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| 1. |
What is an ARM? Answer |
| 2. |
What does amortization mean? Answer |
| 3. |
What is a balloon mortgage? Answer |
| 4. |
What is a Truth-In-Lending Disclosure and why do I receive it? Answer |
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What is an ARM? |
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A
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The term ARM stands for Adjustable-Rate Mortgage. This is a mortgage that the rate adjusts periodically throughout the mortgage at specified times, as stated on the note. The adjustment is usually tied to an index, such as, the one year T-Bill plus a margin, commonly between 2.75% and 3.00%. |
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What does amortization mean? |
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Amortization is the repayment of a mortgage loan by regular installment payments to cover the principal and interest. Furthermore, amortization term is the reference to the length of the repayment. Commonly, terms will be 30 years, 20 years, and 15 years for most loans. |
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What is a balloon mortgage? |
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A balloon mortgage is a loan where level payments are made for a certain period, amortized for a longer period, and then a lump sum (the remaining balance) is due at the earlier specified term. |
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What is a Truth-In-Lending Disclosure and why do I receive it? |
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The Truth-In-Lending Disclosure (also called Reg. Z) is intended to give you a measure of the total costs of your loan. It is a required government disclosure. It is intended help you compare different loan programs and/or lenders; however, different lenders and programs can make different assumptions in calculating this disclosure; therefore, it is not necessarily the best tool to make desicions about a loan. We feel a better way is to simply breakdown a) what is the rate? b) what are the specific terms of repayment? and c) what are the real closing costs to get the loan? To be clear, the Truth-In-Lending Disclosure is a good form in theory to help consumers with their decision making; however, we recommend you measure your decision based on all the information possible to optimize your benefits. |
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