Top Ten Terms for Mortgage Loans

Top Ten Terms for Loans

Everyone knows that you should never sign on the dotted line without reading the contract.  This same term applies to loans.  Signing a loan without knowing the terms and what everything means can be detrimental to your finances, credit and future investments.  Before you sign on the "dotted line", (although its not really dotted) make sure that you know these terms and how they will apply to you. 

1.  Interest rate.  Interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of the lenders money. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR). Interest rates change everyday, sometimes several times each day depending on the market.

2.  Fixed Rate.  A fixed rate will be an interest rate that stays at the same percentage throughout the entire period of your loan. 

3.  Variable Rate.  A variable rate will change according to the economy and the charts that are stating what the rates should be for interest.  A variable rate usually changes every year and adjusts according to a specific given range of percentages. 

4.  Principal.  The most commonly used refers to the original sum of money borrowed in a loan.

5.  Escrow.  This is similar to a savings account of your loan.  Escrow account holds money in it to pay property tax and home insurance.  Your monthly payment includes principal, interest, escrow payment for taxes and escrow payment for insurance.

6.  Title.  A title will be what you get to your home after it is officially yours, stating that the property belongs to you. 

7.  Deed.  A legal document that grants the bearer a right or privilege typically it is the legal document giving ownership to a property.

8.  Home Equity Loan.  This is a loan or line of credit that you can get for your home that borrows the equity in your home.  Equity is the difference between how much you owe and what the property is worth. 

9.  Appraisal.  The appraisal is an estimated value of what the home is worth.   The appraisal is estimated based on comparing your property to other similar properties.  It is an estimate given by a professional, licensed, State regulated appraiser. 

10.  Equity.  The difference between what you owe and what your property is worth.

Once you know some of these basic terms, you will be able to expand on your knowledge and find the exact loan that will fit your needs.  These basic definitions will help you in making the right decision for the type of loan that you want. 

For more information please contact me:

www.anthonypatton.loan

214-226-0885  text or call

apatton@highlandsmortgage.com