Do You Speak Mortgagese? Terms to Know When Applying for a Mortgage

By
Real Estate Agent with Keller Williams Capital Properties DC AB15253

Congratulations!  You are taking the first steps to changing your life by buying a home.  If you’re buying a home, you are probably applying for a mortgage. Unless you’ve been involved in a home sale before, there are many things you will be learning about for the first time - and lots of words that you have never heard before.  Don't worry!  Nearly everyone feels like a stranger in a strange land when they apply for a mortgage.  To make it a little easier, here is a handy list of some of the key terms that every person involved in a real estate transaction should understand.

Appraisal: The written analysis of the estimated value of a property, as prepared by a qualified appraiser, which often determines if you will qualify for the loan.

Closing: One of the last steps of any sale. This is the meeting where the lender, buyer and seller complete the sale and mortgage process. Once the home closes, the home officially belongs to the new buyer.

Closing costs: This term refers to the money paid at closing to the lender and consists of a loan origination fee, points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. Closing costs usually average between 2 – 6 percent of the total mortgage amount.

Credit report: Simply a report of your credit history that a lender will use to determine if you are a good risk for a loan.

Interest-only mortgage: A loan whereby you only pay the interest portion of the mortgage payment each month.

Interest rate: The annual interest on a loan. The lower your interest rate, the lower your monthly payment will be.

Lock-in: The lender’s guarantee that you will be granted a certain interest rate for a specific time period, such as 30 days before closing.

Origination fee: The fee charged by a lender for processing a loan.

Points: The amount that can be paid to a lender to lower the interest rate on your loan at closing. Each point is equal to 1 percent of the loan amount.

Private mortgage insurance (PMI): For those buyers who put less than 20 percent down on a home, lenders will require you to take out PMI, which is then added to your monthly mortgage payment. This protects the lender in the event that you default on the loan.

Title: The home document that proves ownership of the property.

 

Once you have mastered these terms, you will feel like a complete pro and will start to enjoy the process of buying that new home! Congratulations on the good decision you have made to join the world of homeownership!

Comments (27)

Raymond Henson, SRES, GRI
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

Thank you for the informative post regarding one of the most every changing languages of all, mortgages.

Jan 13, 2021 06:55 AM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Great information! I'm surprised this isn't featured.

Jan 13, 2021 07:53 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Lise, I have  list in my Buyer guide that explains what terms they will hear in buying a house.  

Jan 13, 2021 10:08 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lise these terms are a good start to recieving a "Mortgagese" degree!!!  ☺️

Jan 13, 2021 01:09 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

George Souto  - I have received no higher praise than your kind comments on my post!!! Have a great day

Jan 13, 2021 04:00 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Will Hamm - I have always known that you and Yogi Beara are smarter than the average bear!

Jan 13, 2021 04:01 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Sharon Tara = thanks for the moral support!  I always appreciate your comments in particular

Jan 13, 2021 04:02 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Brian England - I think one of the best things we can do for our buyers is to put them in touch with good lenders

Jan 13, 2021 04:02 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Nina Hollander - of course you speak Mortgagese - that is why your clients love you! and give you such rave reviews

Jan 13, 2021 04:03 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Endre Barath, Jr. - thanks!  How are you holding up in this crazy time? I am going to make sure I have a case of wine in my house and turn off the tv for next week

Jan 13, 2021 04:04 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Rocky Dickerson - I completely agree - that is why it is so important to have a lender who will take the time to explain things to a buyer

Jan 13, 2021 04:05 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Raymond Henson, SRES, GRI  Mortgagese is perhaps the most complicated of all the Romance languages to learn 

Jan 13, 2021 04:09 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Lise I am good have not had the TV on since Baseball Season ended and Wine Consumption increased  by a lot:))))))))))Endre

Jan 13, 2021 04:13 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Endre Barath, Jr. - I remember going to Whole Foods on March 13 to buy a case of wine in preparation for the coming pandemic -  there was no meat but there was wine -  I have lost track of how many cases I have bought since then --probably 5 or 6 or 7 - and I am off to buy a case before next week - LOL

Jan 13, 2021 05:55 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Wayne Martin  - you are so right - and then the buyer expects someone else to fix the problem

Jan 13, 2021 05:55 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

James Dray - buyers need all the help they can get - right?

Jan 13, 2021 05:56 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Joe Jackson - thanks for your kind words and the reposting of my blog post - have a great week

Jan 13, 2021 05:57 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Same here loosing track of the cases like loosing track of time:))Endre

Jan 13, 2021 05:57 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Great information, Lise. There is so much jargon in the real estate business, and with mortgages being a part of many buyers' transactions, they need the education!

Jeff

Jan 13, 2021 07:21 PM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Good Sunday morning, Lise.

Take care, be safe and have a great day.

Jan 17, 2021 05:51 AM

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