Mortgages

Learn some of the basics about mortgages.

Mortgage Refinancing

Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms. You may want to refinance your mortgage to take advantage of lower interest rates, to change your type of mortgage, or for other reasons.

These resources will help you learn more about refinancing your mortgage:

Making Home Affordable Program

  • The Making Home Affordable Program offered opportunities to modify or refinance your mortgages, but as of December 30, 2016, no new requests for assistance under any MHA program will be accepted.
  • However, the MHA program still offers free counseling and help for homeowners who are having difficulty communicating with mortgage companies or lenders about their needs for mortgage relief. Learn more about counseling or call 888-995-HOPE (4673).
  • The Home Affordable Foreclosure Alternatives Program (HAFA) is an alternative solution for homeowners who are interested in a short sale or deed-in-lieu to avoid foreclosure.

Is there anything else I need to know?

  • Federal Reserve rules require mortgage companies to notify homeowners when their loans are transferred to another company. The company that takes over your loan must send you a notice within 30 days of acquiring it. Even with a new loan owner, the company that "services" or handles your loan might not change and you might continue to send your payments to the same address. If that loan servicer changes, you will receive a separate notice.

  • For more information about servicing companies, read the Federal Trade Commission's publication "Mortgage Servicing: Making Sure Your Payments Count."

Back to Top

Predatory Loans

Most mortgage professionals are trustworthy and provide a valuable service, helping you to buy or refinance your home. But dishonest or "predatory" lenders do exist and engage in practices that can put you at risk of losing your home to foreclosure. Learn how to protect yourself from and report predatory lending and loan fraud.

Report Predatory Loans

Learn how to file a complaint about mortgages and lenders, and who to send your complaint to.  

How to Protect Yourself

Learn about the types of scams that predatory lenders use to trick you. The Department of Housing and Urban Development (HUD) has counselors available across the country to help you navigate mortgage professionals, look out for scams, and choose the right loan type for you.

Predatory lenders may try to:

  • Sell properties for much more than they are worth using false appraisals
  • Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan
  • Knowingly lend more money than a borrower can afford to repay
  • Charge high interest rates to borrowers based on their race or national origin and not on their credit history
  • Charge fees for unnecessary or nonexistent products and services

Do

  • Before you buy a home, attend a homeownership education course offered by a U.S. Department of Housing and Urban Development (HUD)-approved, non-profit counseling agency.
  • Interview several real estate agents, and ask for and check references before you select one to help you buy or sell a home.
  • Get information about the current values and recent sale prices of other homes in the neighborhood.
  • Hire a qualified and licensed home inspector to carefully inspect the property before you are obligated to buy.
  • Determine whether you or the seller will be responsible for paying for the repairs.
  • Shop for a lender and compare costs.
  • Be suspicious if anyone tries to steer you to just one lender. Learn more about how to spot predatory lending and protect yourself.
  • Become an educated consumer and learn about loans, mortgage fraud, and consumer protection.

Don’t

  • Don’t lie about your income, age, or anything else on a home loan application.
  • Don’t give anyone your personal or financial information, including your Social Security number, through email or messaging.
  • Don’t use a lender, real estate professional, or contractor who cannot provide you with a license number and recommendations.
  • Don’t fall for loans or offers that seem too good to be true.
  • Don’t take out a loan offered to you by telemarketers, flyers, or door-to-door sales.
  • Don’t feel obligated or pressured to sign up for a loan or service “today.”

Back to Top

Reverse Mortgages

A reverse mortgage is a home loan that you do not have to pay back for as long as you live in your home. You only repay the loan when you die, sell your home, or permanently move away. Homeowners who are at least 62 years old are eligible. These mortgages allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.

Read more information about reverse mortgages.

Types of reverse mortgages include:

Be sure to watch for aggressive lending practices, advertisements that refer to the loan as "free money," or those that fail to disclose fees or terms of the loan. To be a savvy consumer and help protect yourself, remember:

  • Do not respond to unsolicited advertisements
  • Be suspicious of anyone claiming that you can own a home with no down payment
  • Seek out your own reverse mortgage counselor
  • Never sign anything you do not fully understand
  • Make sure the loan is federally insured

Reporting Fraud or Abuse

If you suspect fraud or abuse, let the counselor, lender, or loan servicer know. You may also file a complaint:

If you have questions, contact your local Homeownership Center for advice. 

