Home Loans – General Information

Q. What should I consider when deciding whether to rent or buy a home?
A. This is a decision based on both financial and lifestyle choices. From a lifestyle standpoint, you should consider whether or not you want to commit to living in a home for several years. To determine if it makes financial sense to buy, you should compare the cost of renting to the after-tax cost of owning. Use the Should I Rent or Buy? calculator for a quick estimate, then estimate possible rent increases and price appreciation of a home. These factors may affect your final decision.
Q. How can I determine how much I can afford to pay for a house?
A. No one wants to find the home of their dreams, only to discover that they can't afford the mortgage payments. You can use the How Much Can I Afford? calculator to get a quick estimate of how much you can spend for a house. Using your estimated down payment and monthly mortgage payment. To learn how much you can borrow, based on your income, debts, and projected down payment, use the How Much Will My Mortgage Payment Be? calculator.
Q. How much are First Horizon's fees for obtaining a home loan?
A. Fees are determined by several factors, including which state you live in, what county you live in, and even what loan program you have selected. However, a good rule of thumb is that the national average for closing costs is about 3 - 6% of the home's sale price (not including down payment).

Loan Programs

Q. What is the difference between a fixed rate and adjustable rate mortgage?
A. Fixed rate mortgages feature an unchanging interest rate, which is determined when you are approved for a mortgage and remains the same for the term of the loan. With adjustable-rate mortgages (ARMs) the interest rate may vary over the course of the loan. In a rising interest rate environment, the interest rate will normally be lower during the first year and will adjust upward in accordance with the terms of your Promissory Note. Market conditions dictate the amount that the interest rate will change. Prior to the interest rate adjustment, a notice will be sent to you that details the changes to your monthly payment amount.
Q. What is an Interest Only mortgage?
A. An Interest Only mortgage is a loan that allows borrowers to pay only interest only for a specified amount of time, which results in a lower payment when compared to a loan where principal is amortized. This product is beneficial to customers who do not want to commit to living in a home for several years and/or customers who want to maximize their itemized deductions for tax purposes.
Q. What is a Payment Choice mortgage?
A. A Payment Choice mortgage is an adjustable rate mortgage, which often features a low introductory interest rate. This type of loan offers different choices of monthly payments a borrower can make each month. The interest rate may change, but there will be a minimum payment that remains constant until the payment change date. If the minimum payment is chosen and that amount does not cover the interest amount due, the unpaid interest will be added to the principal balance of the loan, resulting in negative amortization, or a higher principal balance.
Q. What is negative amortization?
A. Negative amortization is created when the payment for principal and interest is less than the interest amount alone. Examples of when negative amortization will occur are as follows:
When payments are made, the principal balance will increase to cover the remaining amount due for interest each month. Once a fully amortizing principal and interest payment is calculated, the amount will be calculated based on the outstanding principal balance (inclusive of interest added to principal) and the remaining term of the loan at the time of the change. With this in mind, the amount for the new fully amortizing principal and interest payment will be greater than it would have been at the origination of the loan, since the principal balance is now greater and there are fewer months to pay the principal balance in full (based on the terms of the Note).
Q. Why do interest rates fluctuate?
A. Basically, interest rates are tied to financial instruments/indices that react to various market conditions such as inflation and the global financial market. An increase in inflation can be a contributing cause to a rise in interest rates. Although several other factors can play a role, interest rates will rise as the value of mortgage based securities decline. For more information about interest rate trends, please see our Check Current Interest Rate information.
Q. What are points?
A. A point is 1% of the loan amount. For example, for 2 points on a $300,000 house, you will pay 2% of $300,000, or $6,000. The number of points charged for a mortgage depends on the circumstances. Sometimes it is advantageous to pay higher points and get a lower interest rate, as you'll end up paying less over the life of your loan. You will pay for the points at the time of closing and can deduct the point amount as interest on your income tax return. (Consult a tax professional.)
Q. What is PMI?
A. PMI is Private Mortgage Insurance. It is required when a borrower makes less than a 20% down payment on a house. This partially protects the lender from loss if the borrower fails to make the mortgage payments. Depending on your loan program, but generally when you've paid off 20% of your loan, you may ask for the PMI requirement to be removed. This will decrease your total monthly loan payment.
When your LTV (loan-to-value) ratio is 80% or below, you may ask for the PMI requirement to be removed. PMI deletion requirements vary according to loan program and state requirements. Current First Horizon loan customers may determine if you are eligible to remove PMI Insurance by accessing our Interactive Telephone Response System by calling (800) 364-7662, and after selecting your language preference, select option #2 for PMI information.

