Going through the mortgage process can be an overwhelming experience. Countless different home loan options and hundreds of terms to learn about is enough to deter anyone from going through with this procedure. Well, have no fear because your local Dallas mortgage lenders, The Betz Team, will use their knowledge and expertise to guide you throughout this process. They will educate you and explain all the different mortgage options available.
To begin, The Betz Team has listed below common mortgage terms and their definitions.
Adjustable Rate Mortgage (ARM): This loan permits the lender to periodically adjust the interest rate on the basis of changes in a specified index.
Annual Percentage Rate (APR): The cost to borrow money expressed as a yearly percentage
Amortization: Gradual reduction of the mortgage debt through periodic payments scheduled over the mortgage term.
Amortization Schedule: A timetable for payment of a mortgage that shows the amount of each payment that should be applied to interest and principal and the remaining unpaid principal balance after each payment is applied.
Closing Costs: Money paid by the borrower to effect the closing of a mortgage loan. This generally includes an origination fee, title exam, title insurance, survey, attorney’s fees, prepaid items such as taxes and insurance escrow payments, and any discount points paid.
Down Payment: A percentage of the purchase price paid upfront at closing. A percentage of the purchase price paid upfront at closing.A percentage of the purchase price paid upfront at closing. This money cannot be borrowed from the bank, so if you are thinking about buying a home, start saving now.
Equity: The portion of a property’s value that belongs to the homeowner and exceeds the current balance of a home loan. For example, if the property value is $100,000 and the current loan balance is $75,000, then the homeowner has $25,000, or 25% equity in the home.
FHA (Federal Housing Administration): The federal agency under the Department of Housing and Urban Development (HUD) that insures certain residential mortgages.The federal agency under the Department of Housing and Urban Development (HUD) that insures certain residential mortgages.
Fixed Rate Mortgage: A mortgage that provides for only one interest rate for the entire term of the mortgage.
Loan to Value (LTV): The relationship between the original loan amount of the first mortgage and the property’s appraised value (or sales price, if it is lower).
Mortgage Originator: This is who will work with you and facilitate your home loan.
Origination Fee: The fee(s) charged by a lender to prepare loan documents, make credit checks, inspect, and sometimes appraise a property. The fee(s) are usually computed as a percentage of the face value of the mortgage.
Pre-Qualification: An estimate of the amount a prospective homebuyer may be able to borrow prior to submitting a formal application. A pre-qualification does not include a credit check and should not be confused with pre-approval. An estimate of the amount a prospective homebuyer may be able to borrow prior to submitting a formal application. A pre-qualification does not include a credit check and should not be confused with pre-approval.
Private Mortgage Insurance (PMI): Insurance that is paid for by the borrower to protect the lender of any defaults on the mortgage. This insurance is written by a private company protecting the mortgage lender against loss resulting from a mortgage default.
Refinance: This is an option where you replace your existing mortgage with another one. The repayment of a debt from the proceeds of a new loan using the same property as security.
USDA: A government insured loan that is administered by the United States Department of Agriculture for specific rural areas.
VA: A government insured loan that is administered by the United States Department of Veteran Affairs for active military members and veterans.
For more information on the most common mortgage terms, or to get started on your mortgage application today, please contact your local Dallas mortgage lender, The Betz Team, at 214-361-5626.