Back to Top

FHA Loans and HUD Homes

If you’re a homebuyer, the Department of Housing and Urban Development (HUD) has two programs that may help make the process more affordable.

FHA Loans

The Federal Housing Administration (FHA) manages the FHA loans program. This may be a good mortgage choice if you’re a first-time buyer because the requirements are not as strict compared to other loans.

Am I eligible?

Determine your down payment, closing costs and credit score before applying:

  • Cash down payment can be as low as 3.5% of the purchase price.
  • Your credit score doesn't need to be high.
  • Closing costs may be partly covered or lower than other loans.

How Do I Apply?

The FHA doesn't lend money directly to people. It insures mortgage loans from FHA-approved lenders against default. To apply for an FHA-insured loan, you will need to use an FHA-approved lender.

How do I complain?

If you have a complaint about an FHA loan program, contact the FHA Resource Center.

HUD Homes

When homeowners default on their FHA-insured mortgage, HUD takes ownership of the property because HUD oversees the FHA loan program. These properties are called either HUD homes or HUD real estate owned (REO) property.

Am I eligible?

Your qualifications to buy a HUD home depend on your credit score, ability to get a mortgage, and the amount of your cash down payment. You can also use an FHA-insured mortgage to buy a HUD home. Learn more about buying a HUD home.

How do I apply?

Use the HUDHomestore to find listings of HUD real estate owned (REO) properties for sale. Click on the agent tab to find contact information to learn more about the property.

Where do I call for extra help?

If you have a question or need more information about FHA loans or HUD homes, you can email or call the FHA Resource Center or check their list of frequently asked questions.

Back to Top

How to Get a Mortgage

A mortgage is a loan from a commercial bank, mortgage company, or other financial institution to purchase a home or other real estate. A lender will give a loan if you meet certain requirements such as a high enough credit score and income level and have the financial ability to pay it back. The lender can take, or foreclose on, the property you’ve mortgaged if you don’t repay the money borrowed, plus interest.
Getting a mortgage is one of the biggest financial decisions you may make in your life. This overview can help you understand the process.

Starting the Mortgage Process

Before you begin searching for homes, you’ll need to take a look at your income and credit score to figure out if you can afford a home and the monthly mortgage payments. Follow this list of steps from the Consumer Financial Protection Bureau (CFPB) to help you make the decision.

Loan Options and Choosing a Lender

You can choose from different loan options depending on the amount of your down payment, your personal preferences, and if you qualify for special loan programs. Get information about the length of the loan (typically 15- or 30-year), interest rate (fixed or adjustable rate) and loan program types (conventional, FHA or VA). Learn more about the benefits of each loan option.

After doing your homework about loans options, start looking for a potential lender. As you consider different lenders for your mortgage, ask questions about the interest rate for each option. These rates can fluctuate week to week. Learn about the effect of interest rates on your monthly payment.

At this point, you can get a preapproval or prequalification letter from a lender. As a future homebuyer, this letter shows you’re a good candidate for getting a mortgage. It’s based on your preliminary documents and credit score and shows how much they’re willing to lend you. Learn more about the preapproval process.

Closing the Deal

When you’ve found a home and made an offer that has been accepted by the seller, it’s time to get loan estimates from multiple lenders. A loan estimate is a three-page document that outlines the loan terms the lender expects to offer you for a mortgage.

You’re now in the closing phase of homebuying. You will need to get the home inspected and look for homeowners insurance. After the inspection, your lender will order a home appraisal to make sure the property is worth the amount you’re borrowing. Your lender will also set a date for the closing meeting.

Once the mortgage is approved, you’ll get a loan closing document from the lender, detailing all the final costs. Finally, you’ll go to the closing meeting to sign the last of the paperwork and get the keys to your new home.

How to File a Complaint

Getting a home loan can be stressful. If you feel you’ve been discriminated against or are the victim of unfair business practices, you can file a complaint against a lender.

Share This Page: Facebook Twitter Email

Back to Top

Do you need help?

Ask us any question about the U.S. government for free. We'll get you the answer or tell you where to find it.

What you think matters!

Last Updated: June 01, 2018