Welcome to our comprehensive guide on key mortgage terms—an essential resource to help you navigate the world of home financing with confidence. Whether you’re a first-time homebuyer or a seasoned homeowner, understanding these terms is crucial for making informed decisions about your mortgage.
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The process of paying off a loan over time through regular payments, which include both principal and interest.
The total cost of borrowing expressed as a yearly interest rate, including interest, fees, and other charges.
The initial payment made toward the purchase price of a home, typically expressed as a percentage of the total purchase price.
The difference between the market value of a property and the amount owed on the mortgage loan.
An account held by a third party (usually the lender) to collect and disburse funds, such as property taxes and insurance premiums, on behalf of the borrower.
A mortgage loan with a fixed interest rate and fixed monthly payments for the entire term of the loan.
A mortgage loan with an interest rate that may change periodically, typically based on a specified financial index.
The original amount of money borrowed in a loan, excluding interest and other charges.
An insurance policy that protects the lender in case the borrower defaults on the loan, typically required for conventional loans with a down payment of less than 20%.
Prepaid interest paid to the lender at closing in exchange for a lower interest rate on the mortgage loan.
The process of replacing an existing mortgage with a new loan, often to obtain a lower interest rate, change the loan term, or tap into home equity.
The process of evaluating a borrower's creditworthiness and risk to determine whether to approve a mortgage loan application.
Understanding these common mortgage terms can help you navigate the homebuying process and make informed decisions when choosing a mortgage loan. If you encounter any unfamiliar terms or have questions about the mortgage process, consult with a qualified mortgage lender or financial advisor for assistance.
Understanding these common mortgage terms can help you navigate the homebuying process and make informed decisions when choosing a mortgage loan. If you encounter any unfamiliar terms or have questions about the mortgage process, consult with a qualified mortgage lender or financial advisor for assistance.