An Overview Of Common Mortgage Terms

Understanding the home loan process will be confusing, especially with all of the loan-related terms. Familiarizing yourself with common mortgage terms may facilitate the process. In this article you will find an overview of common mortgage terms.

Common Mortgage Terms

Pre-approval

A pre-approval is a form prepared by a mortgage company confirming the price and loan program that a person might get considering their income, debt, and credit standing. This varies from a pre-qualification, which is strictly an “unconfirmed” guess. Actual approval is ordinarily granted after someone signs a contract to purchase a specific property.

Mortgage Commitment

After a buyer finds a property, a lender reviews all of a personal documentation and the information on the home. A mortgage commitment is then offered to indicate that the primary requirements have been approved and that the loan will be fully approved upon receipt of a few remaining requirements.

Appraisals

An appraisal is mandated by a home mortgage provider to confirm the value of a home. It must be completed before a loan commitment or approval.

Closing Terms

Closing Costs

There are several typical fees related to the transfer of real estate. These are known as closing costs. They often include broker commissions, transfer taxes, mortgage charges, attorney charges, title insurance, and local recording fees. Pre-paid charges such as property taxes are frequently also lumped into the closing cost terminology, but they are really a different type of charge billed at settlement.

Title Insurance

Title insurance protects against problems with the ownership trail and the fees associated with defending your rights. Even though title searches are completed before a property transfer, there could be issues that impact your title to real estate that are not clearly uncovered in a title search. Title insurance is a up-front bill that protects you the length of time that you own a property.

Mortgage Insurance (MI)

MI is mortgage insurance and is traditionally charged on loans with lower than a 20% down payment. There is usually an up-front charge and a monthly fee, both based on the beginning loan balance. The duration for which it is active is based on the loan program.

Additional An Overview Of Common Mortgage Terms

This blog offers an overview of common mortgage terms. There might be other lingo that you come across while applying for a mortgage or purchasing real estate. For additional information, contact Jeanne Umbrello at (781) 894-4321 or jeanneumbrello@hotmail.com.