Credit Questions

Q. Can you approve my loan application before I shop for a house?
A. Yes. After we review your credit history and the additional information you provide, we may be able to provide you with a conditional approval. This is called a pre-qualification. This conditional approval is subject to a satisfactory title review and appraisal of the property that will secure your loan, and no substantial changes prior to closing in the information you provide. Generally, this will help you shop for a home in your price range, and proves to sellers you are likely to have the funds necessary to purchase their home.
Q. How will my credit score affect my loan application?
A. Your credit score plays a significant role when you apply for a loan. People with higher credit scores are eligible for more loan options and better interest rates. If you've had credit difficulties in the past, you may still qualify for some mortgage programs, but these usually cost more, depending on the severity of your credit problems.
Q. How can I improve my credit score?
A. Your credit score is based on the credit data available to the credit reporting agency on the day the score is requested by a lender. You can develop or improve your credit score by following these tips: For example, keep the number of credit cards you use to a minimum. Avoid too many credit inquiries. Contact creditors immediately if you cannot make a payment on time. This may keep them from reporting your delinquency to a credit agency.
Q. What if I have little or no credit?
A. There are still ways to show a credit history. You can prove your good payment history on rent and utilities by obtaining references or credit letters from your landlord and utility companies. Provide a year's worth of checks to validate consistent payments. This information will become part of your loan application.
Q. I can barely meet my monthly bills. How can I consider buying a home?
A. Don't be discouraged. There are steps you can take to improve your financial situation. The best thing to do is seek professional counseling to help you with your credit situation. National Foundation for Credit Counseling (NFCC) is a nationwide non-profit organization that provides credit counseling free or for a reasonable fee. They can help you develop a solid plan for regaining control of your finances.
Q. How can I ensure that the information on my credit report is correct?
A. Your credit report reflects the information reported to the credit bureaus by each of your creditors. The information changes each time something is added or deleted from your credit file. For instance, paying off an account, opening several new credit accounts, or making a late payment on one of your accounts will appear on your credit record. The best way to make sure that the information in your credit file is correct is to periodically request copies of your credit report. If you think an entry is in error, notify the appropriate credit bureau and ask that the error be corrected. Here is contact information for the three leading credit reporting agencies:

Payment Information

Q. How do I make my monthly payments?
A. We offer several options for your convenience.
  1. Mail: Send a check or money order made payable to First Horizon Home Loans®. Be sure to write your account number on the check or money order and send it with your payment coupon to:
    First Horizon Home Loans
    P.O. Box 809
    Memphis, TN 38101-0809
    Please allow adequate time (7-10 days) for us to receive and process your payment.
  2. Automatic bank draft: You may set up Automatic Clearing House (ACH) payment for each month to be deducted from your bank account. Please refer to the back of your monthly statement for instructions. You may also fax a request for ACH payments, with a voided check and your account number, to the First Horizon® Draft Department at (214) 441-5387.
  3. Telephone: Call (800) 364-7662 and select Option 1 to be taken to our "Just In Time" payment service. This automated system enables you to make a payment in seconds by entering your checking or savings account details over the phone.
  4. Online: Visit www.firsthorizon.com to log in, view your billing statement, make a payment via Home Loan Online and more.
Q. I would like to pay off my home loan sooner by making additional payments. How can I do this?
A. To sign up for our Equity Accelerator Payment Program, call (800) 364-7662 to speak to a Customer Service Representative. You may also send in additional payments to your loan's principal by recording the amount in the Additional Principal section of your payment coupon and adding it to your regular monthly payment.

