Mortgage Topics

Mortgage Topics

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
By , Trusted Mortgage Expert with 45+ Years of Experience
Edited by Michael Jensen

Review detailed information on key mortgage topics including important borrower issues, mortgage fundamentals, lender costs and mortgage regulations.  Understanding these topics makes you a more educated borrower and empowers you to make more informed decisions when you shop for a mortgage.  Each topic provides in-depth explanations and examples to help you better understand how to select the lender and loan that best meet your financing goals.  Click on any of the topics below to review comprehensive information and expand your mortgage knowledge.

Borrower Topics
Mortgage TopicsShould You Rent or Buy a Home?

Understand if you should rent or buy a home based on your personal and financial goals.  Determine if the control, certainty and financial upside of owning a home outweigh the flexibility and lower cost of renting.  Review an informative chart that outlines the pros and cons of renting and buying a home including the benefits and risks of both options.

Mortgage TopicsFinancial Comparison of Renting vs Buying a Home

Review a detailed financial comparison of renting versus buying a home over ten years to determine the option that is right for you.  Learn how your rent payment compares to your mortgage payment plus property tax and insurance on a monthly and annual basis and how this changes over time.  Understand how the mortgage tax deduction impacts your decision to rent or buy a home. 

Mortgage TopicsDifference Between Gross and Net Income for Mortgage Borrowers

Learn the difference between gross income and net income when you apply for a mortgage.  Lenders use your monthly gross income, or your income before any deductions for taxes, social security, medicare and retirement account contributions, to determine the mortgage you qualify for.  Understand how lenders verify income and review a chart that shows the items deducted from your gross income to calculate net income.

Mortgage TopicsHow to Get a Mortgage with Student Loans

Review a detailed explanation of how to get a mortgage with student loans including how student loans affect your ability to qualify.  Learn how student loans that are being deferred or in forbearance are treated when you apply for a mortgage.  Understand how income-based repayment plan payments are included in your debt-to-income ratio.

Mortgage TopicsQuestions Borrowers Should Ask Lenders Before Getting a Mortgage

Know the questions you should ask mortgage lenders to find the lender and loan that are right for you. Learn the questions that enable you to determine the lender that is offering the best mortgage terms and to make sure the lender is qualified and experienced.

Mortgage TopicsHow the Mortgage Underwriting Process Works

Learn how mortgage underwriting works including the role the underwriter plays in approving or rejecting your application. Understand the items in your loan application that the underwriter focuses on, how long the underwriting process takes and how to address conditions to close or prior to document requirements.  

Mortgage TopicsWhat is Manual Underwriting for a Mortgage and When is it Required?

Learn what manual underwriting is, when it is required and how manual underwriting can help borrowers with imperfect applications qualify for a mortgage.  Understand the difference between automated and manual underwriting and what it means for mortgage applicants.

Mortgage TopicsWhy You Should Get a Home Inspection Report When You Buy a Home

Learn why you should get a home inspection report when you buy a home. Learn how to find qualified home inspectors and how the inspection report can affect the mortgage process. A home inspection report can save you money and time and help you avoid unfortunate surprises.  The report can also impact the mortgage review and underwriting process and you may need to address items outlined in the report to get final loan approval.

Mortgage TopicsHow to Select a Real Estate Agent

Review helpful pointers for how to select a real estate agent when you buy a home.  Selecting the right real estate agent can help you save money and avoid pitfalls. Learn the steps you can take to find the agent that is right for you including interviewing multiple agents, requesting client references and reviewing their transaction history.

Mortgage Fundamentals
Mortgage TopicsHow the APR for a Mortgage Works

Learn how the Annual Percentage Rate (APR) for a mortgage works and how to use the APR to find the best loan terms, including the lowest combination of interest rate and closing costs.  Understand the inputs that determine the APR and understand the relationship between the APR and your mortgage rate.  Review a detailed explanation and example of an APR and understand how to use the APR to compare lender proposals.

