Without a proper grasp of mortgage lingo, the home-buying process can leave your head spinning. But fear not, for help has arrived. The 42 definitions that follow will give you a solid understanding of mortgage loans and lenders.
Amortization — The monthly reduction of a mortgage loan brought about by making regular mortgage payments.
Annual Percentage Rate (APR) — Shows the monthly cost of the mortgage (including interest, points and mortgage insurance), expressed as a percentage.
Application — First step in getting approved for the loan. The application provides information about the borrower that the lender will use to justify the loan.
Appraisal — A formal assessment of a home’s fair market value, generally required by the mortgage lender to ensure the home is worth the loan amount.
Adjustable Rate Mortgage (ARM) — A type of loan that starts out with a lower interest rate for an introductory period (3 years, for example) and later adjusts to whatever the current interest rate is at the time of adjustment.
Balloon Mortgage — A mortgage that offers low rates for an initial period (generally 5, 7 or 10) years. After this period, the owner must pay the full balance or refinance the loan.
Cap — A limit to how much a monthly payment or interest rate can increase or decrease. Caps are commonly used on adjustable rate mortgages.
Cash Reserves — Money often required to be held in addition to the down payment and closing costs. Lenders have their own requirements as to the amount.
Closing — The process through which property ownership is transferred from the seller to the buyer. Also known as settlement.
Closing Costs — Expenses above and beyond the sale price of the home. Closing costs vary from state to state, but they often include such items as title searches and lawyer’s fees.
Conventional Loan — A loan made from the private sector and not guaranteed by the U.S. government.
Credit Report — A record of your credit history, including previous debts, payments and other financial details. Used by lenders to determine your credit score.
Credit Score — a number derived from your credit report. Used by mortgage lenders to determine your level of qualification for a loan.
Debt-to-Income Ratio — A ratio calculated by dividing your overall monthly debt by your gross monthly income. Mortgage lenders use this to help determine your “credit worthiness.”
Deed — Official document that shows ownership of a property. It transfers from seller to buyer during the closing process.
Default — This is what happens when a homeowner is unable to make mortgage payments. Defaulting on a loan could lead to foreclosure (defined below).
Discount Point — Equal to 1% of the loan amount. Points can be paid by the buyer at closing to reduce the interest rate on the loan.
Down Payment — Portion of the home’s purchase price that is paid in cash and is not part of the mortgage loan.
Earnest Money — Money the buyer puts down to show sincerity in buying the home. If the offer is accepted, the money becomes part of the down payment. If the offer is rejected, the money is returned. If the buyer pulls out of the deal, the money is forfeited.
Fixed-Rate Mortgage — A mortgage with payments that stay the same throughout the life of the loan. In other words, the interest rate and other terms of the loan remain fixed.
Foreclosure — Process through which the home is sold to repay the loan of the defaulting homeowner. See definition of default above.
Good Faith Estimate — An estimate of all fees and charges that will be due at closing. Must be given to the borrower within three days of a loan application submission.
HUD-1 Statement — A list of all closing costs. This document must be given to the buyer prior to closing. Also referred to as a settlement statement.
Interest — A fee charged for borrowing money, expressed as a percentage of the amount borrowed.
Lien — A legal claim on a property. Must be resolved before the property can be sold.
Lock-in — Offered by some lenders to guarantee a certain interest rate if the loan is closed within a certain time.
Mortgage Broker — Individual or company that originates and processes loans for a number of different lenders.
Mortgage Lender — Bank or lending institution that loans you money for a home.
Mortgage Insurance — Insurance purchased by the buyer to protect the lender in the event of default. Usually required on loans with less than 20 percent down payment. Also known as Private Mortgage Insurance or PMI.
Origination — Process of preparing and submitting a loan application. Usually involves a credit check, a property appraisal, and other forms of financial review.
Origination Fee — Charges associated with origination, defined above.
PITI — Principal, Interest, Taxes, and Insurance. These are the four elements that will make up your overall monthly mortgage payment.
PMI — Private Mortgage Insurance. See “Mortgage Insurance” above.
Pre-Approval — When a lender commits to loaning you a certain amount (as long as you still meet their qualification requirements at time of purchase).
Pre-Qualification — When a mortgage lender informally reviews your finances to determine the maximum amount they’re willing to lend you.
Principal — The “core” amount borrowed from a lender, excluding interest and additional fees.
RESPA — The Real Estate Settlement Procedures Act is a law that protects consumers during the home buying and loan application process. Among other things, it requires lenders to make full discloses about settlement costs and conditions.
Settlement — See previous definition under “closing.”
Title Insurance — Protects the mortgage lender against claims that come from a dispute about property ownership. Similar coverage for home buyers is also available.
Title Search — A review of public records to ensure the seller is the legal owner of the property and that there are no unsettled liens or claims.
Truth-in-Lending — A federal law that requires mortgage lenders to provide written disclosures of all conditions and costs associated with a loan.
VA Loan — A loan guaranteed by the Department of Veterans Affairs. These loans are made to qualified military veterans and often come with the benefit of no money down.