Escrow Account Information

Q. What is an escrow account?
A. An escrow account is maintained by your mortgage lender for payment of your property taxes, home owners insurance, private mortgage insurance (PMI) and related items. Your monthly loan payments may include a contributions to a First Horizon escrow account - this ensures there will be sufficient funds available to pay your home's taxes, insurance and other costs.
What is an escrow analysis?
Each year we will review your account to estimate future escrow payments and disbursements. This review helps to ensure that your escrow account's blance will have sufficient funds to pay your taxes and insurance when they are due.
Will my monthly contributions to my escrow account ever change?
We will review your escrow account at least once a year. If your review indicates that your account contains sufficient funds to pay your annual taxes and insurance, we will refund any excess to your over $49.00. Any overage less than $40 will be deducted from your next monthly payment. If an escrow review indicates that your account balance will soon have insufficient funds, your monthly loan payment will be increased to cover this shortage.
Will my escrow account pay my property taxes?
First Horizon's Tax Service will contact your local tax office for your property tax information, and will pay the amount reported to us. Depending on your location, you may receive a supplemental tax bill for additional taxes assessed on your home. This bill will be in addition to the original amount reported to First Horizon, and we will not automatically receive information about supplement tax bills. If you prefer that we pay your supplemental taxes from your escrow account, please send us a copy of the bill together with your personal information and loan number. First Horizon cannot pay special assessments to your property or personal property taxes. Please contact us if you receive a tax bill or assessment and are not sure who is responsible for payment.
Will my homeowner's insurance premium be covered by my escrow payments?
Yes. Please check with your insurance agent to make sure that your homeowner's insurance policies and invoices are forwarded to us. Your insurance notices should be sent to the address shown on the back of your First Horizon loan statement.

Online Security and Information Access

Q. Is my personal financial information safe when I use the calculators, complete the application, and submit it online?
A. Yes, and we understand your concerns. We use industry-leading security technology, which means all of your personal information is secure throughout the entire application process. For more information, please refer to our Security Policy. Furthermore, our Privacy Policy is of the highest standards. We do not collect information you enter into the calculators, and no one but you will see the information you've entered into the loan application until you click Submit.
Q. I am a First Horizon customer; can I check my loan information online?
A. Yes, from the home page, there is a box, "Current Customer Log In." Click the "Log In" button. You will need your loan number and social security number to enter your loan information. From this secure area, you can view your account information and maintain your personal information.

Home Equity Loans and Lines of Credit - General Information

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Q. What is equity?
A. A simple definition is equity equals ownership. It's the portion of your house that is actually owned by you (not your mortgage company). A more accurate definition of home equity is the difference between your home's market value and your loan balance.
Q. What is loan to value (LTV)?
A. Compares your total loan balances outstanding to the appraised value of the property. For Example:
Appraised Value = $100,000
1st Mortgage Balance = 80,000
Loan to Value% = 80%
Q. Will interest on my Home Equity Line of Credit be tax-deductible?
AA. The interest on most consumer credit (auto loans and credit cards, for example) is not tax-deductible. Home equity credit is an exception. Why? Because it's secured by your home. This classifies it as mortgage interest, which is usually 100% tax-deductible. According to the tax laws, interest on up to $100,000 of debt, secured by the equity in either your principal residence or second home, is fully deductible. Every rule has exceptions, of course. So check with your tax advisor first.
Q. How much will I have to pay in closing costs on a home equity line of credit?
A. It depends based on the product you choose but ranges from $0 to $1,500.
What is the maximum loan to value on a home equity line of credit?
Our maximum loan to value is 125% of your home's fair market value. Some restrictions apply.
Q. Where do I close my loan?
A. Your loan will be closed by a closing agent at a location convenient to you, often we can even close in your own home.
Q. Is there an annual fee?
A. All lines are subject to a $50 annual fee.
Q. How long does it take to close?
A. Depending on the location of the property it normally can take 2 - 3 weeks to close on a Home Equity Line of Credit.
Q. Is there a prepayment penalty?
A. There is a $500 early termination fee if you close your home equity line of credit within the first two years.
Q. Once the loan is closed, how do I get my cash?
A. There are 3 ways to get your Home Equity Cash - Purchases are automatically debited from your line of credit balance.
* Must be requested and not available in some states.

