Navigating the home loan process will be complex, particularly with all of the mortgage-specific lingo. Familiarizing yourself with frequently used mortgage lingo may help the process. In this blog you will find information on frequently used mortgage lingo.

Frequently Used Mortgage Lingo

Pre-approval

A pre-approval is something prepared by a mortgage company confirming the amount and loan program that a person may be approved for using their current earnings, monthly expenses, and credit score. This varies from a pre-qualification, which is simply an “unconfirmed” guess. Full approval is ordinarily given after someone is under agreement for a specific home.

Loan Commitment

Once a buyer enters into a Purchase & Sale Agreement on a home, a mortgage company reviews the personal documentation and the details on the real estate. A loan commitment is subsequently offered to declare that the general criteria have been met and that the loan will be officially granted pending some final items.

Appraised Value

An appraisal is required by a mortgage company to confirm the value of a home. It must be due prior to a mortgage commitment or final approval.

Closing Fees

Closing Costs

There are a standard set of expenses in connection with buying and selling a home. These are referred to as closing costs. They can include real estate commissions, transfer taxes, mortgage fees, legal charges, title insurance, and local recording charges. Pre-paid expenses such as property taxes are often also included in the closing cost terminology, but they are officially a different type of charge due at closing.

Title Insurance

Title insurance protects against defects with the ownership trail and the expenses associated with protecting your rights. Even though title searches are performed before a property transfer, there may be problems that affect your ownership to a home that are not easily included in a title search. Title insurance is a up-front charge that remains valid for the entire time that you remain the owner of a piece of real estate.

Private Mortgage Insurance (PMI)

PMI is mortgage insurance and is traditionally charged on loans for more than 80% of the purchase price. There is commonly an up-front charge and a recurring charge, both calculated against the beginning loan balance. How many years PMI remains is based on the loan program.

Additional Information On Frequently Used Mortgage Lingo

This blog offers information on frequently used mortgage lingo. There could be other terms that you encounter while obtaining a mortgage or during the home buying process.