What the heck does that mean?
Sometimes it can feel like those in the mortgage industry are speaking a different language! This can be intimidating. So, I’m sharing some key words that you’ll likely hear when you are buying a home for the first time.
Pre-Qualify
An evaluation by a lender that determines whether the borrower qualifies for a loan and the maximum amount for which they qualify.
Adjustable Rate Mortgage (ARM)
A mortgage that has an interest rate that adjusts periodically based on a pre-selected index.
Annual Percentage Rate (APR)
A broader measure of the cost of a mortgage that includes the interest rate and other fees and charges paid to obtain the mortgage.
Back End Ratio
The ratio of all fixed debt, including housing expenses to gross income.
Escrow
An account held by the lender in which the borrower deposits funds for property taxes and homeowner’s and flood insurance.
Private Mortgage Insurance (PMI)
Insurance paid by the borrower to ensure repayment in the event that the borrower defaults – may be required when borrower has a down payment of less than 20%.
Homeowner’s Insurance
Combined property and liability insurance designed for residential property owners.
Lien
A legal claim against property – must be resolved before the home sells.
Market Value
The highest price that a buyer would pay and the lowest price that a seller would allow on a property.
Fixed Rate Mortgage
A mortgage that keeps the same interest rate and monthly payment throughout its term.
Now that you are armed with the lingo, are you ready to start that conversation? Give us, at Stockton Mortgage Corporation, a call 1-888-914-2276
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