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Know Your Mortgage Terms

Know Your Mortgage

 
  • Where To Find Your Mortgage Information

    First, look at the mortgage documents you received when you signed the paperwork for your mortgage.  If you cannot find your paperwork or don't understand it, contact your loan servicer.  Your loan servicer is responsible for collecting your monthly loan payments and crediting your accountThe loan servicer has all of your mortgage information in its computer system and should be able to answer all your mortgage questions.


  • What Is The Type Of Mortgage

    All mortgages have either a fixed interest rate, an adjustable interest rate or have a balloon payment.  A fixed rate mortgage has an interest rate that stays the same for the life of the loan.  The only change in your payment for a fixed rate mortgage would result from changes in your taxes and insurance if you pay them to the servicer's escrow account.

    An Adjustable Rate Mortgage (ARM) has an interest rate that changes periodically, but usually not more often than once a year.  Your monthly mortgage payment can go up or down
    depending on the interest rate change in the index referred to in your mortgage documents.

    There are also Hybrid Adjustable Rate Mortgages (ARMs) which have a fixed payment for a few years, and then become adjustable loans.  Some are called 2/28 or 3/27 hybrid ARMs where the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate.  Others are 5/1 or 3/1 hybrid ARMs where the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes.  For example, in a 3/1 hybrid ARM the interest rate is fixed for three years, then adjusts every year thereafter.

    A balloon mortgage means that after 7 or 10 years at a fixed interest rate, the entire balance of a balloon mortgage comes due.  With a balloon mortgage, you will need to secure a new mortgage at the end of the fixed term subjecting you not only to changes in interest rates, but also the costs and process of getting that new mortgage.  


  • What Are The Mortgage Terms

    If you have a fixed rate mortgage, you will need to know the length of the loan, usually 15, 20 or 30 years.  If you have an ARM, you will need to know the length of the fixed term, if any, and how often the rate is adjusted.  It is also important to know

    1) when you signed the loan;
    2)
    how much you borrowed;
    3)
    your current interest rate and whether it is a fixed or an adjustable rate;
    4) your monthly payment and whether it includes an amount for your taxes and insurance;
        and
     
    5) the length of the loan.

    Also how soon an ARM will adjust and what the new payment will be may make a big difference on your ultimate decision regarding your house.

 


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This website provides general legal information and not legal advice.  The law is complex and changes frequently. 
Before you apply any general legal information to a particular situation, consult an attorney. 
If you cannot afford an attorney call 1-866-Law-Ohio (1-866-529-6446) or visit OhioLegalServices.org for your closest legal aid office.

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