Completing the home loan process may be challenging, particularly with tons of industry-related terms. Becoming familiar with common mortgage terms will help the process. In this article are details on common mortgage terms.
Common Mortgage Terms
A pre-approval is paperwork prepared by a loan originator detailing the home price and loan product that a buyer may obtain considering their current income, monthly expenses, and credit rating. This is different from a pre-qualification, which is only an “unverified” estimate. Full approval is normally obtained after one is under contract for a specific piece of real estate.
Home Loan Commitment
After a home buyer finds a home, a mortgage company inspects the personal paperwork and the data on the real estate. A loan commitment is later provided to verify that the up-front criteria have been successfully reviewed and that the mortgage will be officially granted pending a few final items.
An appraisal is ordered by a mortgage company to verify the purchase price of a home. It is completed before a loan commitment or final approval.
There are many expenses associated with the transfer of a property. These are known as closing costs. They can include broker commissions, transfer taxes, mortgage fees, legal fees, title insurance, and county recording charges. Pre-paid charges such as home owners insurance are frequently also lumped into the closing cost terminology, but they are really a different class of charge billed at closing.
Title insurance relates to problems with the ownership trail and the fees required for protecting your ownership. Even though title searches are performed before a closing, there may be defects that impact your title to a home that are not clearly uncovered in a title search. Title insurance is a one-time charge that covers you the length of time that you remain the owner of a property.
Mortgage Insurance (MI)
MI is mortgage insurance and is traditionally required on loans for more than 80% of the purchase price. There is commonly an up-front charge and a recurring charge, both based on the starting loan balance. How many years MI remains is based on the type of loan.
Additional Details On Common Mortgage Terms
This blog includes details on common mortgage terms. There will be other phrases that you need to understand while obtaining a home loan or purchasing a home. For more information, contact Bill Kuhlman at 781-444-1399 or firstname.lastname@example.org.