Mortgage TopicsThe Difference Between Conventional and Non-Conventional Mortgages

Learn the differences between conventional and non-conventional mortgages and how these differences impact borrowers and the mortgage programs you are eligible for.  Review examples of both conventional and non-conventional loan programs and understand how interest rates, fees, qualification guidelines and mortgage insurance differ between the two.

Mortgage TopicsConforming Loan Limits

Understand what the conforming loan limit is and how it impacts your loan terms, mortgage amount and loan program eligibility.  Learn who determines the conforming loan limits and how often they are updated.  Review the difference between the general and high cost area loan limits.  Conforming loan limits vary by county and number of units in a property.

Mortgage TopicsMortgage Loan-to-Value (LTV) Ratio

Understand how the loan-to-value (LTV) ratio for a mortgage is calculated and how your LTV ratio is impacted by your mortgage amount, property value and down payment.  Learn how lenders use the LTV ratio to determine your maximum mortgage amount and eligibility for certain loan programs. Review a helpful example of the LTV ratio for a mortgage.

Mortgage TopicsReserve Requirement for a Mortgage

Understand mortgage reserve requirements and how the requirement varies depending on credit score, LTV ratio, loan program, mortgage amount and property type. Learn how lenders determine the amount of reserves you are required to hold as savings when your loan closes and what funds can be used for reserves.

Mortgage TopicsHow Mortgage Amortization Works

Learn how mortgage amortization works and how the split between principal and interest changes even though your monthly payment remains the same.  Understand how you pay mostly interest at the beginning of your loan and mostly principal at the end and how your mortgage gets paid off over time.  Review a helpful example of mortgage amortization.

Mortgage TopicsHow the Mortgage Tax Deduction Works

Understand how the mortgage tax deduction works including the maximum loan amount eligible for the deduction and how home equity loan interest is treated. Learn how much of your state, local and property taxes are deductible and how the mortgage tax deduction benefit changes over the course of your loan as your interest expense declines.  Review how your property value, mortgage amount, interest rate and federal tax bracket affect your deduction.

Mortgage TopicsWaiting Periods After Credit Issues Before You Can Apply for a Mortgage

Review the waiting periods before you can apply for a mortgage after negative credit events such as a bankruptcy, foreclosure, short sale or default.  Learn how the waiting periods vary by loan program and are shorter if you experienced extenuating circumstances such as a job loss, illness or divorce.

Mortgage Documents and Regulations
Mortgage TopicsTRID Mortgage Rule Overview

Understand the TILA / RESPA Integrated Disclosure (TRID) Mortgage Rule guidelines and how TRID regulates the mortgage process and impacts borrowers. Learn the loan documents that lenders are required to provide according to TRID and how they are designed to make the mortgage process more transparent, reduce fraud and empower borrowers to hold lenders accountable.

Mortgage TopicsQualified Mortgage (QM) Overview

Understand what a Qualified Mortgage is and the guidelines a loan must meet to be classified as a Qualified Mortgage. Requirements include a maximum debt-to-income ratio, a loan term less than or equal to 30 years, no negative amortization, no balloon payment, no interest only period and a cap on lender fees.  Additionally, to meet the Qualified Mortgage guidelines the lender must confirm that the borrower has the ability to repay the loan.

Mortgage TopicsMortgage Loan Estimate (LE) Breakdown

Review a page-by-page mortgage Loan Estimate breakdown including explanations of all cost items outlined in the document.  Understand key loan terms, closing costs details and other important information such as APR and total interest percentage. Determine the mortgage services you can and cannot shop for so you understand the fee items that are negotiable.

Mortgage TopicsLender Fees Worksheet Overview

The Lenders Fees Worksheet provides a breakdown of the costs and fees required to obtain a mortgage. The worksheet provides more detailed information on cost items than other mortgage documents. Learn how to request the Lender Fees Worksheet and use it to negotiate lower mortgage closing costs.

Mortgage TopicsLoan Documents for a Mortgage

Review a summary and example of the key mortgage loan documents borrowers review and sign before their mortgage funds and closes. Understand the purpose of each loan document including a Grant Deed, Deed of Trust, Mortgage Note, First Payment Letter and other documents.

