May 19, 2024

Jocuri

Mad about real estate

Mortgage Lingo for First-time Home Buyers

  • Adjustable Rate Mortgage (ARM) – A mortgage in which the interest rate can change periodically based on a specified index.
  • Amortization – Payments on a mortgage are divided into equal periodic payments calculated to pay off within a specified time period.
  • Amortization Term – The length of time specified to pay off the mortgage (i.e. 360 months for a 30-year mortgage).
  • Annual Percentage Rate (APR) – The measurement of the full loan amount, loan fees, and interest fees expressed in a yearly percentage rate.
  • Biweekly Payment – Instead of making payments once a month, a biweekly payment mortgage allows homeowners to make payment every two weeks.
  • Debt-to-Income Ratio – The ratio of a borrower’s monthly loan payment divided by their gross monthly income, which is expressed as a percentage.
  • Escrow Account – A third-party financial account maintained by a title company which holds money for the benefit of the parties involved in a real estate transaction.
  • Federal Housing Administration (FHA) – The FHA is a division of the Department of Housing and Urban Development and is in charge of insuring residential mortgage loans made by private lenders. The FHA also mandates the standards for underwriting mortgages.
  • Federal National Mortgage Association (FNMA) – Also known as Fannie Mae, the Federal National Mortgage Association is a government-sponsored organization that buys and sells traditional residential mortgages.
  • Fixed Mortgage Rate – An interest rate which remains constant (“fixed”) for the entire life of the loan (i.e. 5.5{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} for the full 30 years).
  • Interest Rate – The percentage a borrower must pay in order to borrow money. For example, if the interest rate is 5.5{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4}, the borrower must pay 5.5{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} of the loan in addition to the actual loan amount.
  • Lien – A monetary legal claim on a property by a lender that is owed money by the owner of the property.
  • Money Merge Account – A popular accelerated mortgage payment system offered by the financial institution U First which enables homeowners to pay off their mortgage in less time than the life of the loan.
  • Mortgage Broker – An individual who works on behalf of a borrower to arrange a mortgage contract with a lender.
  • Mortgage Insurance – Money that is paid to ensure a mortgage when the down payment is less than 20{ef6a2958fe8e96bc49a2b3c1c7204a1bbdb5dac70ce68e07dc54113a68252ca4} of the loan amount.