Exploring the home loan process may be confusing, especially with a lot of industry-related lingo. Becoming familiar with commonly used mortgage lingo may facilitate the process. In this blog you will find an overview of commonly used mortgage lingo.
Commonly Used Mortgage Lingo
Pre-approval
A pre-approval is a letter provided by a lender detailing the home price and type of loan that a person might be able to obtain based on their current income, debt, and credit report. This is much more concrete than a pre-qualification, which is strictly an “unsubstantiated” estimate. Full approval is normally granted after a buyer enters into a purchase agreement a specific property.
Home Loan Commitment
Once a buyer is under contract for a property, a mortgage company reviews all of a necessary documentation and the data on the home. A mortgage commitment is later offered to state that the up-front requirements have been successfully reviewed and that the home loan will be fully authorized upon receipt of some remaining requirements.
Appraisals
An appraisal is ordered by a mortgage company to verify the value of a property. It is due before a loan commitment or final approval.
Closing Charges
Closing Costs
There are many charges associated with buying and selling a home. These are referred to as closing costs. They may include real estate commissions, transfer taxes, loan fees, attorney charges, title insurance, and county recording charges. Pre-paid expenses such as home owners insurance 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 relates to defects with the ownership trail and the costs associated with defending your rights. Although title searches are performed before a property transfer, there may be issues that endanger your ownership to real estate that are not readily found in a title search. Title insurance is a up-front charge that protects you the entire time that you remain the owner of a property.
Mortgage Insurance (MI)
MI is an acronym for mortgage insurance and is typically required on loans that have less than a 20% down payment. There is frequently an up-front fee and a recurring fee, both calculated against the beginning loan balance. How long MI is payable is based on the type of loan.
More An Overview Of Commonly Used Mortgage Lingo
This article provides an overview of commonly used mortgage lingo. There might be other terms that you encounter while obtaining a home loan or during the real estate process. For additional information, contact Sonny Solomon at 561-247-1047 or sonny@sonnysolomon.com.
