Mortgage lenders are wizards of home finance. The ins and outs of mortgages are murky and lenders study endlessly to master how they work. This list of common mortgage-related terms is far from comprehensive. However, it provides the reader with a general primer as to the knowledge that lenders posess and some terms that borrowers should know while researching their mortgage options. 

APR (Annual Percentage Rate)  – An APR is the rate charged annually for the money borrowed or earned through an investment. The percentage in question represents the cost of funds over the term of a loan. This rate is the sum of all costs associated with the loan and can easily be compared to rates provided by other lenders. 

Capped Rate – This is a mortgage where the lender agrees that the interest charged will never exceed a specific percentage. This capped rate safeguards borrowers from an interest rate that fluctuates out of control. During a capped period, the interest rate can change but it may never exceed the capped rate. 

Cashback – A cash back mortgage is often utilized by borrowers with exceptional credit though do not have enough money for a down payment on a home. Here lenders will provide borrowers with the money for the down payment. Using a cash back loan will later result in paying insurance premiums.

Delinquency – A borrower enters into delinquency after failing to make the payments as stipulated by the loan documents. Should a scheduled payment not be made by the due date a mortgage is considered delinquent. If a borrower cannot remedy a delinquent mortgage it will transition into a foreclosure. 

Equity – Equity is the difference between the appraised value of a home and the outstanding mortgage balance of the home. 

Escrow – This funny sounding word pertains to the third party that handles money for both the buyer and seller. Should an earnest amount be put down for the home, an escrow will care for the money until the transaction is completed. 

Freehold – Owning the freehold means that you own the total rights to the property and the land on which it is built. 

Index – When pertaining to a mortgage, a financial index is the measure used to determine how much the APR changes at the start of each adjustment period. 

Line Of Credit – This credit line is however much the lender decides to give a borrower. The borrower secures this line of credit through the purchase of home. 

Mortgage – A mortgage is a long-term loan -generally 10-30 years- taken out in order to buy a property with repayment secured on that property. If a borrower doesn’t keep to the repayment terms, the lender can repossess the property, sell it and retain the money they are owed. Types of mortgages can vary widely. 

Portable – This is a type of loan that would allow a borrower to transfer a mortgage from one home to another. 

Principle – The amount of money that you’ve borrowed for the mortgage is the principle. At the end of each month borrowers will pay part of their principal back to the lender as well as interest on the mortgage. 

Settlement Costs – An attorney will determine the final costs associated with the loan. Typically all parties involved in the loan will pay settlement costs. 

Only experience in the trenches can bestow you with sufficient mortgage lingo. If you don’t care to become fluent in the jargon, let the experts take the lead. The loan officers at Affiliated Mortgage have more than 30 years of mortgage experience working with communities throughout the USA. 

Mortgage lenders are wizards of home finance. The ins and outs of mortgages are murky and lenders study endlessly to master how they work. This list of common mortgage-related terms is far from comprehensive. However, it provides the reader with a general primer as to the knowledge that lenders posess and some terms that borrowers should know while researching their mortgage options. 

APR (Annual Percentage Rate)  – An APR is the rate charged annually for the money borrowed or earned through an investment. The percentage in question represents the cost of funds over the term of a loan. This rate is the sum of all costs associated with the loan and can easily be compared to rates provided by other lenders. 

Capped Rate – This is a mortgage where the lender agrees that the interest charged will never exceed a specific percentage. This capped rate safeguards borrowers from an interest rate that fluctuates out of control. During a capped period, the interest rate can change but it may never exceed the capped rate. 

Cashback – A cash back mortgage is often utilized by borrowers with exceptional credit though do not have enough money for a down payment on a home. Here lenders will provide borrowers with the money for the down payment. Using a cash back loan will later result in paying insurance premiums.

Delinquency – A borrower enters into delinquency after failing to make the payments as stipulated by the loan documents. Should a scheduled payment not be made by the due date a mortgage is considered delinquent. If a borrower cannot remedy a delinquent mortgage it will transition into a foreclosure. 

Equity – Equity is the difference between the appraised value of a home and the outstanding mortgage balance of the home. 

Escrow – This funny sounding word pertains to the third party that handles money for both the buyer and seller. Should an earnest amount be put down for the home, an escrow will care for the money until the transaction is completed. 

Freehold – Owning the freehold means that you own the total rights to the property and the land on which it is built. 

Index – When pertaining to a mortgage, a financial index is the measure used to determine how much the APR changes at the start of each adjustment period. 

Line Of Credit – This credit line is however much the lender decides to give a borrower. The borrower secures this line of credit through the purchase of home. 

Mortgage – A mortgage is a long-term loan -generally 10-30 years- taken out in order to buy a property with repayment secured on that property. If a borrower doesn’t keep to the repayment terms, the lender can repossess the property, sell it and retain the money they are owed. Types of mortgages can vary widely. 

Portable – This is a type of loan that would allow a borrower to transfer a mortgage from one home to another. 

Principle – The amount of money that you’ve borrowed for the mortgage is the principle. At the end of each month borrowers will pay part of their principal back to the lender as well as interest on the mortgage. 

Settlement Costs – An attorney will determine the final costs associated with the loan. Typically all parties involved in the loan will pay settlement costs. 

Only experience in the trenches can bestow you with sufficient mortgage lingo. If you don’t care to become fluent in the jargon, let the experts take the lead. The loan officers at Affiliated Mortgage have more than 30 years of mortgage experience working with communities throughout the USA. 

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