A mortgage is described by the "creditor," "debtor," or "mortgage broker" in common terms. While it may seem obvious to understand what these terms mean for homeowners, there are many terms that mortgages involve that homeowners might not be fully familiar with. Let's look at some of these terms:
Creditor: The creditor, which is usually a bank, provides the money in the form of a loan to pay the mortgage amount. Sometimes the creditor may be called the mortgagee or lender.
Debtor: The debtor is the individual or party that owes the mortgage loan. They are sometimes called the mortgagor.
Sometimes, more than one person owns a home. For example, a husband and wife or two close friends might purchase a home together. Or a child may be purchased with their parent. If this happens, both parties become debtors and not owners of the property.
Mortgage broker, financial advisor: It is not always easy to get mortgages. However, due to the demand for houses in many countries, many financial institutions offer them. Many institutions offer mortgages. These include banks, credit unions Savings & loans, credit unions, and mortgage lender in Windermere. A mortgage broker is available to help prospective debtors find the best mortgage rate. They also act as an agent for lenders to help them locate potential borrowers and handle the paperwork.
There will be many other people involved in closing the mortgage or obtaining it. These may include lawyers, financial advisors, and even financial planners. A financial advisor will be able to help you determine your loan needs.
Foreclosure: The property can be forfeited if the debtor fails to pay the mortgage payments. Usually, a foreclosed home will be sold at auction. This price will be applied to the outstanding amount on the mortgage. However, the debtor may still be liable if the property is sold for less than the outstanding balance.
Annual Percentage Ratio (APR): The APR represents the interest rate for a mortgage loans in Windermere in addition to any fees associated with obtaining it, such as points and origination fees. If there were no other costs associated with obtaining a loan then the interest, then the APR would be equal to the interest rate.
Breakeven Point: The breakeven level is the amount of time it will take for a mortgage to be refinanced. It is calculated by adding the closing costs to refinance the old monthly payment and subtracting it from the total amount.
ARM: This is an Adjustable-Rate Mortgage. A mortgage that allows the lender's interest rate to be adjusted periodically.
Fixed-Rate mortgage: A mortgage in which the interest rates do not change over the term of the loan.
Cap: While ARMs may have fluctuating interest rates but these fluctuations are typically limited by law to an amount. These limits may apply to how much the loan can adjust over six months, annually, and over the loan's life. These are known as "caps."
Index: The number used to calculate an ARM's interest rate. The index is usually a published number or percentage such as the average yield on U.S. Treasury bills or the interest rate. To determine the interest rate charged on the ARM, a margin is added.
Prime Rate: The interest rate banks charge their preferred customers. The prime rate can influence other rates such as mortgage interest rates.
Equity: A homeowner's financial interest or value in a property. Equity is the difference in the property's market value and the amount owed on the mortgage and other liens.
Home Equity Loan: A loan secured by a particular property and made against the "equity", the property's equity, after its purchase.
Amortization: An amortization table shows the gradual repayment of a mortgage loan. This is usually done by monthly installments principal and interest. An amortization table lists the monthly payment amounts divided by principal and interest for the entire term.
Cash-Out Refinance: It is known as a cash-out refinance when a borrower refinances a mortgage at a greater amount than his current loan balance, with the intent of withdrawing money for personal use.
Appraised Value: Based on the knowledge, experience, and analysis of the property, an appraisal will give you an opinion about a property's market value. The home's appraised value plays a major role in determining how much it can or will be mortgaged.
Appreciation: Changes in market conditions, inflation, and other causes can cause a property's value to increase.
Depreciation: A decrease in the property's worth; the opposite of appreciation. Both appreciation and depreciation should be understood. As we have just said, the appraised home value is an important determinant in the home's mortgage.
Lock-in: A contract where the lender guarantees a fixed interest rate for a set time frame at a specified cost.
Lock-in Period: The period in which the lender guarantees a borrower an interest rate. This is a different concept from a fixed-rate mortgage. The lock-in period for mortgages may be short-term rather than permanent.
Many of these terms are familiar, but you should review them to see how they all relate to your mortgage or the refinance process. These are the basic terms of a mortgage. Let's now talk more about refinancing.
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