Obtaining a mortgage loan is a complicated procedure. It mortgage refinancing lots of paperwork, signatures, fine print, refinancing mortgage red tape. Even ivy league colleges don't require that much paperwork for acceptance! It is an exasperating and confusing process that completely overwhelms most people. Even though applying for a mortgage is a stressful and long process, learning three basic homeowners vocabulary words can help you get a better handle on the whole thing.
The people who enter a mortgage with some basic knowledge helps them beyond belief, so they realize what they are agreeing to do. Understanding the lingo of the home buyer's world equips you to deal wisely.
The first essential piece of vocabulary is the word term. Term means the life of the mortgage you're applying for. In other words, it is the length of time you're making payments on the loan.
The majority of mortgages last anywhere from ten to thirty years. Longer mortgage loans come with lower monthly payments but you pay more in total interest over the life of the loan. So it's a trade off between one convenience for another. It's usually wise to choose the shortest term you can, because you stand to save tens or hundreds of thousands of dollars in interest with a short mortgage loan term.
The second vocabulary word is interest rate. Know what your interest rate is and how lenders will calculate it. This number (rounded to the one-tenth percent) indicates how much interest you'll be paying for the borrowed money over the life of the loan. Rates are either fixed (never changes) or variable (may increase at certain points during the life of the loan). Even though they appear to be a great deal at first, stay away from adjustable rate mortgages. When the rate increases, you can be in a world of hurt if you aren't prepared to make bigger monthly payments!
The third vocabulary word is closing cost. Learn how they affect the purchase price, because it's often the case that homeowners need to pay these closing costs completely on their own. House appraisals, attorney and notary fees, deeds fees, and more usually are part of the closing costs. Usually closing costs are packed with little fees that add up to a big number! Be wise when you buy a home. Look at the itemized list of fees and ask about anything that seems fishy. Unscrupulous lenders often try to nickel and dime consumers with a few bogus fees in the closing costs if you're not careful.
Now that you've learned these three basic vocabulary words, you can shop for your new home with confidence. Armed with your knowledge, you can get a great mortgage. Comparison shop for mortgages just like you would for any other large purchase, because even a slight difference in interest rates can equate to thousands of dollars. You have the right to spend your money wisely and make every penny count.
For additional information about mortgage loans, please visit the #1 mortgage resource on the net: http://www.MortgageLoans-101.com
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