Are you thinking about refinancing your mortgage? If so, there are several reasons why refinancing…
If you’re a first-time homebuyer, or it’s been a while since you’ve purchased a home, the many mortgage terms and phrases can be confusing. Given how important these terms are to understanding the mortgage process, we’ve compiled a list to help familiarize yourself with common mortgage lingo and get you started on your homebuying journey!
Mortgages can be confusing – abbreviations and acronyms are rampant, so be prepared for an alphabet soup of terms! Here’s a breakdown of some of the most common terms you’ll hear when discussing a mortgage:
- Annual Percentage Rate: Also known as APR, this is a representation of your interest rate along with other additional charges that you pay to get the loan. This can include mortgage insurance and loan origination fees. It’s commonly represented as a percentage.
- Appraisal: A written analysis prepared by a qualified appraiser that estimates the value of the property, providing you with an appraised value.
- Closing: A meeting held to finalize the sale of a property. The buyer signs the mortgage documents and pays closing costs. Also called “settlement.”
- Default: Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
- Delinquency: Failure to make on-time mortgage payments.
- Loan-to-Value: A loan to value (LTV) percentage is a number that describes the size of a loan compared to the value of the property securing the loan. Lenders use the ratio to understand how risky a loan is.
- The date on which the principal balance of a loan becomes due and payable.
- Principal: The amount borrowed or remaining unpaid – the part of the monthly payment that reduces the remaining balance of a mortgage.
- Principal Balance: The outstanding balance of principal on a mortgage not including interest or any other charges.
- Mortgage: A legal document that pledges a property to the lender as security for payment of debt.
- Security: The property that will be pledged as collateral for a loan.
How do you decide what type of mortgage is right for you? Reach out to one of HUNT Mortgage’s knowledgeable Mortgage Consultants today to learn about available options!