Common Mortgage Terms to Know Before Applying For a Mortgage Loan

For many people, the mortgage loan process can be confusing and overwhelming. Some homebuyers simply have insufficient knowledge. Others may hesitate to apply for mortgage loans at the right time.

If you are interested in getting a mortgage loan, and buying a home, you need a plan.

You may also need a reliable Mortgage Broker Philadelphia firm to assist. If you want to learn more about mortgage-related terms, the time is now.

The following terms are very important to the mortgage process:

1. Mortgage- This includes the loan and supporting documentation needed to buy a residential property. Mortgage brokers and lenders can help you in choosing the right type of loan. Mortgage lenders must follow strict guidelines. To learn more about underwriting guidelines, talk to a Latitude Financial mortgage expert.

2. Annual percentage rate- This is the rate of interest owed to the mortgage lender. Depending upon the loan type, this percentage rate can be either fixed or adjustable.

3. Adjustable-rate mortgage (ARM)- Unlike fixed rates mortgages, these mortgages will begin to change after a period. The initial fixed period is usually between three to five years. After that, the interest rate gets adjusted. These adjustments are based on changes in the market and other related factors. These include margins, indexes, conversions, rate caps, and other variables.

4. Appraisal- A property appraisal is performed by an expert with sufficient knowledge and experience. This expert will identify your property’s actual value as per current industry standards and rates. Before fixing the price, he or she will conduct a detailed inspection. The expert will also compare the property to other properties.

5. Amortization- This will depend on the repayment schedule of your loan amount. The payments of your loan are typically divided over equal periods. If you want to know more, connect with Latitude Financial mortgage experts. We are experienced Mortgage Brokers Harrisburg trusts.

6. Closing costs- These costs are paid at the end, before gaining ownership of the house. There are many different amounts, meant for different purposes. Some are paid out-of-pocket, while others are rolled into your loan balance. A consultation with a reputed mortgage broker can give you a better idea.

7. Down payment- This is a common term every property buyer and seller talks about. A down payment is a percentage of your total home price. The mortgage lenders ask for a particular amount to qualify for the mortgage.

8. Equity- This is the difference between the price value of your home and what you owe. The equity of a property can increase as the value of the property increases, and as the loan amount decreases.

9. Good faith estimate- This is an estimation of closing costs made by the mortgage lender. It is an approximated amount that the buyer has to pay at the end, before closing the loan.

10. Settlement costs — This is the amount calculated before closing. These are also called closing costs. Once these costs are paid, the borrowers legally become the owners.

11. Truth in lending- This is a federal mandate that each loan lender and borrower must understand. This mandate protects borrowers from inaccurate and unfair practices. Lenders must disclose rates, fees, and all other essentials of the loan lending process. Ultimately, truth in lending safeguards a home buyer from any kind of fraud.

In the end, there are many essential terminologies you must know about mortgage loans. If you are searching for a “Mortgage Broker Near me,” you deserve one you can trust. When looking for homes in Philadelphia or nearby regions, feel free to connect with Latitude Financial. We can help you with home loans, refinance loans, cash-out refinance, adjustable-rate mortgages, jumbo loans, renovation loans, VA loans, FHA loans, USDA loans, and many other mortgage loan needs.

Call us today!