1205 W. Abram Street Suite 100
Arlington, Texas 76013

Office: 817-860-3232

LegacyCare™

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Real Estate Benefit Plan

Glossary of Mortgage Terminology

The Documents:

• Loan application – standard residential loan application form to apply for a loan

• Credit report – credit bureaus report information about your existing and previous debts and rate how you have repaid the obligations

• Appraisal – independent appraisal to determine the market value of the home

• Survey – verifies property boundaries and confirms that the legal description of the property as stated in the sales contract is correct

• HUD-1 settlement statement – itemizes the services provided and lists all charges to the buyer and seller

• Truth-in-lending statement – a statement which discloses the annual percentage rate, finance charges, the amount of the loan and the total payments required

• Mortgage or deed of trust – pledges the property you are buying as security for the loan

• Promissory note – when you sign this note, you are promising to repay the loan

Types of Mortgages:

• Conventional mortgages – the standard product of lending institutions which are usually sold to investors in mortgages. Down payment assistance programs can be linked with these mortgages to reduce the up-front costs. Available with both fixed and adjustable rate mortgages with many loan terms.

• Federal Housing Administration (FHA) – insures lenders against default by borrowers.  Available with both fixed and adjustable rate mortgages with maximum loan amounts which are established for various geographic locations.

• Veterans Administration (VA) – the VA guarantees mortgages for veterans of the armed services, those currently in the service, and their spouses. 100% financing may be available.
 
Financing Options:
  • Fixed rate mortgages – interest rate does not change over the life of the loan
  • Adjustable rate mortgages (ARM) – interest rate varies with a lower rate in the beginning which may increase by certain amounts and within certain set time frames, over the term of the loan.

  • Convertible mortgages – combines features of the fixed rate and the adjustable rate mortgages.  It allow the borrower to start out with an ARM with the capability of switching to a fixed rate at a later date.

  • Buy-down – the lender is paid a lump sum to temporarily “buy down” the interest rate.  The buy-down rate may be in effect for 3-5 years, during which time the rate gradually increases to the contract rate.
Mortgage Comparison Terms:
  • Interest rate – these are constantly changing and different rates are applied to different programs.

  • Interest rate lock-ins – you will want to know if the lender will hold, or lock-in the initial rate quoted until closing.  There may be fees associated with the lock-ins.

  • Origination fee – a lender’s charge for originating and processing the loan.  Typically 1% or more of the loan amount.

  • Application fee – covers the costs of credit reports, appraisal fees, and other miscellaneous expenses related to determining whether the borrower qualifies for the requested loan.
  • Points -  a “point” represents 1% of the loan amount.  Borrowers may decide to pay points to keep the interest rate lower and, thereby lower their monthly payments. Points are normally paid at closing.
  • Annual Percentage Rate (APR) – total yearly cost of a loan.  It includes the interest rate, mortgage insurance, and points.

For more information on your home loan, please contact a LegacyCare loan consultant at 817-860-3232 or you may email us at Joylynn.Bates@myccmortgage.com.

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