Mortgage Basics

Get the Best NJ Home Loan

No matter what your financial situation looks like, the experts at SunQuest will analyze your income, assets, and liabilities; we’ll coordinate with your attorney, accountant, or other advisers, to insure that your New Jersey mortgage supports your other your financial goals.
Thinking about purchasing or refinancing your home in New Jersey, or purchasing or refinancing your home in New York?

SunQuest Funcding Loan Officers are ethical and honest

Take your time and find an ethical and honest Loan Officer that really knows the New Jersey mortgage market. At SunQuest funding, we pride ourselves in being honest, ethical, friendly, fast and easy to work with.

The most important document to request is a Loan Estimate; once the closing costs have been legally disclosed, many of them can’t change. The Loan Estimate allows you to compare offers from different lenders, in a consistent fashion, because everyone’s closing costs will be disclosed in the same format. A rate that is .25% or more below any other rate in the marketplace, is probably not a real rate. Your NJ home loan rate is only considered locked-in after you get an executed lock in agreement from your lender.

Make sure your New Jersey loan officer has experience. Most loans get denied for mistakes made by the loan officer, not because the borrower didn’t qualify for the loan. An experienced loan officer, from a reputable mortgage company like SunQuest Funding, can help insure that you receive the best NJ mortgage product, and NJ mortgage rate for your specific situation. At SunQuest Funding, we have an excellent reputation for structuring transactions that benefit the borrower. We always make promises that we can keep. Call us today and learn how we can help you achieve your home ownership goals.

Government Mortgage Programs

New Jersey home improvement loans, and construction loans, are one of SunQuest’s specialties. Go to our Construction Loans page to see all the details.

During a purchase or refinance, you can finance the  renovation of your primary primary residence. When you want to renovate a New Jersey home a FHA 203k mortgage may be the right loan for you.

Improvements allowable through the FHA 203k program include:

  • Room Additions
  • New Bathrooms
  • New Kitchens
  • New Windows
  • New Roofing and Siding
  • New Furnace or Central Air Conditioning

The FHA 203k loan does not provide financing for ground-up construction projects or funding for the completion of a home construction project on a home that’s never had a certificate of occupancy. See our section on Construction Loans page to learn more about the ways SunQuest can help you with NJ construction loans.

Conforming & Non-Conforming

Fixed rate New Jersey mortgages, make sense for the majority of borrowers; the interest rate risk remains with the lender and not the borrower.

Fixed Rate Mortgages are home loans where the interest rate and terms of the loan remain fixed through the life of the loan. Generally, fixed rate loans have terms of 30, 25, 20, 15, or 10 years. Shorter term loans have lower interest rates. Shorter term loan payments are higher because they contain more principal than the longer term loan payments.

If you think you’ll be in your NJ home for a long period of time, then a fixed rate loan may  make sense for you. Otherwise, you may want to consider other types of home loans.

Conforming fixed rate loans have the maximum loan amount limits Fannie Mae and Freddie Mac allow. These limits range from $417,000 in many parts of the country and up to $625,500 in the very highest cost areas, such as parts of New Jersey.  Maximum loan limits vary from county to county. Fannie Mae and Freddie Mac generally offer the best New Jersey mortgage interest rates, for fixed rate loans.  They also have some of the most flexible underwriting guidelines.

Jumbo Fixed Rate mortgages have loan amounts above those available from Fannie Mae or Freddie Mac. Jumbo loans have slightly higher interest rates than conforming loans because they don’t have the intrinsic guarantee that government- owned Fannie and Freddie provide. Otherwise, Jumbo Fixed Rate loans have the same features as conforming fixed rate loans. Jumbo loans are available for borrowers purchasing or refinancing higher priced homes.

Major Life Events That Proper Financing Can Improve

Purchasing A New Home

Refinancing An Existing Loan 


Family Conveyances

Debt Consolidation

Acquiring Investment Properties


College Planning

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Glossary Of Mortgage Terms

If you are in the process of securing a New Jersey home loan, you may hear a few words or terms that need defining. Following is a list of commonly-used words and terms you may encounter while shopping for the best New Jersey mortgage. The more you know about mortgages, the easier the process will be.

