Understanding the loan process will be complicated, especially with all of the mortgage-specific terminology. Becoming familiar with commonly used lending terminology will help the process. Below you will find details on commonly used lending terminology in MA.
Commonly Used Lending Terminology
A pre-approval is paperwork written by a loan officer detailing the amount and type of loan that a buyer may be able to obtain using their income, debt, and credit report. This is much more significant than a pre-qualification, which provides only an “unconfirmed” estimate. Full approval is usually obtained after a buyer finds a particular property.
Home Loan Commitment
After a buyer finds a property, a lender inspects all of a personal documentation and the data on the home. A loan commitment is subsequently provided to state that the initial criteria have been fulfilled and that the home loan will be officially granted pending a few final items.
An appraisal is required by a home loan provider to confirm the market value of a home. It must be required prior to a mortgage commitment or approval.
There are a standard set of expenses associated with buying and selling a property. These are referenced as closing costs. They can include broker commissions, transfer fees, loan charges, attorney costs, title insurance, and local recording fees. Pre-paid charges such as home owners insurance are sometimes also lumped into the closing cost terminology, but they are officially a different type of charge billed at closing.
Title insurance relates to issues with a title and the costs associated with protecting your ownership. Even though title searches are completed prior to a closing, there could be problems that impact your title to real estate that are not easily included in a title search. Title insurance is a single charge at closing that remains valid for the entire time that you own a home.
Mortgage Insurance (MI)
MI stands for mortgage insurance and is usually charged on loans higher than 80% of the sale price. There is commonly an up-front fee and a recurring bill, both calculated against the original loan balance. MI remains active until it is paid down to 80% of the purchase value.
More Details On Commonly Used Lending Terminology In MA
This blog offers details on commonly used lending terminology in MA. There will be other lingo that you encounter while obtaining a home loan or during the home buying process. For additional guidance, contact Peter DaMore at 781-229-7900 or firstname.lastname@example.org.