Top Mortgage Terms To Know

If you scan any mortgage website, you will find a detailed glossary that contains literally hundreds of lending and real estate-related terms. These are a few of the top terms that you will hear a number of times right through the approval & home buying process. Once you understand all the industry jargon that professionals in the field use and you have a good home buying team, you will be a little more confident while discussing various topics and that are crucial to your transaction.

Mortgage-Related Terms

  • Amortization Schedule: The payments schedule that show the amount that has been applied to the principal-amount & the interest through the payoff

  • Adjustable Rate Mortgage (ARM): The ARM is related to a certain financial index & might adjust post a fixed period of time

  • Annual Percentage Rate (APR): The rate of interest which is inclusive of loan-related fees. This helps in determining the entire cost of borrowing the loan.

  • Buy-down: The up-front fee that the borrower pays to reduce the mortgage rate & the monthly payment

  • Combined Loan-to-Value (CLTV): All the mortgage obligations on a specific property in comparison to the current fair market value

  • Delinquency: Late payments on the borrower’s monthly liability

  • Disclosure: The documents that the lender, buyer & seller sign during the real estate purchase/ mortgage transaction

  • Discount Point: The amount that is paid to reduce an interest rate

  • Fixed Rate Mortgage: The mortgage in which the interest rate does not change through the term of the note

  • Good Faith Estimate (GFE): The mortgage broker/lender has to provide a GFE to the customer. It is an itemized list of all the costs & fees related to the loan and has to be provided within 3 business days of the loan application date

  • Gross Income: The total taxable-income that is verified by the lender via tax returns & W2’s

  • Home Equity Line of Credit (HELOC): The line of credit that is secured by real estate

  • Joint Liability: When multiple people apply for & secure a mortgage

These are just some of the terms you will come across while your loan is being processed and closed. You will also hear real estate terms like Acceptance, Contingency, Due-Diligence, Deed of Trust, Earnest Money, Escrow, Equity and a lot more. Reading a little about all these terms will help you gain a firmer footing when you are applying for and waiting for your mortgage loan to get approved. For more information, contact ResMac Home Loans today.