Key Words to Know When Buying a House
December 21, 2021 | Posted by: Sharon Patton
The mortgage process can be overwhelming. Knowing key mortgage and home buying terms can help reduce confusion and assist you in better understanding the process of buying a home.
Let us look at some of these below and help take away the stress and confusion and make this an exciting and fun time in your journey towards home ownership.
The money that you pay up front for a house.
Types of Interest Rates
Fixed – the rate does not change for the term of the mortgage.
Variable – The interest rate fluctuates with Prime rate.
Protected Variable – the rate fluctuates but will not rise over a maximum rate.
Open and Closed Mortgages
Open – Let’s you pay off your mortgage in full or in part at anytime without a penalty
Closed – Offers limited (or no) options to pay off your mortgage early in full or part, but usually has a lower interest rate.
Conventional and High-Ratio Mortgages
Conventional - a loan that is equal to or less that 80% of the lending value of a home. This requires a down payment of at least 20%.
High-Ratio - a loan that is over 80% of the lending value of a home. This means the down payment is less then 20% and will likely require high ratio mortgage loan insurance.
The length of time you agree to take to pay off your mortgage (usually 25 years).
How often you make your mortgage payments. It can be weekly, bi-weekly or once a month.
Pre-Approved Mortgage Certificate
A written agreement for a set amount of money at a locked in interest rate for a epcific period of time (usually 120 days). Getting a pre-approval allows you to shop for a house with confidence.
The ability to make extra payments, increase your payments or pay off your mortgage early without penalty.
An option that let’s you transfer or switch your mortgage to another home with little or no penalty when you are selling your existing house.
The process of paying out the existing mortgage for purposes of establishing a new mortgage on the same property under new terms and conditions. This is usually done when you require additional funds.
Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off the outstanding balance.
The length of time that the options and interest rate you choose are in effect. When the term is up you can renegotiate your mortgage and choose the same or different options based on your financial needs.
A home is the biggest investment you will make, and you want to make sure you have the best plan for your financial future. From a pre-approval, to shopping options and rates with over 50 lenders to choose from, we can make this as smooth as possible for you no matter where you are in the homeownership journey. If you have any questions or would like to explore the options of your mortgage let’s chat.
I look forward to connecting with you soon.
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