Home Equity Line of Credit Modifications

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Q. What are the different ways I can modify my HELOC?
A. If you qualify, you can modify your existing HELOC by increasing your line amount, changing certain terms of your line, extending your draw period, or converting a portion of your HELOC to a fixed-rate.
Q. How do I qualify for a HELOC change?
A. There are different requirements for each request. Some requests require credit underwriting and others just a good payment history on your HELOC.
Q. Will I need to order a new appraisal?
A. Our term changes and fixed-rate conversions do not require a new appraisal. Some line increase requests may require a new appraisal though we will advise you if needed.
Q. What is a fixed-rate conversion?
A. A fixed-rate conversion is a feature of your HELOC that allows you to convert your entire balance or a portion of your balance to a fixed rate, fixed term anytime during the draw period. It is similar to an installment loan within your HELOC but your HELOC is still variable rate, open-end credit. The available credit on your HELOC replenishes as you pay down the balance on your conversion portion. Certain conditions and restrictions apply.
Q. How does a fixed-rate conversion work?
A. You can convert a minimum of $10,000 to the fixed-rate conversion. The credit limit on your existing HELOC will be reduced by the amount of your conversion. The conversion portion of your HELOC requires monthly principal and interest payments. As you make payments on your conversion, your available credit on the line is increased by the amount of principal you pay.
Q. What rate will I get on my fixed-rate conversion?
A. Fixed-rate conversion rates are comparable to our current home equity loan rates.
Q. What are the terms allowed on a fixed-rate conversion?
A. You may choose a term of 5, 10, or 15 years; however, the maximum term will be the lesser of 15 years or the 20th anniversary of your HELOC.
Q. Is there a fee for a fixed-rate conversion?
A. There is a $100 conversion / commitment fee (FINANCE CHARGE) for converting to a fixed rate. Fee is subject to change.
Q. What kind of documentation is required?
A. If the conversion request meets our guidelines, we will send you a special FlexLoan Conversion Certificate and a Modification Agreement. You and all parties to the HELOC Agreement will be required to sign and return the document to First Horizon.
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Home Loan Online – General Information

Q. When is the Web site available?
A. The Web site is always available except on Sundays from 6 a.m. to 12 p.m. EST when scheduled maintenance occurs. Additionally, once a quarter, we perform more extensive maintenance from 6 a.m. to 6 p.m. EST.
Q. Which browsers have been certified for use with Home Loan Online?
A. Home Loan Online was tested using the following browsers:
Microsoft Internet Explorer 5.5 and 6.0
Netscape Communicator 4.6 and 6.2
AOL 7.0

Home Loan Online - Security

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Q. When I fill out the Contact Us form, what information appears in the e-mail to Customer Relations?
A. The following information is sent via e-mail:
Q. What should I do if I forget my password?
A. Select the Forgot Password link on the Log In page. You will be asked to enter the answer to your secret question and you will then be prompted to change your password. If you cannot remember the answer to your secret question, contact Customer Relations at (800) 364-7662 to have your password reset.

Reverse Mortgages

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Q. Who is eligible for a Reverse Mortgage?
A. Eligibility rules are simple. If you're at least 62 years old, and if you have a fair amount of equity in your home, you're eligible to apply.
Q. Is it easy to apply?
A. Yes – no income, employment or credit history is required. Plus, you'll receive personal, friendly service from a First Horizon Reverse Mortgage Specialist.
Q. What are the costs involved with setting up a Reverse Mortgage?
A. Like other mortgages, closing costs are involved. These may include: Ask your Reverse Mortgage Specialist for an estimate of closing costs in your area. In addition, you'll continue to be responsible for real estate taxes and homeowner's insurance premiums.
Q. I live in a condominium. Am I eligible?
A. Yes – eligible properties include single-family homes, condominiums, town homes, and 2- to 4-unit dwellings.
Q. How is the loan repaid?
A. A Reverse Mortgage is repaid when no borrowers remain in the home. The repayment can be made from the proceeds of the home's sale, or if the heirs choose, the refinancing of the home.
Q. Is it still possible to leave my home to my children?
A. Yes! Your children may choose to pay off the Reverse Mortgage's outstanding balance. Or, they will receive 100% of the property's remaining equity after the Reverse Mortgage is settled in full.
Q. Why do I need to speak with a HUD counselor before my Reverse Mortgage closes?
A. Our Reverse Mortgages are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). HUD requires that all Reverse Mortgage borrowers meet with a HUD counselor, so you'll understand how a Reverse Mortgage works and feel confident it's the right choice for you.