uying a Home for the first interest rate, points, broker
time can be a little "nerve fees, and certain other credit
racking". Mortgage charges that the borrower is
terminology that brokers use required to pay.
everyday can leave you scratching
your head or shaking your head Conventional loans are mortgage
pretending that you know what loans other than those insured or
they're talking about. Here are guaranteed by a government agency
some mortgage terms and such as the FHA (Federal Housing
definitions that you"ll be Administration), the VA (Veterans
hearing when shopping for a first Administration), or the Rural
time home buyer loan: Development Services (formerly
know as Farmers Home
Adjustable-rate loans, also known Administration, or FmHA).
as variable-rate loans, usually
offer a lower initial interest Escrow is the holding of money or
rate than fixed-rate loans. The documents by a neutral third
interest rate fluctuates over the party prior to closing. It can
life of the loan based on market also be an account held by the
conditions, but the loan lender (or servicer) into which a
agreement generally sets maximum homeowner pays money for taxes
and minimum rates. When interest and insurance.
rates rise, generally so do your
loan payments; and when interest Fixed-rate loans generally have
rates fall, your monthly payments repayment terms of 15, 20, or 30
may be lowered. years. Both the interest rate and
the monthly payments (for
Annual percentage rate (APR) is principal and interest) stay the
the cost of credit expressed as a same during the life of the loan.
yearly rate. The APR includes the
price and any higher price that
The interest rate is the cost of the home buyer agrees to pay for
borrowing money expressed as a the loan. Loan officers and
percentage rate. Interest rates brokers are often allowed to keep
can change because of market some or all of this difference as
conditions. Loan origination fees extra compensation.
are fees charged by the lender
for processing the loan and are Points are fees paid to the
often expressed as a percentage lender for the loan. One point
of the loan amount. equals 1 percent of the loan
amount. Points are usually paid
Lock-in refers to a written in cash at closing. In some
agreement guaranteeing a home cases, the money needed to pay
buyer a specific interest rate on points can be borrowed, but doing
a home loan provided that the so will increase the loan amount
loan is closed within a certain and the total costs.
period of time, such as 60 or 90
days. Often the agreement also Thrift institution is a general
specifies the number of points to term for savings banks and
be paid at closing. savings and loan associations.
A mortgage is a document signed Transaction, settlement, or
by a borrower when a home loan is closing costs may include
made that gives the lender a application fees; title
right to take possession of the examination, abstract of title,
property if the borrower fails to title insurance, and property
pay off the loan. survey fees; fees for preparing
deeds, mortgages, and settlement
Overages are the difference documents; attorneys' fees;
between the lowest available recording fees; and notary,
appraisal, and credit report
fees. When shopping for a first time
home buyer loan make sure you
Under the Real Estate Settlement shop around and find a broker or
Procedures Act, the borrower a loan officer that's responsive
receives a good faith estimate of to your needs. And don't be
closing costs at the time of afraid to ask question. Remember,
application or within three days it's the questions you don't ask
of application. The good faith that could keep you from saving
estimate lists each expected cost money.
either as an amount or a range.
About the Author:
Mortgage Terminology for the First Time Home Buyer was written by Dale Ronewicz. For more information on Home Finance please visit: http://www.american-lenders.org
(this link must be active on your site to use this article)
Source: www.isnare.com
