Our Mortgage Loan Originators will explain everything you need to know, but understanding some basic mortgage concepts may help you feel more comfortable before you begin the process of obtaining a mortgage.
Mortgage Broker
Mortgage brokers shop around to help borrowers connect with lenders who have the best rate and fees for the borrower. While mortgage brokers handle some of the funding paperwork, the mortgage lender is ultimately responsible for underwriting approval.
Mortgage Lender
Lenders are financial institutions that issue loans.
Pre-Qualification
The process in which a home buyer talks with a mortgage professional and determines how much they qualify to borrow. Getting pre-qualified will give insight as to what price range borrowers qualify for, allow them to talk monthly payments with a broker, and keep them competitive with other potential buyers.
Down Payment
The amount of money a buyer pays at closing to fund a home purchase, usually expressed as a percentage of the total home price. The required down payment amount varies depending on the loan type.
Debt-to-Income Ratio (DTI)
Personal finance measure that compares an individual's debt payments to their gross monthly income. When figuring out how much money an individual can afford to borrow, brokers factor in the total percentage of an individual's income that is paid toward debt every month.
Interest Rate
The amount charged by a lender in exchange for loaning money to a borrower. Interest rate is expressed as a yearly percentage of the total loan amount and is paid on a monthly basis as part of the mortgage loan payment. Rates change daily, but once a borrower locks a rate for a fixed-rate mortgage, they will make payments according to this rate for the life of the loan
Private Mortgage Insurance (PMI)
Specific type of insurance that protects the mortgage lender in the event of borrower default. In most cases, homeowners are required to purchase PMI if they do not put 20% down. The cost of PMI can be added to a borrower's monthly mortgage payment, covered via a one-time upfront payment at closing or a combination of both.
Appraisal
A written estimate of a licensed appraiser's opinion of a home's current market value based on comparable recent sales of similar homes, the current condition of the property, and the surrounding neighborhood.
Closing Costs
Fees associated with a home purchase that are paid at the closing of a real estate transaction. The closing costs fees may include, but are not limited to: appraisal, credit report, origination fee, pre-paid interest, property tax, title search, and underwriting fees.
Closing
The formal documented sale of a home and/or property that includes signing all documents associated with the exchange and payment of required closing fees.