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The Rosetta Stone of Home Loan Terms

By: Hal James..

Whether applying for your first loan, second or refinancing, the mortgage application process can be overwhelming. Understanding the language of mortgages is a first step to understanding it.

The first thing to understand about the mortgage application process is the subject of origination. This is the filling out of the application, rounding up and supplying of documentation, verification of employment and checking of credit history.

If you are cash rich at the closing, you might want to investigate paying a discount point. It is the equivalent of one percent of the loan amount. By paying it, you can pay down the interest rate on the loan and save money over time.

A 203(k) loan is one of those unique government programs found in the mortgage world. It is a FHA loan that combines the cost of purchasing the home with rehabilitating it. All and all, it is usually a very good deal.

The mortgage application is pretty much what it sounds like. It should be viewed, however, as only the first step in the process. You can expect the lender to ask for additional information and documentation.

If you get into trouble trying to pay your mortgage, it is important to understand a lender does not want to foreclose. If you communicate with them, they will often give you a special forbearance that lowers or eliminates payments for a period of months.

The infamous balloon mortgage is one of those loans that can lead to catastrophe. The loan offers low initial payments and rates, but there is a big catch. After a set period of time, such as seven years, the entire amount comes due.

A mortgage loan is really a calculation of risk. Some lenders try to lower their risk by requiring borrowers to maintain a “cash reserve”. This is an amount of money held in a bank account and is often equal to three months of your total expenses.

Depending on the part of the country you are in, the conclusion of the real estate transaction will be known as closing or settlement. The property is transferred and you formally take on the mortgage debt. It is both a glorious and stressful day!

The concept of truth-in-lending is designed to protect you, the consumer. Finance is a complex subject, so this law requires the lender to provide you with written disclosure of all fees, conditions and terms associated with your loan.

Visiting a country where you don’t understand a word being said can make you feel bashful and intimidated. The same goes with dealing with lenders. This can lead to unfavorable loans. Take the time to learn the lingo, and you can avoid such problems.

Article Source: http://www.simplepetcare.com/pet-articles

Get more information on mortgage loans at FSBOAmerica.org.
This article is available as a unique content article with free reprint rights.

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