Buying a home and getting a mortgage will be one of the biggest financial decisions of your life! Whether this is your first home or you’re a seasoned pro who just needs a refresher, here are the terms you need to know to help you make the most of your mortgage!
Appraisal: A report, made by a qualified person that sets forth an objective value of the home and property. This is ordered by the lender to ensure that the amount of money being requested by the borrower is appropriate.
Closing Costs: This is not included in the home price but should be budgeted for when purchasing a home. It includes an origination fee, discount points, appraisal, credit reports, title insurance, attorney’s fees, survey and pre-paid items such as tax and escrow payments.
Conventional Mortgage: A mortgage not obtained under a government insured program such as an FHA or VA loan.
Debt-to-Income Ratio (DTI): The Debt-to-Income ratio is the percentage of your gross income that goes towards paying debts, including credit card debt, car payments and student loans.
Earnest Money: A portion of a down payment delivered with an offer to the seller as evidence of good faith. Also known as a deposit.
Gift Letter: You can be given a gift to help you with a home’s down payment. This should be accompanied with a gift letter, written by the person giving the gift money, that there is no obligation to repay.
Gross Monthly Income: Your total monthly income before taxes and other deductions.
Non-Conforming Loan: Loans not eligible to be sold to Fannie Mae or Freddie Mac due to various reasons.
Origination Fee: The amount charged for services handling the initial application and the loan processing. This is included in closing costs.
PITI: Principal, interest, taxes and insurance that makes up the monthly mortgage payment.
When you’re buying a home make sure you work with a lender that can answer any of your questions and help guide you to make the best choices for you and your family. The mortgage experts at PCU can help you, contact us today to get started!
« Return to "Blog"