a chart you can use to compare certain fees in your Good Faith Estimate with the actual closing costs in your HUD-1.
Your HUD-1 is like a receipt of your mortgage loan transaction. Be sure to check your GFE against your HUD-1 and ask your lender about any discrepancies.
When you close your loan, you will sign your paperwork, pay any required fees and collect the keys to your new home.
The mortgage fees you need to pay at closing will be included in your Good Faith Estimate. These fees, also called settlement or closing costs, include the costs to approve the loan, fees to transfer the property's ownership and state and local taxes.
| Fee | What it's for | Charged by |
|---|---|---|
| Appraisal Fee | Cost to have an independent appraiser determine the property's value. | Third party |
| Attorney fees | Fees to transfer the property's deed to the buyer and pay outstanding taxes, utilities and remaining closing costs. | Attorney |
| Closing fee | This fee it typically paid to the title company or attorney for conducting the closing. | Closing agent or attorney |
| Credit report | Fee your lender charges to pull and review your credit report. | Credit reporting agency |
| Deed recording | County clerk's fee to record the deed, the mortgage and to transfer the property tax billing information to the buyer. | Local Government |
| Discount points | Charge for points purchased to lower an interest rate. | Lender |
| Document preparation fee | Fee to prepare the documents required to close a loan. | Lender or a Title company |
| Flood certification - life of loan | Cost to have your lender track any changes that may occur to your property's flood zone status over the life of your loan. | Third party |
| Flood determination fee | Cost for a flood determination company to tell your lender whether or not your house is located in a flood zone. | Third party |
| Home and pest inspection fee | Cost of inspection to ensure the property is structurally sound and free of termites and other destructive pests. | Third party |
| Homeowner's and hazard insurance fee | Prepayment for 1st year of home insurance, which is required to cover the property if it is damaged or destroyed. | Third party |
| Lender's title insurance | Insurance fee to protect the lender from damage or loss if there is any problem affecting the property's title, such as a lien or claim against it. | Title company |
| Mortgage recording charges | County clerk's fee to record the mortgage and to transfer the property tax billing information to the buyer. | Government |
| Origination Fee | Administrative fees for evaluating, processing and approving a loan. | Lender |
| Owner's title insurance | Insurance to protect you (the policy holder) from damage or loss if there is any problem affecting the property's title, such as a lien or claim against it. | Third party |
| Prepaid interest | Interest you pay on your loan from the day you close to the date of your first scheduled mortgage payment. | Lender |
| Private mortgage insurance (PMI) | A monthly fee you may incur if you make less than a 20% down payment on your loan. PMI protects the lender if you default. | Insurance company |
| Processing fee | Cost to process documents such as application and credit report. | Lender |
| Property taxes | These include school, municipal and/or other taxes required by the government. Taxes can be paid by the lender through funds accumulated in an escrow account or the borrower can pay them directly in full on their due date. | Government |
| State tax/stamps | Tax charged by state or local governments for securing a loan for a property. | Government |
| Survey fee | Covers the cost of a property survey to define the property's size and boundaries. The survey also ensures that there are no easements or encroachments that might affect the legal title. | Third party |
| Tax service fee | Fee paid to your loan servicer to set up and service your escrow account. | Loan servicer |
| Title insurance | Insurance to protect you (the policy holder) from damage or loss if there is any problem affecting the property's title, such as a lien or claim against it. Separate policies are usually issued to the lender and the borrower. | Third Party |
| Transfer taxes | Tax charged when a real estate title is transferred from one owner to another, from the seller to the buyer. Transfer taxes vary by state. | Government |
| Underwriting fee | Fee to have an underwriter, or risk assessor, evaluate your loan application and determine if it is approved. The underwriter reviews your credit report, employment history, financial documents and appraisal. | Lender |