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Mortgage Basics


The annual percentage rate is the total cost of loan to the borrower. It includes the interest rate of the loan as well as other fees that come with lending


An appraisal is performed by a professional appraiser. They will determine whether the home's sale value accurately and fairly reflects the market value of the home.

Closing Costs

Your closing costs are the additional costs that are due before you close on your home. These closing costs are not part of your down payment. They can include- appraisal fees, title fees, property tax, attorney fees, PMI fees, among additional fees.

Credit report

A credit report is important for a lender when determining if they should lend money and how much they should lend to someone. The report consists of documents such as your bank statements, individual debts and other information the lender may need.

Down payment

The down payment is the amount that you pay towards the purchase price of your home.


The financial index for an Adjustable rate mortgage is set forth by the lender. The measurement of the index will determine the APR for that upcoming adjustment period. Your “adjusted” interest rate will be impacted by the measurement of the index.

Interest rate

An interest rate is a percentage that expresses the annual cost of the loan for which the borrower is paying.

Loan-to-Value Ratio (LTV)

Prior to getting approved, the lender will assess the risk of the loan. The LTV ratio is expressed in a percentage by dividing the mortgage amount borrowed by the appraised value of the home.


A mortgage in simple terms is a type of loan that a borrower is lended to buy their home or refinance when they do not have the full amount upfront.

Mortgage term

The term of a mortgage is determined by the amount of years it will take to pay off the loan. The term helps breakdown the payments and important details such as the interest to be paid over the life of the loan.

Private mortgage insurance (PMI)

You may be required to pay for PMI. Private mortgage insurance (PMI) protects the lender if there are any defaults in the loan. For example, if you fail to pay your monthly payments. The lender will disclose whether a PMI will be required.

Rate Cap

A rate cap on an adjustable rate mortgage protects you from any sudden shifts in the market. It prevents your interest rate from exceeding the allowed interest rate adjustment or increase.

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