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/

In The News:

---

Washington Times
How can I avoid a mortgage refinancing rip-off?
IndiaPost.com, CA - 27 minutes ago
For mortgage refinancing, that means knowing the terms of your existing mortgage and the latest mortgage rates, as well as reviewing your credit report and ...
The Truth About Mortgage Refinancing Revealed By Connecticut ... SBWire (press release)
Refinancing suddenly booms Honolulu Advertiser
Lenders Backlogged By Refinancing Rush Washington Post
MSNBC - Forbesall 25 news articles

Money High Street
Average Mortgage Rate Hits 5%, Lowest in Decades
New York Times, United States - 11 hours ago
Of course, buying a home is a more lengthy process than simply calling up a mortgage broker to refinance, and activity typically slows during the holiday ...
Long-Term Mortgage Rate Falls Again Wall Street Journal
Banks' mortgage rates fall below 5% Boston Globe
Homeowners with good credit scores are poised to capitalize on ... Baltimore Sun
Scripps News - AHNall 96 news articles

WJBF-TV
US Banks Offer Mortgages Below 5% After Fed Action
Bloomberg - 20 hours ago
The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan dropped to 1143.8 for the week ending Jan. ...
Mortgage rates fall to record low again Forbes
Freddie Mac: Benchmark mortgage rate continues to new low MarketWatch
Bold government action can solve housing crisis North Texas e-News
American Banker - Connecticut Postall 603 news articles

Cardoza proposal could aid housing crisis
Stockton Record, CA - 4 hours ago
Under the Cardoza plan, the payment on that mortgage refinanced to 4 percent fixed rate would drop to $1194 a month. Contact reporter Bruce Spence at (209) ...

REFILE-UPDATE 1-US mortgage demand dipped before Fed move-MBA
Reuters - Jan 7, 2009
The jump in applications during December may have been driven by homeowners already "on the fence" and prepared to refinance on a drop in mortgage rates, ...
Mortgage applications down in latest survey Forbes
Week-to-week mortgage applications down 8.2% MarketWatch
Fewer apply for home loans; credit line delinquencies increase Los Angeles Times
KVOA.com - Kansas City Starall 63 news articles

Boston Globe
Fed’s Rosengren Calls for ‘Concerted’ Fiscal, Monetary Policies
Bloomberg - 6 hours ago
... to purchase or refinance homes,” Rosengren said. The average rate on a 30-year fixed-rate mortgage dropped for a 10th week to 5.01 percent yesterday, ...
Rosengren sees path to recovery Boston Globe
Fed's Rosengren says recession more severe than thought Reuters
all 52 news articles

AFP
Congressional Press Release on Mortgage Deal
Wall Street Journal - 11 hours ago
"Despite efforts by Congress to address this issue, not enough lenders have come to the table to help borrowers with bad mortgages refinance into new, ...
Citigroup reaches agreement with key senators on mortgage ... Minneapolis Star Tribune
Citigroup agrees to allow judges to help modify some mortgages IdahoStatesman.com
all 562 news articles

TopNews
Question & Answer on mortgage refinancing
Boston Herald, United States - Jan 1, 2009
If I refinance the mortgage on my current house, will I hurt my chances for getting a loan for a new place later on? A: No. Refinancing a loan shouldn’t ...
MORTGAGES: 30-year Mortgage Rate Falls For Ninth Straight Week To ... CNNMoney.com
Mortgage Rates Hit 37-Year Low Poynter.org
Home-Mortgage Rates' Next Stop: Below 5% Wall Street Journal
Ventura County Star - Wall Street Journalall 457 news articles

Refinancing shoots through the roof
Plano Star Courier, TX - 17 hours ago
“Quite a few people have remortgaged,” said Craig Jarrell, loan officer with Pulaski Mortgage. “Most people who refinance are new homeowners as recent as ...

Mortgage refinancing skyrockets
Cincinnati.com, OH - Jan 3, 2009
... 2009 With US mortgage rates the lowest in 30 years, local lenders say they've seen a strong surge in loan applications as homeowners seek to refinance ...
Waco banks seeing a boom in mortgage refinance applications Waco Tribune Herald
Borrowers seeking to refinance may face challenges WTOP
As mortgage rates slide, refinancing applications take off Dallas Morning News
all 15 news articles

mortgage refinance - Google News

Reverse Mortgages: When Is One Right For You?

