Buying a home in is a major achievement in most everyones life. Pride of ownership, tax breaks and equity are just a few of the many benefits youll enjoy with your new home.
Your home purchase may also be one of the largest you will ever make. During the emotional excitement of buying your home, you may encounter terms with which you are unfamiliar.
For some, it can be bit embarrassing to ask what they consider too many questions. Others may make a note of their questions but simply forget to revisit those points.
To ensure that you have complete confidence during your home loan process, invest a moment to read this report and become familiar with the concepts and terms youll encounter when applying for a mortgage in .
Knowledge is power, and the more you know, the more successful your decisions will be and the more soundly you will sleep at night having made them.
Adjustable Rate Mortgage (ARM)
Also referred to as a Variable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.
Annual Percentage Rate (APR)
An interest rate that reflects the cost of a mortgage as a yearly rate. This rate takes into account any points and fees and is based on the loan going to its full-term.
An agreement between buyer and seller in which the buyer assumes responsibility for the sellers existing mortgage. This agreement usually saves the buyer money because closing costs and the current interest rate, possibly higher, do not apply.
A method of lowering the buyers monthly payment for a short period of time. The lender or home-builder subsidizes the mortgage by lowering the interest rate for the first few years of a loan.
A limit in the amount the interest rate or monthly payments for an adjustable rate mortgage that may change.
Also referred to as settlement. The meeting at the conclusion of a real estate sale in which the property and funds are exchanged between the two parties involved.
The ratio, expressed as a percentage, which results from dividing a borrowers monthly payment obligation on long-term debts by the borrowers gross monthly income.
Prepaid interest assessed at closing by the lender. A point is equal to 1 percent of the loan amount.
Cash paid by the buyer at closing that makes up the difference between purchase price and the mortgage amount.
Money given by a buyer to a seller as a deposit to commit the buyer to the future transaction. Earnest money is subtracted from closing costs.
The value an owner has in real estate over and above the obligation against the property. Equity is fair market value minus the current indebtedness.
Funds given to a third party which will be held to cover payments such as tax or insurance payments and earnest money deposits.
Fixed Rate Mortgage
A mortgage in which the interest rate remains constant throughout the life of the loan.
The ratio between the amount of the mortgage loan and the appraised value of the property.
The price that a property could possibly bring in the marketplace.
Insurance that protects lenders against loss if a borrower defaults. This is required when the loan-to-value ratio is greater than 80 percent.
A fee charged by a lender for processing a loan application; usually computed as a percentage of the loan.
Refers to Principal, Interest, Taxes, and Insurance.
The decision-making process of granting a loan to a potential home-buyer.
Variable Rate Mortgage
Also referred to as Adjustable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.
There is a lot of free information available to you about buying, selling or investing in real estate. For complete information about the real estate market including current homes for sale, property values and more please visit the most complete website online dedicated to everything real estate. So please feel free to contact me with any of your mortgage questions and I will me more than glad to answer your questions. Call me on my cell at 404 374 1620 or email me at firstname.lastname@example.org
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