Trying to get a loan and get confused about what the heck the Lender is talking about?? Here’s a great glossary of terms associated with loans from bankrate.com.
To read all of the terms, visit: http://www.capstone-mortgage.com/help-center/glossaryofmortgageterms
Here are some common ones:
- Adjustable-Rate Mortgage (ARM) – a mortgage with a variable interest rate, which adjusts monthly, biannually, or annually. Option-arms and hybrid mortgages are also considered adjustable-rate mortgages.
– the way a loan is paid off over time in installments, detailing how much goes toward interest, and how much is paid toward principal.
- Annual Percentage Rate (APR) – the actual interest rate you pay on your mortgage, which factors in fees, points, and other costs associated with the loan.
- Closing – the final step in the loan process when loan documents are signed at an escrow or title company.
Closing Costs – Closing costs are the fees you pay at or before closing that are required to process, approve and close your loan. They include lender fees, attorney fees, appraisal fees, title fees, pre-paid taxes and other fees.
- Conventional Mortgage – any mortgage loan that is not insured or guaranteed by the federal government.
- Down Payment – an upfront payment made by the home buyer toward the property purchase price, usually ranging from five to 20 percent. The remainder of the sales prices makes up the mortgage loan amount.
- Earnest Money – a deposit paid to the seller by the buyer as a pledge to complete a real estate transaction. If the seller accepts the offer, the deposit is held in escrow and applied to closing costs when the deal is closed.
- FHA Loan – a program originated during The Great Depression that allows lower income borrowers to qualify for mortgages as long as they fit certain criteria set forth by the Federal Housing Administration who insures them.
- Mortgage – a temporary loan used to finance the purchase of real property, also known as a home loan.
- Points – stands for a percentage point of the loan amount, typically makes up the origination fee, which can be a fraction of a point to multiple points.
- Pre-Approval/Pre-Qualification – processes to determine what you can afford to ensure you can obtain mortgage financing when purchasing a property.
Looking to buy or sell a home? Let the Charlottesville real estate agents with Silvergate help! Contact us today to discuss your needs!
-Paul and Jamie