A rebate is a credit paid to the borrower by the lender for taking an interest rate higher than the zero point interest rate. The lender hopes to recapture the rebate paid by collecting the higher interest rate over the life of the loan. Rebates can be used to offset non-recurring closing costs, including the guaranteed lender fee and all third party fees, as shown on the good faith estimate.

A conforming loan is one that is less than the maximum loan amounts set by Fannie Mae and Freddie Mac. The loan amounts are revised each year to reflect the change in the national average cost of a home. The current conforming loan amount limits are:

SFR/Condo: $417,000 ($625,500 in Alaska & Hawaii)

2-Unit Property $533,850 ($800,775 in Alaska & Hawaii)

3-Unit Property $645,300 ($967,950 in Alaska & Hawaii)

4-Unit Property $801,950 ($1,202,925 in Alaska & Hawaii)

A super conforming loan is a new loan category that was created by the American Recovery and Reinvestment Act of 2009. The new limits are temporary and vary by state and county. They run as high as $729,750 for one-unit homes. To determine whether your loan request qualifies for super conforming pricing, please perform an Instant Rate Search on our website.

Jumbo loans are loans which exceed conforming and super conforming limits.

An adjustable rate mortgage, or an "ARM", is a loan type that offers a lower initial interest rate than most fixed rate loans. Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future. For some people, an ARM may be the right mortgage choice, particularly if if you only plan on being in the home for less than three, five, seven or ten years.

Here's some detailed information explaining how ARM's work.

Adjustment Period: The interest rate and monthly payment are fixed for an initial time period, generally three, five, seven or ten years. After the initial fixed period, the interest rate can change every year.

Index: ARM interest rate changes are tied to changes in an index rate. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment. The current value of the indexes used on our ARM programs are published weekly in the Wall Street Journal and shown on our website. If the index rate moves up so does your mortgage interest rate, and you will probably have to make a higher monthly payment. On the other hand, if the index rate goes down your monthly payment may decrease.

Margin: To determine the interest rate on an ARM, a pre-disclosed amount , called the "margin", is added to the index. When shopping mortgages, comparing one lender's margin to another's can be as important as comparing the initial interest rate, since it will be used to calculate the interest rate you will pay in the future.

Interest-Rate Caps: An interest-rate cap places a limit on the amount your interest rate can increase or decrease at each adjustment. ARMs have three types of caps: initial cap, which limits the interest rate increase or decrease at the first adjustment; periodic cap, which limits the interest rate increases or decreases at all following adjustments; and lifetime caps, which limit the interest rate increase over the life of the loan.

Please see "Program Descriptions" under the "Loan Programs" tab for information on our ARM programs.

A subordination agreement is a document prepared by a second mortgage lender agreeing to remain in second position when a first mortgage is refinanced. Without such an agreement, the second mortgage holder would move into a first lien position when the existing first mortgage was paid off. The second mortgage lender usually charges a fee to process the subordination agreement, which is incurred by the borrower. Additionally, this process often increases the amount of time necessary to process a first mortgage refinance transaction, so an applicant wishing to subordinate a second mortgage may want to take down a 45 day lock to ensure sufficient time to obtain the subordination agreement.

On refinance transactions, Federal law mandates that you have three days, after signing your loan documents, in which to cancel your loan. This three day period includes Saturdays, but excludes Sundays and holidays. Your loan will not be funded until this period has expired.

The function of title insurance is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer/homeowner are fully protected.

Title companies issue two types of title policies: (1) Owner's Policy which covers the homebuyer/homeowner; and (2) Lender's Policy which covers the lending institution over the life of the loan. If the loan is for a home purchase, both types of policies are issued at the time of closing for a one-time premium. If the loan is a refinance, you already have an owner's policy that was issued when you purchased the property, so only a lender's policy will be issued.

After a thorough examination of the records, any title problems are usually found and can be cleared up prior to your purchase of the property. Once a title policy is issued, if any claim covered under your policy is ever filed against your property, the title company will pay the legal fees involved in the defense of your rights. They are also responsible to cover losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.

Prepaid interest is paid at the time of closing of your loan to cover the interest that will accrue on your new loan for the remaining days of the month in which it is funded. You will make no payments in the month immediately following the month in which your loan funds. You will then begin making payments on the first of each month for the prior month's interest.

The note rate is used to calculate your interest payment each month. The APR (Annual Percentage Rate) is a calculation based on standardized federal regulations. In addition to the interest rate, it factors in other finance charges such as certain loan fees, to show the total cost of the financing over the scheduled life of the loan. The APR is designed to help borrowers fairly compare different lenders and loan options. Please note that the loan amount will influence the APR calculation, with higher loan amounts reporting lower APR calculations. To get a true comparison, the same loan amount must be used. Lenders like AimLoan.com allow you to input your loan amount into their websites which generally calculates an accurate APR. Beware of lenders that just display a rate chart on their website; these websites are reporting an APR for a set loan amount and your APR will be different.