Mortgage Key Terms
Mortgage loans can be confusing and overwhelming. Ever wonder what your Loan officer is talking about??? Relax, and let us serve you better by finding the right loan for you. In the process of it all you may impress your loan officer with all this knowledge you are acquiring!
So take a look below at some of these mortgage key terms to help you along the way. Check back every week as we will be providing more and more terms to help you become a better expert!
Earnest Money – a deposit paid to the seller by the buyer as a pledge to complete a real estate transaction. If the seller accepts the offer, the deposit is held in escrow and applied to closing costs when the deal is closed.
Equal Credit Opportunity Act – a federal law that prevents lenders from discriminating applicants based on race, religion, national origin, sex, age, marital status or involvement in public assistance programs
Escrow – a third party intermediary who holds and allocates funds, including taxes and insurance in a mortgage transaction.
Federal Funds Rate – the interest rate banks charge one another for overnight use of excess reserves.
Federal Home Loan Mortgage Corporation – one of the largest financiers of conventional mortgages on the secondary market. Widely known as Freddie Mac.
Federal National Mortgage Corporation – a publicly owned, government-sponsored corporation that packages mortgages and resells them on the secondary market. Also known as Fannie Mae.
FHA Loan – a program originated during The Great Depression that allows lower income borrowers to qualify for mortgages as long as they fit certain criteria set forth by the Federal Housing Administration who insures them.
First-Time Homebuyer – typically defined as someone who has not owned another property at any time during the three years prior to the date of the purchase.
Fixed-Rate Mortgage – a mortgage with a constant interest rate that will not adjust at any point during the life of the loan.
Foreclosure – the legal process by which a bank or lender sells a property after a borrower fails to meet the repayment terms of the loan.
Good Faith Estimate – a disclosure which details your loan summary and an estimate of the charges you’ll incur upon settlement.
Graduated Payment Mortgage – a negative amortization mortgage with flexible payment options that gradually increase over time until leveling off. Intended for young couples who are unable to make the full mortgage payment, but whose income will increase over time.
Hard Money Loan – a mortgage of last resort for borrowers who can’t obtain financing in the standard market due to poor credit.
HARP Loan – a refinance loan offered to those with negative equity.
Hazard Insurance – insurance which protects a property owner from damages caused by fire or severe weather.
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