APR
The annual percentage rate (APR) is the full cost of borrowing money, shown as a percentage of your loan. It includes the interest rate plus all loan fees.
The annual percentage rate (APR) is the full cost of borrowing money, shown as a percentage of your loan. It includes the interest rate plus all loan fees.
Adjustable-rate mortgages start with a low, fixed rate for a set time. After, the rate changes based on an index, so your payments may go up or down.
An amortized loan is repaid with regular payments of principal and interest. A schedule shows how each payment splits between the two over time.
Your annual income is everything you earn in a year, like wages, salary, tips, bonuses, and overtime. For mortgages, lenders mostly look at wages or salary.
When you apply for a home loan, the lender needs an appraisal to check the home’s value. An inspection and comparisons with similar homes nearby determine this.
The appraisal fee pays the appraiser who evaluates the property’s value you’re buying. The lender uses this report to decide how big of a mortgage you can get.
Balloon loans involve regular monthly payments, but a large lump sum is due at the end of the term. That final payment is much bigger than the monthly ones.
Declaring bankruptcy means you’ve told a court that you can’t pay your debts. This process harms your credit score, making it harder to get loans later on.
A mortgage borrower is a person who gets a loan to buy a home. By borrowing money, they promise to pay it back fully and on time, including interest.
A cash-out refinance means you swap your current mortgage for a new one with a bigger loan. This lets you access the home equity you’ve built up over time.
Closing checklists help you keep track of what needs to be done before closing on a home. They include items like payments to make and documents to sign.
Closing costs are the fees you pay before or at closing when buying a home. Your mortgage contract outlines all costs for you, the seller, and the lender.
One of the most important documents in the mortgage process. This 5-page form lays out your loan terms, like monthly payments, interest rates, and closing costs
Including co-borrowers on your loan application can enhance your chances of approval and secure lower interest rates. They share responsibility for repayment.
Conventional loans come from lenders not backed by the FHA. Because they carry more risk, they often need larger down payments.
A co-signer can aid your mortgage approval by signing alongside you. They don’t own the property, but their credit and finances help secure lower interest rates
Lenders review your credit history, which reflects your borrowing and payment habits, to gauge your likelihood of repaying a mortgage loan.
Credit reports detail an individual’s credit history and payment behavior. Lenders use these reports to assess the risk of a borrower defaulting on a home loan.
The FHA sets credit requirements for government-backed home loans. For example, to use the 3.5% down payment option, you need a FICO score of at least 580.
Your credit score shows how trustworthy you are to lenders when applying for a loan. FICO scores are the most common and widely accepted type of credit score.
Measures how much debt you have compared to your total assets. A lower debt ratio improves your chances of qualifying for a mortgage.
During the mortgage process, you’ll get disclosure documents that outline important details about your home loan agreement.
Discount points are upfront fees you pay to lower your mortgage’s interest rate. Each point costs 1% of your loan amount and helps reduce monthly payments.
The down payment is the money you pay upfront to your lender when buying a house. It varies based on what you can afford and the lender’s requirements.
Many homebuyers struggle to save for a down payment. To help, down payment assistance programs offer grants for upfront and closing costs.
You pay the earnest money deposit after the seller accepts your offer. This deposit shows that you’re serious about buying the home and helps secure the deal.
To qualify for an FHA mortgage or refinance, you must meet certain borrower criteria. The FHA program offers significant flexibility for eligibility.
Home equity is the portion of your home that you own. It increases as you make mortgage payments, showing you own more of the property over time.
Your escrow account is set up by your lender to collect funds for property taxes and home insurance, making it easier to manage these payments.
The Federal Housing Administration (FHA) is a government agency that insures FHA-approved mortgage loans to promote affordable housing in the U.S.
FHA funding fees are insurance premiums needed to secure your loan. How much you pay depends on your loan size, term, and down payment amount.
FHA home loans have specific rules that lenders must ensure the loans are insured by the U.S. government. Rules compiled in a reference book called HUD 4000.1
The FHA sets limits on the amount it can insure for government-backed loans. These limits vary based on location, property type, and conventional loan standards
FHA loans are government-insured to help make housing more affordable in the U.S. This insurance protects lenders from large losses, encouraging more lending.
HUD requires that homes financed with FHA mortgages meet minimum standards. The property must be safe, secure, and sound for the loan to be approved.
Refinancing can be done with the current lender or a new one, replacing the mortgage with a new loan to secure lower rates or access home equity.
The FHA has guidelines that applicants must meet to qualify for a government-backed loan. These requirements are managed by the FHA and HUD together.
Your FICO score measures your creditworthiness. It’s one of the most accepted credit scores, created by Fair, Isaac and Company using a specific algorithm.
Fannie Mae is a government agency that buys mortgages from lenders to help them reinvest. Its mission is to stimulate the U.S. mortgage market and increase affordable housing availability.
U.S. Department of Housing and Urban Development (HUD) sets criteria to define first-time homebuyers. Helps lenders identify and allows to track their numbers.
