Adjustable-rate Mortgage (ARM) - A mortgage that does not have a fixed interest rate. Based on market conditions, the rate can increase or decrease, affecting your payment.
- Private Mortgage Insurance (PMI) - This fee protects the lender against a loss if a borrower defaults on the loan and is added to the monthly mortgage payment. PMI is usually required if the down payment is less than 20% of the purchase price. VA, FHA, VA Guarenteed loans fall into this catagory. Payments can be reduced sometimes by over $200 a month if you are able to put 20% down.
- Fixed-rate Loans - A mortgage that has a fixed interest rate throughout the life of the loan. Repayment terms are generally 15, 20, or 30 years. Payments stay the same unless refinancing is done.
- Escrow - Monies or documents held by a neutral third party before closing on a property. It can also be an account held by the lender, usually set up to pay for taxes and insurance on their investment.
- Loan Origination Fee - A fee charged be the lender for processing a loan. All lenders charge different amounts so it is always best to shop around, they will compete for your business.
- Points - These fees are paid to the lender for the loan, usually in relation to the interest rate. One point is equal to 1% of the principal amount of a mortgage loan. You can "buy down" your interest rate to lower your monthly payment.
- Lock-in - A written agreement setting a specific interest rate on a home loan. The lock-in is typically good for a specific time, usually 60 to 90 days.
- Offer - When one person proposes a contract to another; if the other person accepts the offer, a binding contract is formed.
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Joey Condon, Realtor
Rock Solid Real Estate!