One of the most exciting moments in life is purchasing a home. The process of purchasing a home can be a lengthy one, which is why it is important to understand each stage of the mortgage process to ensure that you are getting the most out of your recent investment.
Mortgage terms and phrases can often be overwhelming, and leave many feeling more confused. Google is great, however, you don’t want to be Googling terms every time you speak to a professional.
That is why we have compiled a list of the most common mortgage terms and their explanations (along with a few common phrases), to ensure that you are going into your investment confidently.
Let’s explore them, together!
Amortization: The length of time it takes to pay off a mortgage in full. You may hear the phrase “Amortization Period.”
Broker: A mortgage broker is an individual who is involved in the mortgage process, and is responsible for arranging the financial aspect on behalf of the client. A mortgage broker does not personally loan the funds themselves. They are in contact with large banks and other lenders. You may hear the phrase “Speak to your mortgage broker.”
Closing Costs: The costs involved in obtaining financing to purchase a home. Closing costs are typically comprised of appraisal fees, legal fees and transfer taxes.
Down Payment: The amount of money you put towards the purchase of a home. It is the percentage of your home’s purchase price that you pay upfront when you are going through the process of closing. You may hear the phrase “20% down payment.”
Fixed Rate Mortgage: A specific type of mortgage where the interest rate is fixed for a specified period of time. It is agreed upon between the lender and the borrower, and the rate cannot change.
Interest: The fee you pay to your lender for using the money you borrow is called interest. Interest begins the day you receive the funds. You may hear the phrase “Interest rate.”
Maturity Date: The date when your mortgage term ends. This means that your mortgage is either paid off completely, or you need to renew it for a new term. You may hear the phrase “Your mortgage is up for maturity.”
Trigger Rate: The rate of interest at which no portion of the monthly payment amount is left over to pay the interest that accumulated during the payment period.
Variable Rate Mortgage: A variable rate mortgage is a type of mortgage that consists of your interest rate changing according to the financial index. You may hear the phrase “I have a variable rate mortgage.”
Learn More From Arise Mortgage
Didn’t get a chance to write a few of these terms down? Not sure you are quite understanding them? That is why we are here!
Although there are many more terms that go beyond this list, understanding them will help you walk into your new home confidently understanding the terms of your mortgage.
At Arise Mortgage, we will work with you to ensure that you are a master of understanding each and every aspect of your mortgage (and the many terms that come with it!).
Get in touch with our team today, and let’s find you a mortgage that best works for you.