Actual Cash Value: An amount equal to the replacement value of damaged property minus depreciation.

Adjustable-Rate Mortgage (ARM): Also known as a variable-rate loan, usually offers a lower initial rate than fixed-rate loans. The interest rate can change at specified time periods based on changes in an interest rate index that reflects current finance market conditions, such as the LIBOR index or the Treasury index. The ARM promissory note states maximum and minimum rates. When the interest rate on an ARM increases, the monthly payments will increase and when the interest rate on an ARM decreases, the monthly payments will be lower.

Adjustment Period: The time between interest rate adjustment dates for an ARM. They are usually the initial period between the time the ARM is originated and the first interest rate change date, and subsequent adjustment periods between each interest rate change after the first interest rate change.

Amortization: A term used to describe the process of paying off a loan over a predetermined period of time at a specific interest rate. The amortization of a loan includes payment of interest and a portion of the outstanding principal balance during each payment cycle.

Amortization Schedule: Provided by mortgage lenders, the schedule shows how over the term of your mortgage the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases.

Annual Percentage Rate (APR): The cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fees and certain other credit charges that the borrower is required to pay.

Application Fee: The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.

Appraisal: A professional analysis, including references to sales of comparable properties, used to estimate the value of the property.

Appraiser: A professional who conducts an analysis of the property, including references to sales of comparable properties in order to develop an estimate of the value of the property. The appraiser’s report is called an “appraisal.”

Appreciation: An increase in the market value of a home due to changing market conditions and/or home improvements.

Arbitration: A process where disputes are settled by referring them to an impartial third party (arbitrator) chosen by the disputing parties who agree in advance to abide by the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator issues the decision.

Asbestos: A toxic material that was once used to make insulation and fireproofing material in houses. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.

Assets: Everything of value an individual owns.

Assumption: A home buyer’s agreement to take on the primary liability for paying an existing mortgage from a home seller.

Balloon Mortgage: A mortgage with monthly payments based on a 30-year amortization schedule and the unpaid principal balance due in a lump sum payment at the end of a specific period (usually 5 or 7 years) earlier than 30 years. The mortgage contains an option to reset the interest rate to the current market rate and to extend the maturity date provided certain conditions are satisfied.

Bankruptcy: Legally declared unable to pay your debts as they become due. Bankruptcy can severely impact your ability to borrow money. Talk to a credit counselor as soon as you realize you are having problems paying your bills on time to try to prevent bankruptcy.

Capacity: Your ability to make your mortgage payments on time. This depends on your income and income stability, your assets and reserves, and the amount of your income each month that is available after you have paid for your housing costs, debts and other obligations.

Cash Reserves: The money you have left in the bank after your New Jersey or New York mortgage loan, or refinance mortgage loan, closes. Cash in the bank is very important in case you run into unforeseen circumstances. Usually, two months worth of house payments are required.

Closing (Closing Date): When the real estate transaction between buyer and seller is completed. The buyer signs the mortgage documents and the closing costs are paid. Also known as the settlement date.

Closing Agent: A person that coordinates closing-related activities, such as recording the closing documents and disbursing funds.

Closing Costs: The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs and items that must be prepaid or put into escrow, and other costs. Ask a lender or real estate professional for a complete list of closing cost items.

Closing Disclosure: [This document is one of the most critical documents you’ll receive.] A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs). The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from the lender. The three days also gives you time to ask your lender any questions before you go to the closing table.

Collateral: Property which is pledged as security for a debt. In the case of a mortgage, the collateral would be the land, the house, and other buildings and improvements.

Commitment Letter: A letter from your lender that states the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.

Concession: Something yielded or conceded in negotiating a transaction.

Condominium: A unit in a multi-unit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas. The owners do not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas, and reserves for improvements.

Counter-offer: An offer made in return by the person who rejects the previous offer.

Credit: The ability of a person to borrow money, or obtain goods with payments over time, as a consequence of the favorable opinion held by a lender as to the person’s financial situation and reliability.

