Mortgage FAQ

Q1 - What is private mortgage insurance?

Answer:
PMI is an insurance policy you pay for that protects your mortgage lender from financial loss if you stop making your mortgage payments.
Note: Your PMI policy insures only your lender against loss; it does not make mortgage payments for you if you're injured or unemployed.
Depending on your credit score, your down payment, and several other factors, your lender may require you to have PMI coverage on your mortgage.

Q2 - Can I cancel my PMI? What do I need to do?

Answer:
It may be possible to cancel your PMI policy; but it depends on several factors - including the kind of mortgage you have (conventional, Fannie Mae, Freddie Mac, FHA/VA, etc.), how long you've lived in your home, your payment history, how much equity you have in your home, and several other criteria. Your first step toward cancellation is to submit a written request for your lender to review your loan.

Q3 - I've received a bill for my property taxes. What should I do if my account is impounded?

Answer:
If your loan has an escrow account, you do not need to send the county the bill.
Your tax authority sends lender an electronic version of your bill, and they'll make any required payment on your behalf before the due date.
If your mortgage does not include an escrow account, you'll need to pay your tax bill yourself.

Q4 - What is an "escrow account"?

Answer:
An escrow account is a type of "holding account." As your mortgage servicer, lender collects from you the funds needed to pay your annual property taxes, insurance bills, and (in some cases) homeowner association (HOA) fees when they come due. So as part of your regular mortgage payment, you pay lender a portion of those estimated annual amounts.

 Based on the actual tax and insurance bills lender receives for your property, they analyze your escrow account every year and adjust the amount you need to pay into it
.
But your taxes, insurance rates, and other fees can change, so the amount you need to pay into your escrow account can also change.


Q5 - What is my mortgage payments made up of?

Answer:
Your mortgage payment is made up of several "parts":

Principal - The amount of money you owe on your property.
Interest - The money your lender charges you to borrow the principal.
Escrow - Most mortgage payments also include amounts that the loan servicer holds "in escrow" (called an "escrow account") and pays annually on your behalf. Your escrow account usually includes:
Property taxes - Payable to your county or other local tax authority.
Homeowner's Insurance - Also called "hazard" insurance; payable to your insurance company.
Other fees - Depending on your local and state regualtions, other fees or costs may be included in your escrow account; such as homeowners association (HOA) dues, water/sewer facilities assessment fees, and more.

Q6 - What are my payment options?

Answer:
They are few options that you can check with your lender. Example:

Monthly autodraft - Automatic withdrawal of your payment from your bank account every month is easy to arrange; and with autodraft (sometimes called “ACH”), your payment will never be late.

Biweekly autodraft - If your budget can handle biweekly mortgage payments, you can pay down your principal faster and reduce your interest costs over time. For example, if you borrowed $250,000 for 30 years at 4% interest, making biweekly payments could enable you to pay off your loan in 25 years and could save you nearly $30,000 in interest charges over the life of your loan. And as with monthly autodrafts, your payment will never be late.

Online bill-pay - Like other monthly bills, you can pay your mortgage using an online bill-pay system through your bank or other provider. When you set it up, be sure to correctly specify your payee name and the amount of your payment.

Website - You can make a one-time payment using lender website by clicking on the Payments menu then select the Schedule Payment option or you can schedule a recurring payment by selecting the Schedule Recurring Payment option.

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