Understanding the home loan process may be complex, especially with all of the industry-specific terminology. Understanding commonly used mortgage terminology may help the process. Below you will find details on commonly used mortgage terminology.
Commonly Used Mortgage Terminology
A pre-approval is paperwork provided by a loan officer detailing the dollar amount and type of loan that a person might get considering their income, debt, and credit standing. This varies from a pre-qualification, which is simply an "unconfirmed" guess. Full approval is typically granted after a buyer is under contract for a specific piece of real estate.
After a buyer finds a home, a home loan provider reviews the financial documentation and the details on the property. A mortgage commitment is subsequently granted to indicate that the up-front criteria have been approved and that the mortgage will be fully approved upon receipt of a few remaining items.
An appraisal is mandated by a lender to verify the value of a home. It is completed prior to a mortgage commitment or final approval.
There are many charges related to buying and selling a property. These are called closing costs. They may include real estate commissions, transfer taxes, loan charges, attorney charges, title insurance, and county recording fees. Pre-paid expenses such as home owners insurance are sometimes also included in the closing cost terminology, but they are technically a different class of fee billed at settlement.
Title insurance covers problems with a title and the fees required for defending your rights. Even though title searches are ordered before a purchase, there could be glitches that affect your title to a home that are not clearly included in a title search. Title insurance is a one-time bill that remains valid for the entire time that you remain the owner of a home.
Mortgage Insurance (MI)
MI stands for mortgage insurance and is usually required on mortgages for higher than 80% of the home price. There is sometimes an up-front charge and a monthly charge, both calculated against the starting loan balance. The number of years for which it is active depends on the loan program.
More Details On Commonly Used Mortgage Terminology
This article includes details on commonly used mortgage terminology. There will be other terminology that you come across while applying for a mortgage or during the real estate process. For more definitions, contact Bradford Pratt at 781-316-5760 or firstname.lastname@example.org.