A fixed-rate mortgage has an interest rate that remains constant for the loan’s duration. This means your monthly payments won’t change, simplifying budgeting.
Foreclosure occurs when a borrower fails to make mortgage payments, loses all rights to their home. Lender then seizes and sells the property to recover losses
Freddie Mac is a government agency that buys mortgages from lenders. This helps lenders provide more loans, making homeownership more affordable for many people
Good Faith Estimate is a document that helps people buying a home giving them basic info about their home loan and an idea of the costs involved in getting it.
HUD or the Department of Housing and Urban Development, is a government agency that promotes affordable housing through programs that boost the real estate mark
HUD-1 Settlement Statement outlined home loan terms but was replaced by the Closing Disclosure form in October 2015 by the Consumer Financial Protection Bureau.
As a homeowner you can borrow money using your home’s equity as collateral. This is called a home equity loan or a second mortgage, as it adds to your main loan
As a borrower, you might need a home inspection, where a professional checks the house’s condition. The report will highlight any issues found.
Identity theft is a serious crime where someone steals your personal information, like your name and social security number, to commit fraud.
The interest rate on your loan is the percentage you pay to the lender for borrowing money. Mortgages can have either a fixed or adjustable interest rate.
A joint loan is a mortgage with a co-borrower who shares repayment responsibility. Their credit score and income can help you qualify for the loan.
Jumbo loan is a mortgage that exceeds Fannie Mae and Freddie Mac limits. It’s ideal for buying expensive homes if you have a large down payment and good credit.
Your lender is the person or institution that gives you a mortgage loan to buy a home. You agree to make regular payments, plus interest, to repay the loan.
To begin mortgage process, you must fill out and submit a loan application to your lender. This form and documents help assess your eligibility for the mortgage
Your loan is approved when lenders officially grant you a mortgage based on the information you provided in your loan application.
Your loan balance is the amount you still owe on the original mortgage. Part of your monthly payments goes towards reducing this balance.
Using a loan calculator to find your monthly payments for a fixed-rate mortgage. Enter your loan amount, interest rate, and term to see your monthly payment.
To be approved for a mortgage, all borrowers must meet specific guidelines. FHA loans have more lenient requirements, making them easier for first-time buyers.
The loan officer at the lending institution helps match a mortgage program to your needs and processes your loan application after you’ve applied.
A loan term is the period during which a borrower makes monthly payments on a home loan. It can change based on the borrower’s payment habits and refinancing.
Loan-to-value (LTV) ratio compares the loan amount to the home’s value. It helps assess the risk of granting a mortgage and influences mortgage insurance rates.
To qualify for an FHA loan, you must pay a mortgage insurance premium. This insurance protects lenders if you can’t make your monthly payments.
Monthly payments on a mortgage loan help pay off the principal and interest. The amount depends on the down payment, loan term, interest rate, and property cost
When buying a new home, most people apply for a mortgage. This loan allows you to borrow money for the property and repay it with monthly payments plus interest
The mortgage closing is the final step in buying a home. It’s when the property title transfers to you, and funds are exchanged with the seller.
The Home Affordable Refinance Program (HARP) was an initiative from the Obama administration that provided options to help homeowners based on their situations.
The FHA One-Time Close Construction-to-Permanent Loan is a government-backed mortgage for one-unit stick-built homes, new manufactured homes, and modular homes.
Processing a mortgage involves a lot of work. As the borrower, you’ll need to pay an origination fee to cover the costs of setting up the mortgage.
When applying for a mortgage, the FHA will insure your loan only if you’re buying or refinancing a property that will be your primary residence.
With conventional loans, you must pay for Private Mortgage Insurance (PMI). Lenders require it to protect against losses if a borrower defaults.
Getting pre-approved boosts your credibility as a buyer since a lender certifies you’re likely to qualify for a mortgage based on a preliminary review.
By making prepayments on a home loan, you pay off the principal faster than scheduled, reducing the total interest paid over the life of the mortgage.
Before house hunting, know how much you can afford. Prequalification gives you an initial estimate of the mortgage amount a lender will provide.
The loan balance is the remaining amount you owe on the mortgage principal, excluding interest. It’s what you need to repay to the lender.
Property taxes are paid to the local government where your house is located. The amount varies based on the area and property type.
At closing, you receive the property title, confirming your ownership of the home. The title company issues it to show no one else has claims.
A reverse mortgage’s loan balance grows over time since payments start only when the borrower moves or dies. A popular choice for seniors to supplement income.
Second mortgages are loans secured by property already used as collateral for a home loan. They can be a home equity loan or a home equity line of credit.
A single-family home is an unattached dwelling. For an FHA loan, it must be owner-occupied, meaning the borrower intends to use it as their primary residence.
The FHA Streamline Refinance helps homeowners lower their interest rate and monthly payments on an existing FHA mortgage with a simplified process.
Some lenders provide subprime mortgages to borrowers with low credit scores who may not qualify for standard loans. These loans usually have high interest rates
