Lending

Mortgage Terms

Adjustable-rate mortgages- have low introductory rates that start out fixed but may fluctuate.

Annual Percentage rate (APR) reflects the true cost of borrowing. APR includes the interest rate, points, and fees the lender charges. APR is higher than the interest rate because it ecompasses all these loan costs.

Closing costs/settlement fees- Closing costs are charges added to the price of the property to complete a real estate transaction that paid for by buyers and/or sellers. Costs include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges.

Closing disclosure- a five-page document with final details about your selected mortgage loan. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

Conventional loans have stricter qualification requirements because the government doesn't insure them. These loans are a better fit for borrowers with strong credit.

Escrow An account held by a neutral third party (an escrow agent) who works for both the lender and the borrower.

FHA loans are insured by the Federal Housing Administration. These loans may have more lenient credit score minimums and allow buyers to use gift money for part of the down payment.

Fixed-rate mortgages offer an interest rate that doesn't change over the life of the loan. The rate at which you buy a home will be the rate you keep until you sell or refinance.

Home appraisal tells the lender the market value of the home. Your mortgage loan will only be what the home is worth.

The Loan estimate is a three-page document provided to homebuyers after they apply for a mortgage. It includes details about the loan request, including the estimated interest rate, monthly payment, projected closing costs, and estimated taxes and mortgage insurance.

Mortgage lender- a financial institute, such as a bank, that offers the loan.

Purchase escrow is a good faith deposit paid into an escrow account by the homebuyer after a succesful bid on a home. It assures the seller that the buyer is serious about purchasing the home. At closing, the deposit will go toward the buyer's down payment or closing costs.