costs of property taxes and insurance, and how the interest rate and payments may change in the future. It explains which charges can change before settlement (closing) and which charges must remain the same. Loan Modification Modifications may involve extending the number of years you have to repay the loan, reducing your interest rate, and/or forbearing or reducing your principal balance. If you are offered a loan modification, be sure you know how it will change your monthly payments and the total amount that you will owe in the short-term and the long-term. Loan-to-Value ratio The loan-to-Value (LTV) ratio is a measure comparing the amount of your mortgage with the appraised value of the property. The higher your down payment, the lower your LTV ratio. Mortgage lenders may use the LTV in deciding whether to lend to you and to determine if they will require you to acquire private mortgage insurance. Low Down Payment Loan Programs There are instruments which allow for zero down payment such as USDA and VA. Fannie Mae's Home Ready Program, Conventional 97, Freddie Mac's Home Possible, and Home One require as little as 3%. The FHA requires 3.5%. Margin The margin is the number of percentage points added to the index by the mortgage lender to set your interest rate on an adjustable-rate mortgage (ARM) after the initial rate period ends. The margin is set in your loan agreement and is fixed for the life of the loan. The margin amount depends on the particular lender and loan.
Mortgage closing costs
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