In a previous post we listed some basic mortgage terminology you need to understand regarding your mortgage. As a homeowner you need to understand mortgage lingo in order to make informed financial decisions. Doing your homework before shopping for a mortgage loan can literally save you thousands of dollars; brushing up on the terminology is well worth your time.
Here are several more mortgage terms that could prove handy to know.
Truth in Lending is a law where mortgage lenders are required by the Federal government to disclose information regarding the loan. The “Truth in Lending Form” your mortgage lender is required to provide you discloses any fees and the interest rate as an Annual Percentage Rate. It is the APR that accounts for the interest paid annually and factors in any other fees you pay. By comparing the Truth in Lending statements and the APR from a variety of lenders you will be able to choose which mortgage is the best for your situation.
Mortgage Underwriting is the process your lender goes through in preparing your mortgage. They will evaluate your credit, your income, and the appraisal of your property before approving you for the loan.
Mortgage Servicing is the recordkeeping your lender keeps on your mortgage. This includes collecting your monthly payments, billing, and paying taxes and insurance.
Reverse Mortgages are often referred to as equity conversion loans. This type of mortgage allows the homeowner to cash out equity in their home on a monthly basis. These types of mortgages are typically reserved for senior citizens. With a reverse mortgage the lender pays the homeowner every month. Repayment of the mortgage is deferred until the homeowner moves or dies.
RESPA is an acronym for Real Estate Settlement Procedure Act. This is a Federal law established to protect consumers and requires lenders to disclose key information about their loans. Lenders are not required to disclose this information until the application is received. The Truth in Lending form must be signed by the homeowner prior to closing.
Home Survey is a map of your property that shows legal boundaries, dimensions, structures and any other physical features of your home and property. It is used by the mortgage lender to describe the property securing your mortgage loan. If you default on the loan this information is used at foreclosure.
Title Underwriter is an insurance company providing title insurance for the property. Title insurance protects the interest parties from problems with the property title. These problems are referred to as “Title Defects.” Defects could include any lean placed on the property that was not found in a title search. The insurance pays any legal expenses resulting from title problems.