Mortage FAQ's
- Do I get a tax advantage from having a mortgage?
- What are rates, terms, and APR?
- How do I know what my loan rate will be?
- What are points and how many do I have to pay?
- How do I qualify for a loan?
Do I get a tax advantage from having a mortgage?
You should consult a tax attorney or accountant for specific details, but interest on a mortgage is usually tax deductible. Interest on credit cards or automobile loans is not normally tax deductible.
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What are rates, terms, and APR?
All mortgages have an interest rate, a term, and an Annual Percentage Rate (APR). For example, a mortgage might be defined as a 30-Year Fixed Rate Loan at 7.625%, with an APR of 7.800%.
In this example, the mortgage term is 30 years. As the borrower, you will pay back the loan in installments over the course of 30 years.
The interest rate in this example is 7.625%. This means you must pay interest on the money you've borrowed at a rate of 7.625% per year. That is, in addition to paying back the loan, you will pay your lender an additional 7.625% of the current loan balance every year. This interest is basically the fee your lender charges you in return for lending you the money.
The Annual Percentage Rate (APR) is a measure of the cost of credit, expressed as a yearly rate. Because APR includes points and other costs such as origination fees, it's usually higher than the advertised rate. The APR allows you to compare different mortgages based on actual annual costs.
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How do I know what my loan rate will be?
Rates vary primarily based on the type and purpose of the loan, your credit history and income, loan amount, value of the property, and the number of points you are willing to pay.
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What are points and how many do I have to pay?
Generally speaking, points are fees added on to loans. One point is equal to 1% of your loan amount. Points are paid when the loan closes, not at the time you apply for the loan.
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How do I qualify for a loan?
Lenders use specific criteria to determine if you qualify for a loan, and the amount you can qualify for. You can use our Calculators area to determine whether you can qualify for a loan, the types of loan products that are best for you, and many other things. ditech.com allows you to apply and get pre-approved right here online - it's fast, easy, and free (ditech.com charges no application fee).
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