Frequently Asked Questions

A mortgage is a loan used to finance the purchase of a home, where the property itself serves as collateral for the loan. Borrowers repay the loan through monthly payments that typically include both principal and interest, and may also include taxes and insurance. Mortgage terms most commonly range from 15 to 30 years, during which the loan balance is gradually reduced until it is fully repaid.

Getting pre-approved with HMCO is simple! Connect with a local HMCO Loan Officer, who will guide you through the process and handle the details—starting with just a few basic pieces of information in our pre-approval form.

Home equity is the difference between your home’s current market value and the remaining balance on your mortgage. It represents the portion of your property that you truly own.

Equity increases over time as you pay down your loan and as your home’s value appreciates, including through improvements or market conditions.

Home equity can also be used as a financial resource, often accessed through options such as a home equity loan or a home equity line of credit (HELOC), and may be used for purposes like debt consolidation, home improvements, or education expenses.

A prepayment penalty is a fee that some lenders may charge if a borrower pays off their mortgage early—either by making extra principal payments or by paying off the loan in full before the end of the term. This fee compensates the lender for interest income they would have earned had the loan continued as scheduled.

Prepayment penalties are typically disclosed in the loan agreement, so it’s important for borrowers to review these terms carefully. Understanding them is especially important if you plan to refinance, sell your home, or pay off your mortgage early.

At HMCO, our mortgage loans typically do not include prepayment penalties, giving you the flexibility to pay down your balance or refinance whenever it makes sense for your financial goals.

Owner-occupancy means that you live in the home you are purchasing or refinancing. Lenders use this information to determine how the property will be classified. If you do not intend to live in the home, it may be considered an investment property rather than a primary residence, which can affect the types of mortgage products, loan terms, and interest rates available to you.

A primary residence is the home where you live for most of the year. This could be a single-family house, condo, co-op, or even a houseboat—but you can only have one primary residence at a time. Mortgage rates are typically lower for primary residences, so it’s important to indicate this on your loan application. In many cases, the interest paid on a primary residence mortgage may also be tax-deductible.

A Homeowners Association (HOA) is an organization that manages a residential community, such as a neighborhood, condominium, or townhouse complex. When you purchase a home in an HOA community, you automatically become a member and agree to follow its rules.

HOAs maintain shared spaces like landscaping, pools, gyms, and community centers, funded through monthly or annual fees known as HOA dues. They also establish guidelines for property appearance, noise, and other standards to help protect property values and maintain the quality of the community. It’s important for homeowners to review an HOA’s rules and fees carefully, as they can affect your responsibilities and rights as a homeowner.

A Planned Unit Development (PUD) is a type of residential community that combines privately owned homes with shared common areas and amenities, such as parks, playgrounds, pools, or clubhouses. In a PUD, homeowners own both their individual homes and the land beneath them, while also sharing ownership of the community’s common spaces.

Living in a PUD usually involves paying HOA fees to maintain these shared areas and following the community rules established by the HOA. PUDs offer a sense of community and access to amenities that may not be available in traditional neighborhoods, making them an appealing option for many homebuyers.