Completing the mortgage process may be complex, particularly with all of the mortgage-specific terms. Familiarizing yourself with frequently used lending lingo will help the process. Below you will find details on frequently used lending lingo in MA.
Frequently Used Lending Lingo
Pre-approval
A pre-approval is a letter prepared by a mortgage company detailing the dollar amount and type of loan that a buyer may obtain considering their current earnings, debt, and credit rating. This varies from a pre-qualification, which provides merely an “unsubstantiated” estimate. Full approval is usually issued after a buyer is under agreement for a specific property.
Home Loan Commitment
After a buyer is under contract for a property, a mortgage company inspects all of a buyer’s financial paperwork and the information on the real estate. A loan commitment is subsequently offered to state that the up-front requirements have been approved and that the loan will be officially approved pending a few final items.
Appraised Value
An appraisal is required by a mortgage company to verify the purchase price of real estate. It is ordered prior to a mortgage commitment or approval.
Closing Fees
Closing Costs
There are a standard set of charges in connection with the transfer of a property. These are referred to as closing costs. They may include real estate commissions, transfer fees, loan charges, attorney charges, title insurance, and county recording fees. Pre-paid expenses such as home owners insurance are frequently also lumped into the closing cost terminology, but they are technically a different class of charge due at closing.
Title Insurance
Title insurance relates to problems with a title and the fees associated with defending your ownership. Even though title searches are completed before a property transfer, there could be defects that affect your title to a home that are not readily found in a title search. Title insurance is a single expense at closing that covers you the entire time that you own a property.
Mortgage Insurance (MI)
MI is mortgage insurance and is almost always charged on mortgages higher than 80% of the home price. There is frequently an up-front charge and a recurring bill, both based on the beginning loan balance. MI stays on a mortgage until it is paid down to 80% of the appraised price.
More Details On Frequently Used Lending Lingo In MA
This article offers details on frequently used lending lingo in MA. There might be other phrases that you need to understand while applying for a mortgage or buying a property. For more information, contact Christopher Graves at 781-759-1200 x22 or christopher.d.graves@gmail.com.
