Mortgage Terminology 101: Breaking Down the Terms

Mortgage Terminology 101: Breaking Down the Terms

 

Now, we know the mortgage process can be dreadfully boring, but if the title of this article captured your attention, you’re probably looking to understand the process a bit better. Now, mycommodo.com really simplifies the process for you by taking the work out of shopping for your mortgage and bringing the lenders to you.

So, it’s only fitting that we break down the mortgage terminology and make things that much easier for you. We’re not trying to be condescending here, we know you probably know what annual percentage rate (APR), equity, and disclosure mean—right?

If you scratched your head just now, you might want to read on, but if you’ve got this, continue to mycommodo.com, and find out just how simple we’re really making this mortgage process for you!

Adjustable Rate Mortgage – a mortgage with a fixed rate of interest that is set for a period of time. The interest rate is low at first and adjusts based on an index over time.

Annual Percentage Rate (APR) – the rate of interest that has to be paid back to the lender. The rate can be either fixed or adjustable.

Appraisal – conducted by a professional appraiser who will give you an estimated value of your property based on a physical inspection and by comparing other houses on the market.

Closing Costs – during the mortgage process, the buyer must pay these costs.

Construction Mortgage – if a person wants to have a home built, they usually have this type of mortgage. The lender will advance the money for the home based on the construction schedule. After the home has been completed, the mortgage is then converted into a permanent mortgage.

Credit History – lenders will look at your credit history when you apply for a mortgage, which is a document or score looking at your borrowing and payment habits.

Disclosure – during the mortgage process, you will be given disclosure documents that will give you details about the home loan agreement.

Down Payment – this is the purchase price that the buyer will pay.

Equity – this is the difference between what your home is worth and your mortgage loan. The equity of the home usually increases over time, as the value of the home goes up.

Fixed Rate Mortgage – when the interest rate and the term of the loan are set for the life of the loan.

Mortgage – the loan and the documentation for the purchase of a home.

Truth in Lending – this is a federal mandate that must be followed by all lenders including proper disclosure rates and other parts of the lending process.

If you have any more questions about mortgage terminology that has you stumped or general questions about the mycommodo.com mortgage process, please feel free to contact us!

Sources:

http://www.mortgagecalculator.org/helpful-advice/mortgage-terminology.php

http://www.fha.com/mortgage_terminology