Student loan default is definitely the worst credit problem possible. Bankruptcy and the no statute of limitations term are more than enough reasons for you to avoid defaulting at all cost. There are several options and simple steps you can take to make sure you can repay money comfortably. This article will discuss some of the steps you should take to avoid student loan default.
When you apply for a loan, make sure you are applying for the needed amount only. The fact that you wouldn’t have to pay for the loan until later on when you graduate can be quite tempting, but you must calculate the right amount of loan you need and borrow only that amount. If you can, reduce expenses and pay for books and other costs without the loan. This way, you can easily reduce the amount of loans you will have to deal with in the future.
If you are not sure about the monthly payments, it would be best to opt for loan consolidations early. There are several federal as well as private student loan consolidation options available, so be sure to check them out. These consolidation options cost lower; use the options to save some money on repayments and make the whole repayment process a lot easier to manage. When you have several loans you need to deal with, consolidating these loans will turn them into one fixed monthly bill you can manage easily.
If you still have troubles repaying the loans, make sure you maintain open communication with your lender. Avoiding phone calls or any communication with your lender can be a huge disadvantage, since you are denying the possibility of getting rescheduled plan or other viable solutions altogether. By actively communicating with your lender, you are actually showing good faith and your lender will be more than happy to work on a mutual solution. This way, you can easily avoid student loan default and all the troubles for sure.
Whenever a student gets a loan amount on his shoulder, it is obvious that he needs to repay the debt amount within the specified period of time. Generally, the loan offering company takes back the debt amount in monthly installments. However, if someone cannot repay any installment, he will be offered a certain period of time. Within that period of time, if he repays the entire debt amount, he will be declared free from his student loan. However, after completion of that limited period of time, if there remains any unpaid loan amount, the debt will be considered among the student loans in default accounts.
Once you have been declared as a defaulter of student debt, you need to get prepared to face some unwanted negative consequences. At first, the loan offering company will cater all the details of your defaulted debt account to some third-party collection agency in order to extract the residual amount from the defaulter. These people will definitely employ some methods that will make the life of the defaulter unstable. At that point of time, you need to look around for some profitable options that will let you remove the student loan default account from your shoulder.
At that point of time, you can always have the opportunity to seek help from the financial advisors. In that case, you will be able to know about various profitable options that will let you handle your defaulted debt situation. Under such scenario, you will be able to know about the various profitable schemes that will let you clear your student loan default account. In that case, you can depend on the debt consolidation program that can conveniently handle all your defaulted accounts.
While you are willing to opt for the loan consolidation scheme, you need to know the fact that there are mainly two types of plans available in the market. Here are a few words that will enable you to know about these options to erase your student loans in default accounts conveniently.
Federal Debt Consolidation Program: In this scheme, you can have the opportunity to merge all your defaulted debts with a much lower rate of interest. However, the processing period is considerably much higher compared to the other private plans available in the market.
Private Loan Consolidation Scheme: Here, one can conveniently combine all his debt accounts along with the student loan default account into a single account. The processing time is pretty fast when compared to the federal scheme. You can also have the opportunity to defer your loan repayment period for a certain period of time. Thus, people would love to opt for this scheme whenever they have some defaulted debt account on their shoulders.
In short, if people are facing some trouble regarding the student loans in default accounts, you can opt for the debt consolidation program available in the market.
If your car insurance is due for renewal and you are considering buying another policy then this article will provide you with important facts that you should know about. Car insurance policies are getting increasingly expensive and you should do all that you can to reduce your costs. How much you have to pay for your car insurance is dictated by a variety of factors as they apply to you and your vehicle.
In this article we will examine coverage limits, your age, gender and marital status, your location and insuring other household members. All of these factors will have a great influence on how much you will have to pay for your policy.
Coverage limits are generally dictated by the price that you are willing to pay for your insurance. A higher level of coverage will generally result in higher premiums. The best way to find a good value policy is to comparison shop. Nowadays it is generally accepted that the best way to do this is by using a car insurance comparison website.
Your age, gender and marital status will have a great effect on the auto insurance rates that you are offered. Insurers rate drivers using a variety of criteria, if you are a young single male driver you will usually have to pay higher rates. If you are a middle-aged female married driver then your rates will be lower. Insurers calculate the best car insurance rates for you by comparing levels of risk. Those groups which are statistically more likely to be involved in an accident have to pay correspondingly higher rates.
Location plays an important part in deciding how much your premiums will cost. Drivers who live in an urban environment will usually pay more than those from a rural area. This is because drivers who live in cities and heavily populated areas are more likely to be involved in an accident, or to have their car stolen or vandalized. Insurers generally offer better rates if you’re able to demonstrate that you keep your vehicle in a garage at night. You may also be able to improve the security arrangements of your automobile by fitting an alarm, immobilizer and steering wheel lock.
Insuring other household members will have an influence on the cost of your policy and the best car insurance rates that you offered. If you have teenage family members living with you and they are added to your policy, then your costs will increase. This may still work out cheaper than if your teenage driver were to have a separate policy in their own name.
In conclusion, there are a variety of different factors which can affect your ability to be offered the best insurance rates. Some of these are coverage limits, how old you are, whether you are male or female and whether you are married or single. Your rates will also be affected by the area where you live and whether other household members are included in your policy.