Frequently Asked Mortgage Questions

Do you have questions? We can help! You will find the answers to several frequently asked mortgage questions below.

What is a mortgage?

A Mortgage (also called a home loan) is a legal contract made between a lender and a borrower that uses property as collateral to secure the loan. The lender can take possession of the property if the borrow fails to pay the prearranged home loan payments.

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What is a mortgage refinance?

This occurs when a borrower uses the money from a refinanced loan to pay off an existing home loan. Borrowers typically do this to extend their home loan period, apply for a lower interest rate or to use some money out of their equity.

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What is the APR (Annual Percentage Rate)?

The APR is the cost of borrowing credit and is expressed as a yearly percentage. Since you might be paying discount points and other prepaid finance costs during closing, the disclosed APR is usually higher than the interest rate on your loan. The APR on a particular loan can be compared with the APR of other similar loan programs and it works as a tool to compare loan options.

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Why does the APR differ from the interest rate?

The APR doesn’t only include the interest rate but other costs like prepaid interest, mortgage insurance as well as other fees. As a result, the APR is usually higher than your interest rate

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What is a fixed rate mortgage?

A fixed rate mortgage is a home loan with steady interest rates and monthly payments that do not change throughout the lift of the loan.

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What is an adjustable rate mortgage?

ARMS have monthly payments that change periodically due to fluctuations in market interest rates

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How do you calculate LTV or loan to value?

The loan to value (LTV) ratio of your home is calculated by dividing the fair market value of your home by the amount of your home loan.

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What is a Good Faith Estimate (GFE)?

A good faith estimate (GFE) is an estimate that outlines the costs you will incur during the mortgage loan. This is provided to you within 3 business days of applying for your mortgage loan.

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What is a Credit Score?

A credit score is an indication of your credit history and assists in measuring your ability to repay a debt in the future.

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Can I become a homebuyer even if I have had some previous issues with my credit and/or do not have much for a down payment?

It is certainly possible - please contact your C&F Loan Officer for a detailed analysis of your particular situation.

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Be sure to visit our Mortgage Glossary