San
Diego HomeMortgage Frequently Asked
Questions (FAQ)
Page 2
Q:
Can I pay my own taxes and insurance?
A:
When a loan is originated,
the mortgage documents specify the escrow conditions.
This has become a standard practice for all mortgages,
including FHA, VA and conventional mortgages.
Occasionally on conventional loans, FRFCU waives the
collection of escrow requirement at closing if the member
has a minimum 20% equity position in the property.
Q:
What do I do if I receive a tax statement?
A:
Many tax authorities will
mail an informational copy of the real estate tax statement
to the homeowner in addition to the Credit Union. However,
there are some statements tax authorities do not forward
to the credit union, and in special cases we will need
your assistance in obtaining the bill. If you receive
a statement for any of the following, please forward
it to our office by mail or fax.
delinquent real estate taxes
supplemental or additional real
estate taxes
special assessments
if the tax authority will not
honor a bill request from another party.
Q:
Why did my mortgage payment amount change?
A:
There may be several reasons. Some mortgages,
such as ARM loans, provide for periodic adjustments
to your principal and interest payment amount. A second
reason for a change may be due to an annual analysis
of your escrow account. In compliance with the Real
Estate Settlement Procedures Act (RESPA), you will receive
an Annual Escrow Disclosure Statement, which shows the
adjustment to your escrow payment based on current tax
and insurance amounts.
Q:
What is an ARM loan?
A:
An ARM loan is an Adjustable Rate Mortgage.
The interest rate on an ARM loan is adjusted periodically
based on the terms of the mortgage documents. The interest
rate is typically based on a common index published
periodically, adjusted by a margin. The margin is an
amount charged in addition to the index and typically
does not change over the life of the loan.
Q:
What benefits do I receive from private mortgage insurance?
A:
Prior to the existence of
private mortgage insurance, individuals typically could
not purchase a home unless they had a down payment of
at least 20% of the purchase price. Private mortgage
insurance benefits the mortgage lender directly by reducing
the costs associated with borrower default. It also
benefits consumers by lowering down payments, thereby
allowing more people to achieve home ownership.
Q:
How is interest calculated on a mortgage loan?
A:
Most mortgages originated
today calculate interest in arrears, unlike consumer
loans which calculate interest to the date of payment
receipt. As an example, when borrowers pay their February
mortgage payments, they are paying the January interest.
This method of calculating interest is based on a 360
day year in which each month has 30 days.
Q:
Why does the title have to be cleared before I can get a
mortgage?
A:
When a lender makes a mortgage
loan (other than a home equity loan), the lender typically
requires a first lien position. This means there can
be no other outstanding liens against the property that
are superior to the new mortgage. Liens can result from
a variety of sources, such as home equity loans or lines
of credit, child support judgments, divorce settlements,
delinquent taxes, and special assessments. Most realtors,
mortgage companies, title companies, and escrow companies
will assist the seller and/or borrower in clearing title.
The ultimate responsibility, however, lies with the
sellers of the property who are warranting clear title
to the buyers. It is important the buyers receive clear
title from the sellers so there are no future claims
against their property ownership rights.
