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Straight answers, without the sales pitch.
Most mortgage confusion comes from a handful of terms that nobody explains properly. Here they are, in plain language — including the parts that cost you money.
Mortgage questions, answered
What is the difference between the interest rate and the APR?
The interest rate determines your principal-and-interest payment. The APR expresses that rate together with the finance charges — discount points, the lender fee and prepaid interest — as a single yearly percentage, so two offers with different fee structures can be compared honestly. APR is normally higher than the note rate. A quote showing a low rate and a much higher APR is telling you the fees are large.
What are discount points, and should I buy them?
A discount point is a fee you pay at closing to lower your interest rate, typically costing one percent of the loan amount. Whether it is worth it comes down to how long you keep the loan: divide the cost of the points by the monthly saving to get the number of months to break even. Staying well past that point makes it worthwhile; moving or refinancing before it does not.
What is a rate lock, and when should I lock?
A rate lock is a lender commitment to hold your rate for a set number of days while your loan is processed, protecting you if pricing rises. Locking usually makes sense once you are under contract with a closing date in view. Longer locks cost more, which matters on new construction where closing may be months away.
What is private mortgage insurance and when does it go away?
Private mortgage insurance protects the lender, not you, and is required on conventional loans with less than 20 percent down. You can request removal once the balance reaches 80 percent of the original value, and it terminates automatically at 78 percent if payments are current. FHA mortgage insurance is different — on most current FHA loans it lasts the life of the loan, and the usual way out is refinancing to conventional.
How much house can I afford?
Lenders look at your debt-to-income ratio — your total monthly debt payments, including the new mortgage, against your gross monthly income. What most calculators miss is that property taxes, homeowners insurance and HOA dues all count toward that payment. In parts of the Triangle, HOA dues alone can move your qualifying number meaningfully.
Does shopping for a mortgage hurt my credit score?
Barely, and far less than most people fear. Scoring models treat multiple mortgage inquiries within a short shopping window as a single inquiry, precisely so that comparing lenders is not penalised. Our rate calculator does not pull credit at all — you select a score range yourself.
What does a mortgage broker do that a bank does not?
A bank offers its own products. A broker shops your loan across wholesale lenders and brings you what they offer, which matters most when your situation is not textbook — self-employment, a condo project with review issues, a thinner credit file, or a jumbo loan where guidelines vary widely between lenders.
How long does it take to close on a house in North Carolina?
Typically around 30 to 45 days from accepted offer to closing, though it varies with the loan program, the appraisal schedule and how quickly documentation comes back. The single biggest thing you control is responding promptly to document requests — files stall on paperwork far more often than on underwriting.
Guides
One question each, answered properly — with the trade-offs and the sources, not just the reassuring half.
How much house can I afford?
Lenders decide what you can borrow using your debt-to-income ratio: your total monthly debt payments, including the new mortgage, divided by your gross monthly income.
Read →Pre-qualification vs pre-approval: what is the difference?
A pre-qualification is an estimate based on information you state about yourself, with nothing verified.
Read →What credit score do I need to buy a house?
FHA loans allow a credit score as low as 580 with a 3.5% down payment, and conventional loans generally start in the low-to-mid 600s.
Read →Are discount points worth buying?
A discount point is money paid at closing to lower your interest rate, typically costing one percent of the loan amount per point.
Read →Interest rate vs APR: what is the difference?
The interest rate determines your monthly principal-and-interest payment.
Read →What are closing costs in North Carolina?
Closing costs are the fees paid to complete a home purchase, covering lender charges, third-party services like the appraisal and title work, government recording fees, and prepaid items such as the first year of insurance.
Read →How do I get rid of PMI?
On a conventional loan you can request that private mortgage insurance be cancelled once your balance reaches 80% of the original property value, and it must terminate automatically at 78% provided your payments are current.
Read →Stop reading, start comparing
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