1. What is prequalification? The process of determining how much you will be eligible to borrow before a loan is applied for.

2. What is pre-approval? This allows you the ability for a specific loan amount prior to finding the home you want to purchase. The loan is underwritten and the lender commits to a specific loan amount. This can give you an advantage in negotiations.

3. What information is necessary when I apply? You will nee the most current information on your monthly income and debt, a total of your assets, social security number, and employment information. You may need additional information depending on which lender you go to and which program you choose.

4. Is there a cost to apply? This varies from lender to lender. Some charge a fee to cover out-of-pocket expenses. Others only charge for the appraisal and credit report fee.

5. How long will the process take? Loan approval and funding time frames vary depending on the type of transaction and the complexity of your personal finances. On average, it takes anywhere from 14-60 days.

6. What is an escrow account? An account maintained by the lender to collect funds from the borrower in order to pay the taxes and property insurance due on the loan.

7. What is PITI? P-principal, I-interest, T-taxes, I-insurance

8. What is the difference between adjustable and fixed rate mortgages? With a fixed rate, the interest and payment remains constant over the life of the loan. An adjustable rate is what it sounds like. The interest goes up or down based on the terms of the loan. This means the payments can increase in order to have the loan paid in full by maturity.

9. What is a convertible mortgage? This allows you to convert your adjustable rate mortgage to a fixed rate for a flat fee during a specified time frame.

10. What is a balloon mortgage? A loan with a fixed rate payment for the first five to seven years of the loan, then a lump sum payment is due on the balance at a specified time.

11. What is a conventional loan? A mortgage not guaranteed by VA or insured by FHA, FMHA, or State Bond Agencies.

12. What is PMI? This stands for Private Mortgage Insurance. On a conventional loan PMI is required if you borrow over 79.99% of your appraised value.

13. What is mortgage life insurance? This insurance would pay the balance owed on your mortgage in the event of your death during the term of the mortgage.

14. What is hazard insurance? This represents the insurance that protects your investment in your home.

15. What are points? Points represent an origination fee charged by the lender and loan discount points sometimes charged on the note to lower the interest rate.

16. What are closing costs? They are the fees and costs that both the buyer and seller must pay at close. They generally run about 3-5% of your loan amount, not including the down-payment.