When going through the process of securing a new home, there are many terms that get used that might be new to you.
Knowing and understanding these terms can make it easier to get through the mortgage and loan process and makes everything just a little bit easier.
Loan Term The number of years it will take to repay the loan
Closing costs The costs the buyer must pay during the mortgage process
Down Payment The amount of the purchase price the buyer is paying
Equity The difference in the value of the house and mortgage loan
Homeowner’s Insurance New buyers secure property insurance prior to closing
Mortgage The loan and all documentation for the home purchase
Settlement Costs The final costs associated with the loan, settled before closing
Truth In Lending A federal mandate lenders must follow to protect consumers from potential fraud
Escrow Buyers set aside a percentage of yearly taxes to be held by the lender
Fixed Rate Mortgage The interest rate and the term of the loan is negotiated and set for the life of the loan, usually between 10 and 40 years.
Construction Mortgage When building a home, a construction mortgage is used where money is advanced based on the construction schedule. After the home is built, it converts to a permanent mortgage.