Principal:
The original loan amount borrowed, excluding interest.
Interest Rate:
The percentage charged by the lender for borrowing the principal amount.
Amortization:
The process of repaying the loan through scheduled, equal payments over time, which includes both principal and interest.
Down Payment:
The initial payment made by the buyer towards the home purchase, expressed as a percentage of the property's total value.
Loan-to-Value (LTV) Ratio:
The ratio of the loan amount to the property's appraised value, expressed as a percentage.
Closing Costs:
The fees and expenses associated with finalizing a real estate transaction, including appraisal fees, title insurance, and legal fees.
Loan Term:
The length of time over which the loan is repaid (e.g., 30 years).
Fixed-Rate Mortgage:
A mortgage with a constant interest rate throughout the entire loan term.
Adjustable-Rate Mortgage (ARM):
A mortgage with an interest rate that may change periodically based on market conditions.
Escrow:
An account held by the lender to cover property taxes and insurance on behalf of the borrower.
Private Mortgage Insurance (PMI):
Insurance required for conventional loans when the down payment is less than 20% of the home's value.
Homeowners Insurance:
Insurance that protects the homeowner against property damage and liability.
Appraisal:
An assessment of the property's value conducted by a professional appraiser.
Title Insurance:
Insurance that protects the buyer and lender against any defects in the property's title.
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