Frequently Asked Questions (FAQs)

Fixed-rate and adjustable-rate home loans differ in how the interest rate is structured over time.

A fixed-rate loan has an interest rate that does not change throughout the life of the loan. Your monthly principal and interest payments remain consistent, which can make it easier to budget over the long term. This type of loan is a popular choice for those who plan to stay in their home for many years or prefer long-term payment stability.

An adjustable-rate mortgage (ARM), on the other hand, typically starts with a rate that remains the same for an initial period. After that, the rate may adjust periodically based on market conditions. For example, a "5/1 ARM" usually has a fixed rate for the first five years, followed by yearly adjustments. This type of loan may be suitable for buyers who expect to move or refinance before the adjustment period begins.

At Solarity, we offer a variety of fixed- and adjustable-rate loan options. Our Home Loan Guides are here to help you explore your choices and find a solution that fits your needs.

PMI is short for Private Mortgage Insurance, and it's typically required any time a borrow puts down less than 20% of a home's purchase price. PMI is paid for by the homeowner and increases their monthly mortgage payment. The purpose of PMI is to protect the lender if the borrower becomes unable to pay, as the lender is at greater risk when making a home loans with low down payments. Learn more about PMI.

A typical mortgage payment will include principal and interest. Some will also require your property taxes and insurance to be collected for what is called an escrow account. Insurance includes homeowner’s insurance and  PMI, if applicable. You will receive an itemized breakdown of your monthly mortgage payment before you close on your loan, including if you are required to have an escrow account to pay your homeowners insurance and property taxes on your behalf when they are due.

The term “short sale” describes a home that a lender is working with the current owner to sell for less than the amount owed on the property. A short sale can offer a unique buying opportunity, but can also be a more complicated transaction, as outlined in this article on  what you need to know before buying a short sale.

A pre-approval letter is a document that states the dollar amount a lender is willing to lend toward a home purchase. It is important to have it when you start house hunting because it will show both your real estate agent and the sellers' agent that you’re a serious and qualified buyer.

An appraisal is an estimation of a home’s value. An appraisal is determined by many factors; recent sales of similar properties, current market trends, location and condition of the home, number of bedroom and bathrooms, floor plan and square footage to name a few.

A Loan Estimate is a three-page form that tells you important details about the home loan you have requested. A lender must provide you a copy of this form within three business days of receiving your application. The form is designed to simply communicate the estimated interest rate, monthly payment, total closing costs and many other loan details. You can see (and click through) this interactive explainer of a Loan Estimate provided by the Consumer Financial Protection Bureau.