Mortgage terms that you should know to keep you on your toes at all times.
Mortgage contracts are filled with confusing terms that no one has ever seen, except mortgage contractors. Sometimes they can catch you unaware, but with this Mortgage Encyclopedia Andrayannica, you’ll be able to stay one step ahead.
Adjustable-Rate Mortgage (ARM): A mortgage loan with an interest rate that’s subject to fluctuate over the term of the loan in accordance to market rate.
Amortization: The paying of principal over time. In a mortgage, the principal is scheduled to be paid off, or amortized, over the duration of the loan.
Basis Point: One one-hundredth (0.01 or 1/100) of a percentage point. For example, a mortgage that’s fallen from 7.50 percent to 7.49 percent has dropped one basis point. One percent is 100 basis point.
Cash-Out Refinance: Refinancing of a mortgage in which the new principle exceeds the overall principal of the original loan by at least 5 percent.
Consumer Price Index (CPI): A measurement of the average change in prices paid by consumers for a fixed-market of a wide variety of goods and services to determine the underlying rate of inflation.
Employment Cost Index: An index based on quarters used to measure the change in the cost of civilian labor that includes salaried workers.
Fannie Mae and Freddie Mac: The nation’s two federally chartered and stockholder-owned mortgage finance companies. (And partly directly responsible for the collapse of the housing market in 2008.)
Fixed-Rate Mortgage (FRM): Unlike an ARM, an FRM’s interest rate does not change over the term of the loan.
Mortgage Application Index (Purchase): An index published weekly by the Mortgage Bankers Association of America which gauges the number of applications submitted for refinancing a home.
If you’re feeling intimidated by the process, contact a dedicated home loan specialist like me, Andraya Coulter. I serve the Bay Area and the entire state of California and Texas with quality, suitable, home loans! I can help guide you through the refinance process and make sure you get the home loan you deserve. Call me!