Exploring the home loan process may be complicated, especially with all of the loan-specific phrases. Understanding commonly used lending terminology may make the process less stressful. In this article you will find definitions on commonly used lending terminology in Newburyport MA.
Commonly Used Lending Terminology
A pre-approval is a letter prepared by a loan originator indicating the dollar amount and type of loan that a buyer may possibly be approved for based on their current earnings, monthly expenses, and credit rating. This is not the same as a pre-qualification, which provides merely an “unverified” estimate. Full approval is typically issued after a buyer finds a specific home.
After a buyer enters into a P&S Agreement on a property, a home loan provider audits the financial paperwork and the data on the property. A mortgage commitment is later issued to confirm that the general requirements have been approved and that the home loan will be fully granted upon receipt of a few final items.
An appraisal is ordered by a lender to verify the value of real estate. It is ordered before a mortgage commitment or approval.
There are many expenses in connection with the transfer of real estate. These are called closing costs. They often include broker commissions, transfer taxes, loan charges, attorney costs, title insurance, and local recording fees. Pre-paid charges such as property taxes are sometimes also included in the closing cost terminology, but they are really a different type of charge due at closing.
Title insurance relates to defects with a title and the fees associated with protecting your ownership. Even though title searches are performed prior to a closing, there may be defects that affect your title to a property that are not readily found in a title search. Title insurance is a one-time expense at closing that protects you the entire time that you own a piece of real estate.
Mortgage Insurance (MI)
MI is an acronym for mortgage insurance and is usually charged on mortgages higher than 80% of the sale price. There is frequently an up-front fee and a monthly bill, both calculated against the beginning loan amount. MI remains in place until the balance drops below 80% of the purchase price.
Additional Definitions On Commonly Used Lending Terminology In Newburyport MA
This blog offers definitions on commonly used lending terminology in Newburyport MA. There will be other terms that you encounter while obtaining a home loan or during the home buying process. For more definitions, contact John Wells at 978-518-1481 or email@example.com.