Navigating the loan process can be confusing, especially with all of the mortgage-related lingo. Understanding commonly used mortgage lingo may make the process less stressful. Below are details on commonly used mortgage lingo.
Commonly Used Mortgage Lingo
A pre-approval is a form prepared by a loan originator detailing the home price and loan program that a person may be able to obtain given their income, debt, and credit standing. This is different from a pre-qualification, which is merely an "unsubstantiated" estimate. Actual approval is usually granted after a buyer is under agreement for a specific piece of real estate.
Once a buyer enters into a P&S Agreement on a home, a home loan provider reviews the personal paperwork and the data on the property. A loan commitment is then granted to confirm that the primary requirements have been approved and that the loan will be fully approved upon completion of minor requirements.
An appraisal is ordered by a lender to verify the purchase price of a property. It must be completed before a mortgage commitment or approval.
There are many fees in connection with the transfer of a property. These are known as closing costs. They often include real estate commissions, transfer taxes, loan charges, attorney charges, title insurance, and county recording fees. Pre-paid charges such as property taxes are frequently also lumped into the closing cost category, but they are technically a different class of expense billed at settlement.
Title insurance relates to issues with a title and the costs associated with protecting your rights. Although title searches are performed before a property transfer, there may be defects that endanger your ownership to real estate that are not readily identified in a title search. Title insurance is a up-front bill that protects you the length of time that you own a piece of real estate.
Mortgage Insurance (MI)
MI stands for mortgage insurance and is traditionally required on loans with less than a 20% down payment. There is sometimes an up-front fee and a recurring fee, both calculated against the starting loan amount. How long MI is payable is based on the type of loan.
More Details On Commonly Used Mortgage Lingo
This blog provides details on commonly used mortgage lingo. There might be other terms that you come across while applying for a home loan or during the home buying process. For additional definitions, contact Linda Gray at 603-801-8002 or firstname.lastname@example.org.