Completing the home loan process will be confusing, particularly with all of the mortgage-specific phrases. Becoming familiar with common lending lingo may help the process. In this blog you will find details on common lending lingo in MA.
Common Lending Lingo
A pre-approval is a form written by a loan officer indicating the price and type of loan that a buyer may obtain using their monthly income, debt, and credit rating. This is not the same as a pre-qualification, which provides merely an “unverified” estimate. Full approval is normally given after a buyer finds a specific home.
Home Loan Commitment
After a buyer is under contract for a property, a mortgage company reviews the financial documentation and the details on the property. A loan commitment is subsequently provided to confirm that the up-front requirements have been approved and that the loan will be officially authorized pending a few final items.
An appraisal is mandated by a home loan provider to confirm the value of real estate. It must be completed prior to a mortgage commitment or approval.
There are a standard set of fees in connection with buying and selling a home. These are referred to as closing costs. They can include broker commissions, transfer fees, mortgage charges, attorney costs, title insurance, and municipal recording fees. Pre-paid charges such as property taxes are often also included in the closing cost category, but they are technically a different type of charge billed at closing.
Title insurance relates to problems with a title and the fees associated with defending your ownership. Although title searches are performed before a closing, there may be glitches that affect your title to real estate that are not readily included in a title search. Title insurance is a one-time bill at closing that protects you the entire time that you remain the owner of a home.
Mortgage Insurance (MI)
MI is an acronym for mortgage insurance and is almost always charged on mortgages more than 80% of the home price. There is sometimes an up-front charge and a recurring bill, both calculated against the beginning loan amount. MI remains active until the balance drops below 80% of the sale value.
More Details On Common Lending Lingo In MA
This blog offers details on common lending lingo in MA. There will be other terms that you come across while obtaining a mortgage or purchasing a home. For more guidance, contact Christopher Graves at 781-759-1200 x22 or email@example.com.