Exploring the loan process will be complex, particularly with all of the mortgage-specific terminology. Learning common lending terminology may facilitate the process. In this article you will find details on common lending terminology in Philadelphia or New Jersey.
Common Lending Terminology
Pre-approval
A pre-approval is documentation written by a loan officer indicating the home price and type of loan that a buyer may possibly be approved for given their household income, monthly expenses, and credit report. This is not the same as a pre-qualification, which offers only an “unsubstantiated” estimate. Full approval is ordinarily granted after a buyer enters into a contract to purchase a particular piece of real estate.
Home Loan Commitment
After a buyer enters into a P&S on a property, a home loan provider audits all of a personal documentation and the information on the property. A loan commitment is later issued to state that the preliminary criteria have been approved and that the loan will be officially authorized pending a few final items.
Appraised Value
An appraisal is mandated by a mortgage company to confirm the value of real estate. It must be completed before a mortgage commitment or approval.
Closing Terms
Closing Costs
There are a standard set of fees in connection with the transfer of a home. These are referred to as closing costs. They often include real estate commissions, transfer fees, loan charges, attorney charges, title insurance, and county recording fees. Pre-paid charges such as home owners insurance are sometimes also included in the closing cost terminology, but they are really a different class of charge billed at closing.
Title Insurance
Title insurance protects against issues with a title and the costs associated with protecting your ownership. Although title searches are completed prior to a closing, there are glitches that impact your title to a property that are not clearly identified in a title search. Title insurance is a single expense at closing that remains valid for the entire time that you remain the owner of a piece of real estate.
Mortgage Insurance (MI)
MI stands for mortgage insurance and is typically charged on mortgages more than 80% of the sale price. There is commonly an up-front fee and a monthly bill, both calculated against the starting loan amount. MI remains on a mortgage until it is paid down to 80% of the purchase price.
More Details On Common Lending Terminology In Philadelphia Or New Jersey
This blog offers details on common lending terminology in Philadelphia or New Jersey. There could be other lingo that you come across while applying for a mortgage or during the home buying process. For more definitions, contact Diana Escobar-Wachter at 610-461-2910 or wachterd@accessabstract.com.
