First-time home buyers are often unfamiliar with the common terminology that are crucial in the home buying process or even in the housing market. That’s okay, Mirabal Montalvo is here to help. Familiarize yourself with these frequently used terms; it will be helpful for both you and your real estate agent if you are already knowledgeable with the language beforehand.
Bait Rate: Misleading mortgages with low rate promises and no contingencies generally for those with extraordinary credit. Rates are based on: credit, debt-to-income and loan-to-value ratios, the size and type of loan, property location, and the day you lock your rate, etc. The loan isn’t locked until the application is accepted. By then, it may be too late to find a better rate from another lender.
Basis Point: A term used in the mortgage industry which simply means 1/100th of 1 percent.
Closing Costs: The fees required to process and close your loan. They’re a cash obligation running from three to five percent of the purchase price. Motivated sellers might pay a portion of these costs.
FRM and ARM: A Fixed Rate Mortgage Loan (FRM) is a loan where your interest rate stays the same for the life of the loan. ARMs are Adjustable Rate Mortgages with variable interest rates that fluctuate based on an agreed-upon index.
GFE: The Good Faith Estimate (GFE) is a document explaining all costs involved in getting a loan.
TIL: The Federal Truth-in-Lending Form is a document that spells out the costs and fees of the loan.
Per Diem Interest: Interest you pay per day, from the day you close to the last day of the month.
Underwriting and Underwriting Fees: Underwriting is a process the lender performs to qualify a borrower for a loan and the fee is what you pay the lender at closing to cover evaluating the risk involved with loaning you money.
Warranty Deed: A legal document guaranteeing the seller has a right to sell a property, which is very important if you are considering a distressed or discounted property.
Always trust a professional
Set your standards high when choosing a trustworthy professional. It is wise to be in regular contact with your agent and understand the entire process of buying your home. Mirabal Montalvo firmly believes that the client comes first and every step must be taken in order to get their home sold. Contact us today for more information