Making Sense of Mortgage SpeakApplying for a home loan can be overwhelming. You will need to contend with mountains of papers, contracts, documents; and do lots of planning and coordination. Add to that a whole language unique to the mortgage loan process and you have the makings of an experience unlike any other. Agreeing to the terms of your home loan is no small matter. It is important to understand every word of the contract and terms to which you are agreeing. Although it may be easy to ignore terms you don't understand now, you may be haunted by what you did not know when you are ready to sell or refinance. Eliminate the mystery by taking the time to familiarize yourself with the terms that are common among lenders. Following are explanations of some of the most common terms used in the home loan process. Also, don't be afraid to call on the expertise of your credit union representative. They are happy to answer any questions that you have. Adjustable Rate Mortgage: The amount of interest the lender charges on your principal varies. ARM's generally carry provisions for minimum and maximum interest rates. If you choose an adjustable rate mortgage, you can expect to make higher payments when interest rates move closer to the maximum and lower payments when rates hover nearer the minimum. Annual Percentage Rate: The extension of credit is a privilege, but it is not free. The annual percentage rate of your loan gives you a picture of the annual cost of the credit that had been extended to you. You will find your annual percentage rate outlined in your initial contract, and on your monthly statements. Appraisal: A trained professional will evaluate your home to determine its value. The estimated figure is derived from a combination of factors including market conditions and the property itself. Closing Costs: These are costs, such as points, taxes and title insurance that must be paid at closing. These costs are not included in the cost of the home and are paid separately. Depending on your situation, there are a few lenders that may be able to extend you a loan that includes the amount of purchase and the closing costs. Default: Failure to repay your mortgage loan according to the terms set forth in the loan contract. Equity: This term is used in reference to the value in your home above the total amount of liens against your home. Escrow: Your lender may hold money from each payment. This money is collected to satisfy expenses of home ownership such as taxes and insurance. If you have an escrow account your mortgage company will pay tax and insurance payments as they come due. Fixed Rate Mortgage: Unlike an adjustable rate mortgage, a fixed rate mortgage maintains constant interest rates throughout the life of the loan. Good Faith Estimate: Potential lenders may provide written documentation of anticipated costs and fees for your mortgage. This document is called a good faith estimate. It will give you an idea of how much you can expect to spend to secure a mortgage. Mortgage: Your mortgage is the amount of the loan you secured to purchase your home, minus the down payment. Your home serves as collateral and is considered a guarantee for the loan. Points: Each point represents one percent of the amount of your mortgage loan. Two points on a $100,000.00 mortgage loan equals $2,000.00. Of course, there are a number of other terms that you will encounter during the loan process. Make sure you fully understand every word of your contract before you sign on the dotted line. Nicole Soltau
MORE RESOURCES updated Wed. April / 24 / 2024 Should You Refinance Halfway Through Your Mortgage? Bankrate.com 10-year refinance rates: What to know about the current market CNN Underscored Only Half Of Black Seniors Approved For Home Repair Or Refinance Loans To Age In Place Block Club Chicago 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider How to Refinance Your Mortgage NerdWallet Will Interest Rates Go Down in May 2024? | Mortgage Rates Forecast The Mortgage Reports Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider Mortgage Rates This Week NerdWallet Loan Modification Vs. Refinance Bankrate.com 30-Year Mortgage Refinance Rates Business Insider Mortgage Interest Rates Today, April 22, 2024 | The Still-Hot Economy is Keeping Rates High Business Insider Mortgage Interest Rates Today, April 21, 2024 | Rates Remain Near 7% Business Insider Mortgage Interest Rates Today, April 19, 2024 | High Rates Make for a Challenging Homebuying Season Business Insider The best mortgage lenders for refinancing in April 2024 CNN Underscored How To Choose The Right Kind Of Refinance For You Bankrate.com Mortgage Interest Rates Today, April 20, 2024 | Rates Remain Elevated, but They Could Fall Later This Year Business Insider Should You Refinance Your Mortgage In 2024? Bankrate.com How To Refinance A Rental House Bankrate.com Mortgage Refinance Rates: Compare Current Rates Business Insider Best Mortgage Refinance Lenders In 2024 Bankrate.com Current mortgage refinance rates CNN Underscored Best Refinance Lenders of April 2024: Refinance Your Mortgage The Motley Fool Best Mortgage Refinance Lenders of April 2024 Business Insider How To Get A Home Equity Loan With Bad Credit Bankrate.com When to Consider Refinancing Your Mortgage Business Insider Mortgage Rates Chart | Historical and Current Rate Trends The Mortgage Reports Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports Mortgage Rate Forecast February 2024 Bankrate.com How Soon Can You Refinance a Mortgage? NerdWallet Refinancing a Home Equity Loan (2024 Guide) MarketWatch Mortgage Rate History: 1970s to 2023 Bankrate.com 30-year refinance rates: What to know CNN Underscored Current 15-year refinance rates — and lenders that offer them CNN Underscored When to Refinance Mortgage: Is it Time? - Buy Side from WSJ The Wall Street Journal With property values strong in 2023, many homeowners tapped home equity lines of credit, pushing total HELOC ... Miami Herald Pros and Cons of a Cash-Out Refinance Bankrate.com Should I Refinance My Mortgage Now? When to Refinance As Rates Drop Business Insider What Credit Score Do I Need To Refinance? Bankrate.com Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023 Consumer Financial Protection Bureau The Best Mortgage Refinance Rates in Canada NerdWallet Will Mortgage Rates Go Down in 2024? What Homebuyers Should Expect Business Insider Mortgage Interest Rates Today, April 16, 2024 | Rates Remain Elevated After Last Week's Spike Business Insider
|