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TERMS YOU SHOULD KNOW WHEN APPLYING FOR A HOME MORTGAGE!
Annual Percentage Rate (APR) – An interest rate reflecting the cost of a loan as a yearly rate. This rate is likely to be higher than the interest rate on the mortgage, because it includes points and other credit costs. The APR allows borrowers to compare different types of mortgages based on the annual cost for each loan.
Balloon (payment) Mortgage – Usually a short term loan involving small payments for a set period of time and one large payment for the remaining principal balance.
Closing Costs – Usually include an origination fee, appraisal fee, title search and insurance, taxes, deed recording fee, credit report charge and other costs associated with making the loan.
Equity – The difference between the market appraisal value of your home and the amount of money you still owe on your home.
Fixed Rate Mortgage – Loan in which the interest rate remains the same for the term of the loan.
Mortgage Insurance – Insurance that protects the lender against default when the down payment is less than 20 percent.
Origination fee – Fee charged by lender to prepare loan documents, credit checks, etc.; usually computed as a percentage of the face value of the loan.
PITI – Principal, interest, taxes and insurance. Also called monthly housing expense
Points (Loan Discount Points) – Money paid by the borrower to the lender. Each point is equal to one percent of the loan amount. A point is considered a discount point when it lowers the interest rate.
Prepaids – Expenses necessary to create an escrow account or to adjust an existing account. Can include taxes, hazard insurance, private mortgage insurance and special assessments
Prepayment penalty – Fee charged for the early repayment of some types of loans.
Principal – The balance, not including interest, left on the loan.
RESPA (Real Estate Settlement Procedures Act) – Federal law allowing consumers to receive review information on known or estimated settlement costs after applying for a loan and again at closing. Requires the lender to furnish this information after an application has been made.
- State Bank
- Fifth Third
- First Federal
- Farmers and Merchants State Bank
- Midwest Community Credit Union
- Women’s Council of Realtors