Mr. Mortgage Online! FAQ

FAQ, frequently asked questions, what, where, how, arm, adjustable rate, mortgage, mortgage lenders, second mortgage, mortgage lenders, lender, mortgage loan rates, mortgage credit, mortgage refinancing, home purchase,
home buying, buying a home, lowest mortgage rates

What is a Mortgage? A Mortgage is a loan secured by real property through the use of a legal instrument called a "Mortgage." Simply put, it's a loan for the purchase of real estate with a specified payment term and interest rate. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.

Where Do I Get a Mortgage? There are a number of sources for mortgages. The most obvious sources are banks and mortgage companies, many of which advertise their loan programs heavily via various media outlets. But if your credit history is shaky, you may have trouble getting approved for a mortgage through these conventional venues.

What is an ARM? A.R.M. or "ARM" is an acronym for Adjustable Rate Mortgage. An adjustable rate mortgage is just what it sounds like. The interest rate is adjustable. An ARM typically begins with a low fixed rate for a short time, usually 2, 3, or 5 years. It then adjusts according to the terms of the mortgage, which can vary greatly from lender to lender. An ARM is a great option for short term borrowers; folks who only plan to occupy their homes for a few years or folks who can, and do, refinance before the adjustable rate kicks in. An ARM is not a good option for long term borrowers.

How about a Second Mortgage? A Second Mortgage is a mortgage given on real estate that has already been pledged as collateral for an earlier mortgage. Second Mortgages carry rights which are subordinate to those of the First Mortgage and generally have higher interest rates. The higher rates are due to the lender's added risk of being in second lien position, and the higher total LTV or Loan to Value on the property.

Loan to Value? What's that? For example, if a $100,000 property has a $90,000 first mortgage, that's 90% LTV, meaning 90% of the value of the property is borrowed, which in turn means the borrowers only have a 10% ownership stake in the property. Some lenders allow borrowers to borrow up to 100% of the value of the property, but most conventional lenders top out at between 80% and 90% LTV.