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How It Works FAQs
Your rate is based on today's mortgage rates and current housing market. To get you a personalized, up-to-date rate, we also factor in your credit score, property location, property type, loan amount, loan type, term, and loan-to-value (LTV) ratio. The LTV ratio is the percentage of your current principal loan balance (based on your down payment, if purchasing) compared to your home’s original value.
The interest rate is the rate of interest charged on a home loan and can be fixed or variable, depending on which loan you choose.
The APR is a measure of the cost to you for borrowing money. The APR includes your interest rate, points, fees, and other charges associated with your loan – that's why it’s usually higher than your interest rate.
This shows you how long it’ll take to pay off your mortgage, how much of your payment goes to the principal, interest, and escrow each month, and how much you’ll pay in interest altogether. The main benefit of checking out your amortization schedule is that it gives you a fairly precise idea of your mortgage’s total cost.
Your rate designates the amount of interest you'll pay over the course of your loan. Your amortization schedule will tell you the amount of interest versus principal you'll pay year over year.
This is when we guarantee a certain interest rate, at a certain price, for a specific amount of time. This provides peace of mind if rates rise during the loan application process.
It makes the most sense to try and lock in your rate once you sign a purchase agreement. This is typically 30-60 days prior to closing.
This is when you pay less upfront and, in exchange, receive money from your lender at closing to help you cover costs and fees. This, in turn, makes the interest rate on your loan higher.
For example, if you are considering a $200,000 loan amount and see one interest rate has a 0.250 credit, that would be $200,000 multiplied by 0.0025, equaling a $500 reduction in your closing costs.
Also known as discount points, points are upfront fees calculated as a percentage of your total loan amount and paid directly to the lender at closing in exchange for a reduced interest rate. You have the option to choose the number of points and how many you buy when discussing rate options with your home loan expert.
For example, if you are considering a $200,000 loan amount and see one interest rate costs 0.500 points, that would be $200,000 multiplied by 0.005, equaling $1,000 added to your closing costs.