Mortgage FAQs
Plain-language answers to common questions about mortgage costs, rates, qualification and repayment.
What determines a mortgage payment?
Principal, interest rate and loan term determine principal-and-interest payments. Taxes, insurance, mortgage insurance and association fees can increase total housing cost.
What is mortgage principal?
Principal is the amount borrowed or the remaining loan balance before future interest.
What is amortization?
Amortization is the scheduled reduction of a loan balance through periodic payments. See the Amortization Calculator.
What is the difference between APR and interest rate?
The interest rate applies to borrowed principal. APR is a broader annualized borrowing-cost measure that can include certain finance charges. Read the guide.
What is a fixed-rate mortgage?
Its interest rate remains fixed according to the loan terms, making principal-and-interest payments more predictable.
What is an adjustable-rate mortgage?
An ARM can change its rate after an initial period according to the loan agreement and an applicable index or formula.
How much down payment is needed?
Requirements vary by loan program, lender, property and borrower. Use the Down Payment Calculator to explore scenarios.
What is mortgage preapproval?
It is a preliminary lender assessment based on information reviewed at that stage; it is not necessarily final loan approval. Mortgage Preapproval Guide.
What are closing costs?
They are expenses associated with completing a property transaction or mortgage and can include lender, title, appraisal, government and other charges.
What is refinancing?
Refinancing replaces an existing loan with a new one, often to change rate, term, payment structure or other conditions.
Does paying extra reduce mortgage interest?
When permitted and applied to principal, extra payments can reduce the outstanding balance sooner and may reduce future interest.
What is loan-to-value ratio?
LTV compares a loan amount with the property's value or another specified valuation measure.
General education only. Mortgage products and qualification rules vary by lender and jurisdiction.