Mortgage TopicsOffer to Purchase a Home

Review a summary of the Offer to Purchase for a home. Understand the information contained in an Offer to Purchase and why the document is important to both the property seller and buyer. Learn how to make your Offer to Purchase stronger and how it impacts the mortgage process.

Past Mortgage Documents and Regulations
Mortgage TopicsRESPA Mortgage Law Overview

Review an overview of the Real Estate Settlement Procedures Act of 1974, also known as RESPA, the law that regulated the mortgage process until 2015. Understand the mortgage disclosure documents that lenders were required to provide and the guidelines they were required to follow under RESPA.

Mortgage TopicsGood Faith Estimate Overview

Review a summary of the Good Faith Estimate, which outlines key mortgage terms including interest rate and closing costs. The Good Faith Estimate is no longer used by lenders and was replaced by the Loan Estimate in 2015.

Mortgage TopicsGood Faith Estimate Cost Items

Review a detailed breakdown and explanation of the key cost items on the Good Faith Estimate including closing costs, origination charges and fees for other settlement services. The Good Faith Estimate is not used by lenders anymore.

Mortgage TopicsHUD-1 Statement Overview

Review an overview of a HUD-1 statement for a mortgage which outlines the final terms and costs of your mortgage, including interest rate, points and one-time fees.  The HUD-1 document was replaced by the Closing Disclosure and is no longer used by lenders .

Mortgage TopicsTruth-in-Lending Statement Overview

Review an overview and explanation of the Truth-in-Lending Statement, which outlines detailed information about mortgage costs and terms including the ARP, finance charge and loan features.  According to TRID regulations implemented in 2015, the Truth-in-Lending Statement is no longer used by lenders.

Mortgage Costs
Mortgage TopicsMortgage Closing Costs

Review of mortgage closing costs including a detailed list of estimated costs items.  Understand the factors that determine your closing costs and review advice for lowering your costs.

Mortgage TopicsMortgage Closing Cost Example

Review a detailed example of mortgage closing costs including the numerous recurring and non-recurring costs, fees and charges a borrower pays. Understand the total funds required to buy a home including closing costs and your down payment.  Learn what factors influence mortgage closing costs and how recurring closing costs are calculated depending on when your loan closes.

Mortgage TopicsHow Much Are Mortgage Lender Costs?

Review a detailed list of the mortgage lender costs, fees and charges you may be required to pay including origination, administration and processing fees.  Understand how different lenders use different terminology for fees.  Learn how lender costs vary depending on type of lender, loan program, location and other factors. Understand how to identify and negotiate lower lender costs.

Mortgage TopicsWhat is PMI and Do I Need to Pay It?

Learn what PMI, or private mortgage insurance, is and when you are required to pay PMI. Understand how much PMI costs, the difference between borrower paid and lender paid PMI and how to request to have PMI removed. Learn how PMI protects lenders but not borrowers if you default on your loan.  Review current PMI rates and understand how PMI varies based on LTV ratio, loan term, credit score and mortgage program.  

Lender Topics
Mortgage TopicsWhat Are Mortgage Lender Overlays?

Understand what a mortgage lender overlay is an how overlays impact your ability to qualify for a loan. Review examples of lender overlays and learn how lenders apply them to manage their risk. Know how to determine if lender overlays apply to you and how they typically impact your mortgage terms.

Mortgage TopicsWhat is a Loan Level Price Adjustment?

Learn how loan level price adjustments for a mortgage work and how they impact mortgage rate pricing and closing costs. Understand who pays for loan level price adjustments and how your credit score, LTV ratio, property type and property occupancy affect mortgage pricing. Review a detailed loan level price adjustment table.

Mortgage TopicsWhat is a Yield Spread Premium?

Learn what a yield spread premium for a mortgage is and how it affects your interest rate and lender costs. Review a yield spread premium example and how it applies to mortgage brokers. Understand what borrowers should know about a yield spread premium and how it changed after the mortgage crisis.

About the author
Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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