Mortgage Terminology for the First Time Home Buyer

Buying a Home for the first time can be a little "nerve racking". Mortgage terminology that brokers use everyday can leave you scratching your head or shaking your head pretending that you know what they're talking about. Here are some mortgage terms and definitions that you"ll be hearing when shopping for a first time home buyer loan:

Adjustable-rate loans, also known as variable-rate loans, usually offer a lower initial interest rate than fixed-rate loans. The interest rate fluctuates over the life of the loan based on market conditions, but the loan agreement generally sets maximum and minimum rates. When interest rates rise, generally so do your loan payments; and when interest rates fall, your monthly payments may be lowered.

Annual percentage rate (APR) is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fees, and certain other credit charges that the borrower is required to pay.

Conventional loans are mortgage loans other than those insured or guaranteed by a government agency such as the FHA (Federal Housing Administration), the VA (Veterans Administration), or the Rural Development Services (formerly know as Farmers Home Administration, or FmHA).

Escrow is the holding of money or documents by a neutral third party prior to closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.

Fixed-rate loans generally have repayment terms of 15, 20, or 30 years. Both the interest rate and the monthly payments (for principal and interest) stay the same during the life of the loan.

The interest rate is the cost of borrowing money expressed as a percentage rate. Interest rates can change because of market conditions. Loan origination fees are fees charged by the lender for processing the loan and are often expressed as a percentage of the loan amount.

Lock-in refers to a written agreement guaranteeing a home buyer a specific interest rate on a home loan provided that the loan is closed within a certain period of time, such as 60 or 90 days. Often the agreement also specifies the number of points to be paid at closing.

A mortgage is a document signed by a borrower when a home loan is made that gives the lender a right to take possession of the property if the borrower fails to pay off the loan.

Overages are the difference between the lowest available price and any higher price that the home buyer agrees to pay for the loan. Loan officers and brokers are often allowed to keep some or all of this difference as extra compensation.

Points are fees paid to the lender for the loan. One point equals 1 percent of the loan amount. Points are usually paid in cash at closing. In some cases, the money needed to pay points can be borrowed, but doing so will increase the loan amount and the total costs.

Thrift institution is a general term for savings banks and savings and loan associations.

Transaction, settlement, or closing costs may include application fees; title examination, abstract of title, title insurance, and property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorneys' fees; recording fees; and notary, appraisal, and credit report fees. Under the Real Estate Settlement Procedures Act, the borrower receives a good faith estimate of closing costs at the time of application or within three days of application. The good faith estimate lists each expected cost either as an amount or a range

When shopping for a first time home buyer loan make sure you shop around and find a broker or a loan officer that's responsive to your needs. And don't be afraid to ask question. Remember, it's the questions you don't ask that could keep you from saving money.

Mortgage Terminology for the First Time Home Buyer was written by Dale Ronewicz (American-Lenders.org). For more on First Time Home Buyer Loans please visit: http://www.american-lenders. org/firsttime_home_buyer_loans/

---

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, chances... Read More

Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages

Sub-prime mortgages are not that much different from average mortgages.... Read More

Finding the Best Homeowner Loans for Your Money

Looking for the best homeowner loans can be stressful, especially... Read More

A Mortgage Loan For Homes

Everybody wants to own a house because it is something... Read More

Choosing The Right Mortgage For You

This article will help you understand the differences between a... Read More

Stock Market, Bonds, Deposit Account, Cash, Equities, Unit Trusts - Few, Just Few of the Ways of Sav

Man has been known for continually simplifying things in his... Read More

Home Mortgage Quotes Online - How Do They Compare To a Quote From a Broker in The Real World?

Online home mortgage quotes are very similar to the quotes... Read More

Getting The Best Rates On Mortgages And Loans

With an impending up-grade to the family due in a... Read More

How to Get Cheap Home Loans with a Bad Credit

It's been years since you made any major improvements to... Read More

Do You REALLY Need a Home Equity Loan?

Your equity is the amount your home is worth, on... Read More

Preventing Foreclosure Proceedings and Understanding Your Options

Every year over 8 million homeowners are seeking help preventing... Read More

Refinance Your House

If you have seen all the advertisements regarding refinancing your... Read More

Think You Cant Get a Mortgage?

You've finally found that dream home that you have always... Read More

Rates May Be Rising: Mortgage And Refinancing Preparation Made Simple For You

Buying a home is probably the single largest investment most... Read More

Home Loan Confusion Continues

Unfortunately, most Americans still do not understand how home loans... Read More

Mortgage Soup

Looking for home mortgage loans can get confusing with the... Read More

Home Loans For People With Bad Credit - Tips To Getting Approved Online

Buying a home with bad credit doesn't have to stop... Read More

Some of the Available Loan Types

There are many mortgage products available on the market today.... Read More

Multi Family Property Living

While most multi family properties are designed to allow the... Read More

Home Equity Line of Credit ? Great Idea for Rainy Day Emergencies

Most Americans tend to live on a paycheck-to-paycheck basis, and... Read More

Gearing Up for Bad Credit Mortgages

Mortgage would have never happened, had mortgages been a no... Read More

First-time House Buyers: to Buy or Not to Buy; that is the Question

Buying your first house is always a difficult time. There... Read More

Securing the Best International Mortgage for Your Home in Spain

Are you one of a growing number of people planning... Read More

Home Buying ? What Can You Afford?

Okay, you've decided to buy a home and are trying... Read More

Reverse Mortgages ? A Tax Free Income For Senior Citizens

I fully realize if it sounds too good to be... Read More

Mortgage Refinance - Tips to Help You Cut Fees and Costs

Saving money through a mortgage refi is more than just... Read More

Refinancing and Car Finance - Is it worth it?

Refinancing and Car Finance - Is it Worth It?No doubt... Read More

Real Estate Lender - Get Approved For a Mortgage Loan Online

Real estate lenders now offer mortgage loan quotes and application... Read More

Home Equity Loan ? When Does Refinancing Make Sense?

For the last two years, interest rates have been much... Read More

Your Mortgage Rate Compare and Save

When trying to obtain the best mortgage rate compare offers... Read More

Private Mortgage Insurance Basics

Will you be asked to pay Private Mortgage Insurance, or... Read More

Fixed Versus Adjustable Rate Mortgages

Which One Should You Choose?Choosing between a fixed rate loan... Read More

A Home Equity Loan ? Is It For You?

Home equity loans are often touted as being the solution... Read More