Terms to Know

As you begin your mortgage process, here are some terms to know. We are here to help you with the process from start to finish!

Closing Costs

Costs the homebuyer pays, in addition to down payment, at the time of purchase. These would usually include appraisal fee, title search, lawyer's fees, but may include points and other fees.

Down Payment

A portion of the purchase price paid in cash upfront, reducing the amount of the loan.

Escrow

An escrow officer holds the documents that change hands during the home buying process and sees that items in the purchase contract are carried out and parties are paid. Most often, homeowners insurance and taxes are held in escrow.

Loan-to-Value Ratio

One of the factors lenders consider before approving a mortgage, this is the loan amount expressed as a percent of the property's market value.

Points

Finance charges paid to the lender as part of the closing costs. (1 point = 1% of the total mortgage loan.) Points can be negotiable and are sometimes tied to the interest rate. Paying more points to get a lower interest rate may be a good idea if you plan to take a long-term loan.

Private Mortgage Insurance (PMI)

Insurance the buyer carries to guarantee the lender is paid off if the buyer fails to pay on a mortgage.  PMI is generally required for mortgages with less than 20% down.

For more information about home loans, please contact us at 515-733-4396 or email at info@RandallStory.com