Several months ago at the height of the Wordle craze, we offered up a guide to 5-letter mortgage terms. Of course, not everyone who’s looking for information about home financing plays Wordle, and not all mortgage terms only consist of 5 letters.
Here are 8 more terms related to home loans that every borrower should know. They’re all longer than 5 letters and are arranged in reverse alphabetical order, which resulted in perhaps the most important mortgage term of all being listed last. So, we encourage you to read (or at least scroll) all the way to the end!
Pre-Approval
A borrowing status, usually accompanied by a letter, that shows the amount of money your lender is willing to loan you for a home purchase. This one is obviously pretty important, so here are 6 things you need to know about mortgage pre-approvals.
Mortgage Rate
The interest rate you pay to borrow money when buying or refinancing a home. Needless to say, everyone wants to get the lowest rate possible on a home loan. Some things that determine your interest rate are within your control, while others are not. Take a look at this list of 7 factors that affect your mortgage rate.
Equity
The value in your home above the total amount of liens against your home. To put it another way, the monetary portion of your home that is actually yours. Building equity is one of the 5 benefits of homeownership we’ve outlined in this blog.
Down Payment
The amount, typically 3.5% to 20% of the purchase price of a home, that you pay up front before you start making your loan payments. Go to our Mortgage Calculator page to see how the amount of your down payment can affect your monthly house payment.
Credit Score
The number ranging from 300-850 that’s based on an analysis of your credit history. The higher your score, the better your chances of qualifying for home financing and getting a favorable interest rate. Check out these 3 tips to help you maintain your credit score and improve your credit profile.
Closing Costs
The fees required to complete a real estate transaction. We recently published this comprehensive guide to understanding mortgage costs to provide borrowers with the education and understanding necessary to navigate the purchase or refinancing process with absolute certainty.
Appraisal
A report highlighting the estimated value of a property completed by a third party. Here are some answers to common questions we get about home appraisals
Affordability
A measure of whether someone earns enough money to qualify for a home loan based on the most recent price, income, and mortgage rate data. This one is perhaps the most important term on this list because owning a home should be fun and rewarding. Being house poor doesn’t lend itself to either of those things.
Feel free to crunch some numbers yourself with our Mortgage Calculators. But remember, your local Homeowners Licensed Mortgage Professional is available by phone, email, or text to take a deeper dive into both your personal financial info and that of the property you want to finance. We exist to improve the lives we touch, and putting your mind at ease about how much house you can afford is just one of the ways we do that!