How do you know if a reverse mortgage is right for you? The answer depends on your current financial situation of course.But other factors such as your... Read More

Private Mortgage Insurance Basics

Will you be asked to pay Private Mortgage Insurance, or PMI? Most lenders will require you to carry PMI if you cannot put 20% or more of... Read More

Stopping Foreclosures

If you as an investor understand the process, you will be able to help more people!Foreclosure is tuff on folks it's all about losing!Your customer loses their... Read More

What is an Offset Mortgage?

An offset mortgage is very similar to a current account mortgage - but instead of having everything all in one account, all accounts are held separately.The offset... Read More

Mortgage Glossary of Terms

A brief list of some of the most common Mortgage terms.Adverse Credit The term used if the borrower has a poor credit history. This could include previous... Read More

Sub-Prime Mortgage Company - 4 Signs of a Predatory Sub-Prime Lender

If you have bad credit and are looking to get a home loan, odds are, you are going to be applying with a subprime lender. Subprime lenders... Read More

Guide to Remortgages

Here is a useful guide to remortgages. What is a remortgage? A remortgage is when the terms of the original mortgage are renegotiated, and usually means that... Read More

Biweekly Mortgage

The biweekly mortgage has been around for years but with the recent media attention to the real estate industry in general and the mortgage industry in particular,... Read More

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

If you are currently looking for a new home, chances are that in all the excitement you won't really give any thought to the type of home... Read More

Buying a House or a Home?

A house is just that, a house, until someone lives in it. That's when it becomes a Home. There's a big difference. At our house, we always... Read More

Should You Get a Home Inspection?

It's very important, and in my opinion, mandatory to have a home inspection done before you close on a house. The inspection helps with giving you an... Read More

First Time Home Owner Mortgage Loans

First time home owners are sometimes surprised at the complexity of the mortgage lending process. If you are searching for a mortgage and you have never owned... Read More

Mortgage Debt Elimination in 5 to 7 years!

Mortgage Debt Elimination shows that most home loan debts will be secured. Secured debts usually are tied to an asset, like your house for a mortgage. If... Read More

How to Find a Direct Homeowner Loan

If you've been thinking about applying for a direct homeowner loan, you might want to take a little bit of time to make sure that you understand... Read More

Adjustable Rate Basics

An adjustable rate loan, most simply stated, means that your interest rate can be adjusted up or down over the months and years. By adjusting the interest... Read More

Unlock your Home Loan Piggy Bank

With the recent sharp increase in property values your current home could be a pot of gold.Property prices have increase about 20% - 30% over the past... Read More

Gearing Up for Bad Credit Mortgages

Mortgage would have never happened, had mortgages been a no profit venture for the mortgagees or the mortgage providers. The lender receives much more than he had... Read More

Kippers or Red Herrings?

Recent news has made much of parents stretching their finances to cover costs for their twenty and thirty something children. Debts and high property prices have forced... Read More

How To Get The Best Home Equity Loan

Are you wondering how to get the best Home Equity loan? Do not be afraid to shop around. If you decide that the timing's right for a... 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. They have interest rates, points, and fees. They can be compared online, and they have seasonal trends.... Read More

A Mortgage Loan For Homes

Everybody wants to own a house because it is something that portrays your success in life. Some people make some ways on how to own one by... Read More

What Your Mortgage Lender Is Not Telling You About Accelerated Mortgages

For years, mainstream banks and financial advisors have been recommending that you pay extra cash into your mortgage account in order to cut down the huge interest... Read More

Reverse Mortgage ? Be Sure You Need It Before Applying For One

Reverse mortgages used to be considered the last resort of desperate retirees who needed to borrow against their home equity in order to pay for medical expenses.... Read More

A New Choice for Home Financing: Correspondent Lenders

When you begin your search for a new home loan, one of the first things to consider is where you'll get the money. Your basic choices will... Read More

The Real Truth About Those: Online Get a Better Loan Web Sites - 6 Things to Look For

You have seen the Commercials on TV go this or that web Site and Refinance your Home and Save thousands. Tempting isn't it? Do they really save... Read More

Find the Best Mortgage Company

If you do not wish to commit to living in one place for at least a few years, then owning a house is probably not for you,... Read More