More Morgage Terms to Help With Your Home Purchase: E - J
June 20, 2014
Recently we posted the A-D in mortgage terminology to help new homeowners when it comes to understanding loan terminology. In this installment we are covering more terms to help demystify the home buying process. Earnest Money - This is a deposit made by the buyer when signing a purchase agreement as evidence of good faith. Equity - This is the percentage of the property value that is actually held by the owner and not the outstanding balance on the mortgage. Escrow - When buying a home, a neutral third party holds the money and or documents during the sales process. For instance the earnest money deposit would go into escrow until the sale is complete. Fannie Mae - This is a government agency created by congress that buys and sells residential home loans. FHA - The Federal Housing Administration insures residential mortgage loans made by private lenders and sets underwriting standards. Freddie Mac - This is a similar government agency to Fannie Mae, but loans are purchased from insured depository institutions and HUD-approved mortgage bankers. Good Faith Estimate - This document sets the costs associated with the mortgage including fees, interest rates, insurance, and other information. This is required by law to be given within three days of receiving a loan application. Costs may change before closing. HUD - Housing and Urban Development is a government agency that implements federal housing programs and oversees the Federal Housing Administration. HUD-1 settlement statements are forms that breakdown all the closing costs associated with the purchase of a new home. Jumbo Loan - These are loan types that are larger than the limits set by Fannie Mae and Freddie Mac and hence are not backed by federal agencies. Because of this they are usually at a higher interest rate. We have more terms to help continue to assist in your home buying process so stay tuned.