There are many words that we use to describe everything from how a loan matures to various documents and programs that may be unfamiliar to you. Over the next few weeks, I will explain some of the terms that we used most often in mortgage lending to help you gain a better understanding of some of the terminology you may hear when acquiring a mortgage through Fairway Independent Mortgage Corporation.
Amortization – The repayment of principal from scheduled mortgage payments exceeding the interest due. By subtracting the interest from the scheduled payment you will obtain the amortization.
Balance – The amount of the original loan that is still remaining to be paid. By subtracting the sum of all prior payments from the loan amount, you will obtain the balance.
Cash-In Refinance – Paying down the loan balance to reduce loan-to-value ratio in a refinance transaction. This is often done to help the borrower qualify for a lower interest rate or reduced mortgage premium.
Debt Consolidation – The process of using a new, more favorable loan to pay off several unsecured debts.
Equity – The difference between the value of the home and the balance of outstanding mortgage loans on the home.
Fannie Mae & Freddie Mac – Two government agencies that purchase mortgages from lenders and resell them to investors.
Grace Period – The period of time where a loan payment may be made after its due date without incurring a late penalty.
As your Mortgage Planner, I am happy to answer questions that you may have and provide you with more insight on loan programs that may be of interest to you. Call me today to set up a time when we can meet to discuss your home mortgage needs!
Tags: Mortgage Terms