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Talking about your mortgage: Escrow (or reserve) funds
Some lenders require that you set aside money in an escrow (reserve) account
to pay for property taxes, homeowner’s insurance, and flood insurance (if you
need it). Lenders use escrow funds to ensure that these items are paid on time
to protect their interest in your home. With an escrow account, money is held
by the lender or the lender’s agent, who then pays the taxes and insurance bills
when they are due. At settlement, you may need to provide some payment into
this account, depending on when payments will be due. For example, if you are
buying your home in August and property taxes are due the following January,
you will need to deposit funds into your escrow account at settlement so that
you have enough to pay the taxes when they become due in January.
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Talking about your mortgage: Loan origination fee
The origination fee (also called underwriting fee, administrative fee, or processing
fee) is charged for the lender’s work in evaluating and preparing your mortgage
loan. This fee can cover the lender’s attorney’s fees, document preparation
costs, notary fees, and so forth.
Estimated cost: 1% to 1.5% of the loan amount
Mortgage
Terms Defined:Adjustable-rate loans, also known as variable-rate
loans, usually offer a lower initial interest rate than fixed-rate loans. The
interest rate fluctuates over the life of the loan based on market conditions,
but the loan agreement generally sets maximum and minimum rates. When interest
rates rise, generally so do your loan payments; and when interest rates fall,
your monthly payments may be lowered
Refinance.net is committed
to helping consumers find great
rates and information on mortgage refinancing
loans. We are not a loan originator,
agent, broker or carrier. We simply
provide relevant information and a
more convenient method for consumers
to request refinancing quotes from
licensed professionals near their
homes.