To all my blog readers and subscribers, I always try to bring to you things of value and substance whether or not it came from me or another colleague in the real estate industry. Rebekah Radice has delivered again.
This is yet another one of those instances, Rebekah Radice, a mortgage loan originator with Benchmark Mortgage and a colleague of mine out of Colorado Springs, CO has some great and practical advise that I think anyone who owns a home and is considering selling your home or a prospective home buyer would benefit from. Rebekah has become a trusted source of information in regards to today’s mortgage industry and how it affects the consumer.
This information is especially worth sharing with all Dallas/Fort Worth, TX and Keller, TX prospective homebuyers.
All consumers who want to purchase a home need to become familiar with the many terms used in today’s mortgage industry. I can walk you through the tedious process of purchasing your home successfully. We work with local lenders who will explain all the ins and outs of the various financing programs to Northeast Tarrant County Home Buyers.
To your success,
John Hrisco of John Hrisco and Associates
p.s. if you feel like making a comment here for the reblog, thank you, but please visit Rebekah's original blog post via the link below and tell her what a great job she did on the information provided.
As you begin the process of purchasing a new home, understanding a few of the mortgage terms thrown at you will give you a valuable advantage. Colorado home buyers should have a grasp on general terms before meeting with a Loan Officer and feeling overwhelmed by the often confusing terminology.
We all know that you need to read a contract before signing on the dotted line. So why then do so many people sign a loan application without fully comprehending the details?
Below are just a few common loan terms and how they apply to you:
1. Adjustable or Variable Rate
An adjustable (ARM) or variable rate is typically fixed for a period of time before moving into its adjustment period. The fixed period can be anywhere from 1-10 years and typically offers a substantially lower interest rate than a fixed rate. Once the initial fixed period ends, the rate may adjust up or down dependent on market conditions. Subsequent adjustments are either every 6 months or once per year.
The appraisal is a written estimate of a property's current market value and will be prepared by a licensed appraiser. Once you complete your home inspection, the appraisal will be ordered.
3. Bi-Weekly Mortgage
This option has become increasingly popular as a means to pay your loan down in a shorter amount of time.
Here is how it works: You pay half of your monthly mortgage payment every other week which results in 26 payments being made over the year. This additional payment is put towards principal and allows you to pay your loan off in a shorter amount of time.
Escrow has a different meaning dependent on your state. For Colorado homeowners, your escrow account is a managed account including property taxes and homeowners insurance. As you make your monthly payments, your taxes and insurance will be held until they become due. At that point, your lender will pay those bills on your behalf.
5. Fixed Rate
A fixed interest rate will not change over the life of the loan. Your interest rate will remain the same until your term ends or you refinance the loan.
6. Good Faith Estimate
The Good Faith Estimate lists all of the settlement charges you will pay at closing. The lender is required to provide this form to you within three business days of receiving the loan application.
7. Interest rate
Your mortgage interest rate is the price of money you are borrowing to purchase a home. The interest rate will fluctuate dependent on market conditions and is used to calculate the interest payment you make to the lender.
8. Mortgage Insurance
Mortgage Insurance or PMI insures the lender against default. This is an upfront fee that is charged to the borrower and calculated into the monthly mortgage payment. Mortgage insurance is required unless 20% is put down on the home.
The principal is what becomes your equity and overall investment. The principle is the portion of the monthly payment that will go will to reduce your loan balance.
Title insurance protects you and your lender against a loss that arises from the title of the property.
For example: Work might have been done prior to your ownership and a lien has been filed. Title insurance covers the insured party for any claims and legal fees that arise from a situation such as that.
11. Underwriting Requirements
Underwriting requirements are used by lenders to determine your qualifications. The criteria are a comprehensive evaluation of your creditworthiness and overall ability to repay the loan.
Once you have a handle on a few basic loan terms, your next step is determining which loan program fits your needs.
To learn more: Check out our FREE Top 20 Homebuyer Secrets that can save you thousands of dollars! Plus browse our Home Buying Resources section and fill-out a free no-obligation secure online application or call us in Colorado Springs, Colorado at 719.387.1368 with any questions.
Home Loan Terms You Need to Know BEFORE You Buy was written by Rebekah Radice.
Rebekah's Mortgage Grapevine (unashamed plug) provides insight, education and musings on anything from mortgage lending and real estate, to social media, marketing and all things relevant to your everday success! If you want to learn lots of cool things, have your thoughts provoked, AND be entertained, be sure to hit the SUBSCRIBE button to the right!
Rebekah Radice | Mortgage Loan Originator
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T: 719.387.1368 | Email: email@example.com | Website: http://rebekahradice.com |CO & NMLS Licensee: LMB100010938 & 288596 | Benchmark Mortgage dba Ark-La-Tek Financial Services, LLC | 12 E. Kiowa |Colorado Springs, CO 80903
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