Credit Bureau: A company that gathers information on consumers who use credit and sells that information in the form of a credit report to credit lenders.

Credit History: A credit history is a record of credit use. It is comprised of a list of individual consumer debts and an indication as to whether or not the debts were paid back in a timely fashion or “as agreed.” Credit institutions have developed a complex recording system of documenting your credit history; this is called a credit report.

Credit Report: A document used by the credit industry to examine an individual’s use of credit. It provides information on money that individuals have borrowed from credit institutions and a history of payments.

Credit Score: A computer-generated number that summarizes an individual’s credit profile and predicts the likelihood that a borrower will repay future obligations.

Creditworthy: Your ability to qualify for credit and repay debts.

Debt: A sum of money owed from one person or institution to another person or institution.

Debt-to-Income Ratio: The percentage of gross monthly income that goes toward paying for your monthly housing expense, installment debts, alimony, child support, car payments, and payments on revolving or open-ended accounts such as credit cards.

Deed: The legal documents conveying title to a property.

Deed of Trust: A legal document in which the borrower conveys the title to a 3rd party (trustee) to hold as security for the lender. When the loan is paid in full the trustee re-conveys the deed to the borrower. If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.

Default: Failure to perform a legal obligation; a default includes failure to pay on a financial obligation, but may also be a failure to perform some action or service that is non-monetary.

Deposit: The amount of money you put down on a house to hold it.

Depreciation: A decline in the value of a house due to changing market conditions, decline of a neighborhood or lack of upkeep on a home.

Down Payment: A portion of the price of a home, usually between 3-20%, not borrowed and paid up front.

Earnest Money Deposit: The deposit you make to show that you are committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not satisfied.

Equity: The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.

Escrow: The holding of money or documents by a neutral third party prior to closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.

Fixed-Rate Mortgage: A mortgage with an interest rate that does not change during the entire term of the loan.

Foreclosure: A legal action that terminates all ownership rights in a home when the home buyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.

Gift Letter: A letter that a family member writes verifying that he/she has given you a certain amount of money as a gift and that you do not have to repay it. You can use this money towards a portion of your down payment through some mortgage products.

Gross Monthly Income: The income you earn in a month before taxes and other deductions. Under certain circumstances, it may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

Home Inspection: A professional inspection of a home to review the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

Homeowner’s Insurance: A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances.

Housing Expense Ratio: This ratio is the percentage of your gross monthly income it takes to make your house payment, including taxes and insurance. If you earn $3,600 and your house expense is $1,200, you have a 33% housing ratio (1,200 is one third of 3,600).

Index: The published index of interest rates on a publicly traded debt security used to calculate the interest rate for an ARM. The index is usually an average of the interest rates on a particular type of security such as the LIBOR.

Individual Retirement Account (IRA): A tax-deferred plan that can help build a retirement nest egg.

Inflation: An increase in the general level of prices.

Inquiry: A request for a copy of your credit report. An inquiry occurs every time you fill out a credit application and/or request more credit. Too many inquiries on a credit report can lower your credit score.

Interest: The cost you pay to borrow money. It is the payment you make to a lender for the money it has lent to you. Interest is usually expressed as a percentage of the amount borrowed.

Keogh Funds: A tax-deferred retirement-savings plan for small business owners or self-employed individuals who have earned income from their trade or business. Contributions to the Keogh plan are tax deductible.

Liabilities: Your debts and other monetary obligations.

LIBOR Index: The London Interbank Offered Rate (LIBOR), or more officially ICE LIBOR for Intercontinental Exchange, is the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks. 

Lien: A claim or charge on property for payment of some debt. With respect to a mortgage, it is the right of the lender to take the title to your property if you do not make the payments due on the mortgage.

Loan Estimate: [This document is one of the most critical documents you’ll receive.] The form provides you with important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. In addition, the form indicates if the loan has special features that you will want to be aware of, like penalties for paying off the loan early (a prepayment penalty) or increases to the mortgage loan balance even if payments are made on time (negative amortization). If your loan has a negative amortization feature, it appears in the description of the loan product.

