Mortgage Buzz Words

Each industry has it's own particular language and the mortgage buisiness is no different. Your home purchase or refinance have many of these words in common. Here are a few of the terms that you will encounter in your search for the perfect financing for your home loan. Additionally, here is a link http://www.fha.gov/glossary.cfm to a very extensive mortgage glossary compiled by HUD.

• ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in monthly payment amount, however, is usually subject to a cap.
• Cash-Out Refinance: when a borrower refinances a mortgage at a higher principal amount to get additional money. Usually this occurs when the property has appreciated in value.
• Closing Costs: fees for final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes.
• Conforming loan: is a loan that does not exceed Fannie Mae's and Freddie Mac's loan limits. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
• Conventional Loan: a private sector loan, one that is not guaranteed or insured by the U.S. government.
• FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

Well, that's a start. Don't hesitate to post questions on these or any other real estate related topic.