Mortgage Lingo Made Easy: A Cheat Sheet for Understanding Mortgage Terminology
Posted by Laura Hernandez
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Buying a home is an exciting time and one of the most confusing aspects of the home buying process is the mortgage terminology. If you are a first-time homebuyer, you may feel like you need a translator to understand everything. But don't worry, I have you covered! Here are some of the most common mortgage terms you need to know:
- ARM: Adjustable Rate Mortgage - This type of mortgage has an interest rate that can change over time based on market conditions.
- APR: Annual Percentage Rate - This is the total cost of borrowing money, including interest and any fees, expressed as a percentage.
- Closing Costs - These are the fees associated with the purchase of a home that are paid at closing, including appraisal fees, title insurance, and attorney fees.
- Equity - This is the value of the home minus any outstanding mortgage debt.
- PMI: Private Mortgage Insurance - This is insurance that protects the lender if the borrower defaults on the loan. It is typically required if the borrower makes a down payment of less than 20%.
- Principal - This is the amount of money borrowed to purchase a home.
- Refinance - This is the process of obtaining a new mortgage to replace an existing one.
Understanding these terms will help you make informed decisions when it comes to your mortgage. Don't let the jargon scare you away from your dream home. With this mortgage lingo cheat sheet, you'll be speaking the language of homeownership in no time!
Also, don't forget that I am here to help you and so is your mortgage broker. We are a team that work together to get you the best opportunity possible.
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Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the HRIS.
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