Loan Origination Fees: The fee paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.

Loan-to-Value Ratio (LTV): If you have a house valued at $100,000, with a $90,000 loan, you have a 90% loan-to-value ratio ($90,000 divided by $100,000 = 90%).

Lock-In Rate: A written agreement guaranteeing a specific interest rate when your mortgage closes.

Low-Down-Payment Feature: A feature of a mortgage, usually a fixed-rate mortgage, that helps you buy a home with as little as a 3% down payment.

Margin: The amount (expressed as a percentage) added to the index for an ARM to establish the interest rate on each adjustment date.

Market Value: The current value of your home based on what a willing purchaser would pay. The value determined by an appraisal is sometimes used to determine market value.

Mortgage: A loan secured by a lien on your home. In some states the term mortgage is also used to describe the document you sign to show that you have granted the lender a lien on your home; other states use a deed of trust document instead of a mortgage. It may also be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage is usually the purchase price of the home minus your down payment.

Mortgage Broker: An independent finance professional who specializes in bringing together borrowers and lender to facilitate real estate mortgages.

Mortgage Insurance (MI or PMI): Insurance needed for mortgages with low down payments (usually less than 20% of the price of the home).

Mortgage Lender: The lender providing funds for a mortgage. Lenders also manage the credit and financial information review, the property and the loan application process through closing.

Mortgage Rate: The cost or the interest rate you pay to borrow the money to buy your house.

Mutual Funds: A fund that pools the money of its investors to buy a variety of securities.

Net Monthly Income: Your take-home pay after taxes. It is the amount of money that you actually receive in your paycheck.

Offer: A formal bid from the homebuyer to the home seller to purchase a home.

Open House: When the seller’s real estate agent opens the seller’s house to the public. You do not need a real estate agent to attend an open house.

Points: 1% of the amount of the mortgage loan. For example, if a loan is made for $50,000, one point equals $500.

Pre Approval Letter: A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. The per-approval is based on the specific down payment, property tax, credit approval, and income detailed in the letter; it’s also contingent on the appraisal. Getting a Pre Approval letter also shows a home seller that you are a serious buyer.

Predatory Lending: Abusive lending practices that include making a mortgage loan to an individual who does not have the income to repay it or repeatedly refinancing a loan, charging high points and fees each time and “packing” credit insurance on to a loan.

Pre Qualification Letter: See Pre Approval letter.

Principal: The amount of money borrowed to buy your house or the amount of the loan that has not yet been paid back to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan at any given time. It is the original loan amount minus the total repayments of principal you have made to date.

Private Mortgage Insurance (PMI): See Mortgage Insurance

Property Appreciation: See Appreciation

Radon: A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.

Rate Cap: The limit on the amount that the interest rate on an ARM can increase or decrease during any one adjustment period.

Ratified Sales Contract: A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspections, making repairs, closing by a certain date, and the like.

Real Estate Professional: An individual who provides services in buying and selling homes. The real estate professional is paid a percentage of the home sale price by the seller. Unless you have specifically contracted with a buyer’s agent, the real estate professional represents the interest of the property seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.

Refinance: Obtaining a new mortgage with all or some portion of the proceeds used to pay off the original mortgage.

Replacement Cost: The cost to replace damaged personal property without a deduction for depreciation.

Securities: A financial form that shows the holder owns a share or shares of a company (stock) or has loaned money to a company or government organization (bond).

Title: The right to, and the ownership of, land by the owner. Title is sometimes used to mean the evidence or proof of ownership of land; although another term used for that is “deed.”

Title Insurance: Insurance that protects lenders and homeowners against loss of their interest in the property because of legal problems with the title.

Total Expense Ratio: This is the percentage of your gross monthly income it takes to pay your house payment plus other monthly payments you make, such as car payments, credit card debt and student loans.

Underwriting: The process a lender uses to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

Uniform Residential Loan Application: A standard mortgage application that your lender will ask you to complete. The form request your income, assets, liabilities and a description of the property you plan to buy, among other things.

Warranties: Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.