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Anyone who aim at mortgage loans and wishes to make an informed and reasonable choice, should well understand about mortgage loan and its terminology. There is a certain set of terms which are the essential part of mortgage loan process and mortgage insurance as well.
Generally speaking about mortgage loans, it is necessary to notice that sound knowledge of the main aspects of mortgage terminology is your key to success. Basic mortgage loan terminology refers to mortgage loan types and mortgage loan documents. You have to familiarize yourself with the following terminology to get the best deal.
Mortgage loan term:
Fixed period during which you have to pay off your loan. So longer the term the lower the payment.
Interest rate:
Certain amount of money which you have to pay off for borrowing money. Your interest rate depends on the cost of the house you purchase, amount of money you can afford to put down, your income and credit rating.
Closing costs:
Final and total sum of all expenses you have to pay when you become a property owner.
Principal:
A certain amount of money borrowed from lender.
ARM (Adjustable Rate Mortgage):
This is one of the main types of mortgage insurance, when interest rate changes within certain period of time (can change depending on movements of an index rate).
APR (Annual Rate Percentage):
A kind of interest rate which involves all expenses for the mortgage. As a rule APR is higher than advertised rate, that is why you can easily compare annual rate percentage and fees of various lenders.
Down payment:
The amount of money (cash) you pay directly to real-estate seller. This sum is the difference between the mortgage loan amount and real price of the object.
Escrow:
Mortgage loan document which takes effect only after conditions stated in it are fulfilled.
Advance:
Payment which is paid in advance according to mortgage agreement.
FRM (Fixed Rate Mortgage):
Fixed rate mortgage, one of the oldest and time-proved types of traditional mortgage loans which has fixed interest rate and remains unchanged during the mortgage agreement is in effect. |
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Mortgage best buys and tools |
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| More from Your Mortgage |
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| When
it comes to household insurance, there are two kinds of
policy.
* Buildings insurance covers the structure of the home
itself, as well as the fixtures and fittings
* Contents insurance covers the contents you would take
if you moved.
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