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Lending FAQ

Find the lending answers you need

Select a question that interests you for more information. An Ameriprise financial advisor can guide you through lending solutions and resources.

Lending questions
What determines how large a mortgage I qualify for?

The amount of mortgage loan you qualify for will vary depending on factors such as:

  • The particular loan program and applicable interest rate
  • The property's value
  • Your credit history
  • Your income
  • Your job stability
  • Your debt-to-income ratio
  • Your assets
What is APR?

Annual Percentage Rate (APR) represents the total cost of credit, including interest and a portion of your closing costs.

  • An estimated APR appears on the Truth in Lending Disclosure you receive after applying for a loan as required by law.
  • By showing the overall cost of the loan as a percentage, you can accurately compare the costs of one loan to another.
  • APR differs from the actual interest rate which is used to calculate your monthly payments.
What is PMI?

Private Mortgage Insurance (PMI) may be required if your down payment is less than 20% of the purchase price.

  • This insurance protects the lender in case a borrower defaults on the loan.
  • The percentage of required PMI each month depends upon the loan amount, the type of loan and the down payment.
  • There is a loan alternative that does not require PMI. Ask a financial advisor about this option.
What is a Good Faith Estimate?

A Good Faith Estimate is a written estimate of settlement and/or closing costs which must be provided to you within three business days after you submit an application.

What are closing costs?

Closing costs are expenses for financing your home loan. You may negotiate with the seller regarding who will pay some or all of them. Closing costs may include, but are not limited to:

  • Loan origination fee
  • Mortgage broker fee
  • Discount points
  • Underwriting fee
  • Appraisal/inspection fees
What is prepaid interest?

This is interest on the loan charged to the borrower at closing to pay for the cost of borrowing for a partial month. For example, if a loan closes on the 15th of the month and the first payment is due 45 days later, the lender will charge 15 days of prepaid interest.

What are escrows?

Escrows are funds that your lender collects to pay your property taxes, hazard/flood insurance and PMI (if applicable). They are in addition to your monthly principal and interest payments and are used by the lender to pay your property taxes and insurance premiums.

What are underwriting conditions?

Underwriting conditions are requirements needed to finalize the application process. Underwriting conditions must be received, documented and accepted by the lender to obtain final approval for the loan.

What is PITI?

Principal (P), interest (I), property taxes (T) and property insurance (I) are combined into the home payment you make each month.

Ameriprise Bank, FSB, Member FDIC, an Equal Housing Lender, provides certain deposit, lending and personal trust products and services to Ameriprise Financial Services, Inc. Deposit products are FDIC-insured up to $100,000 per depositor. Ameriprise Financial Services, Inc., Member FINRA and SIPC, and Ameriprise Bank, FSB are subsidiaries of Ameriprise Financial, Inc.

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