Intricate Mortgage Terminology

The different terminologies used in mortgage arena have always perplexed the people in to it. The following glossary section about different terms used in mortgage business will help you understand the business better. It is very essential to have the basic awareness about the different mortgage terminology, as it could help you avoid misunderstanding the jargons used. Do check out the mortgage terminology list given below.

Adjustable-Rate Mortgage (ARM) – A kind of mortgage loan wherein the rate of interest periodically changes, which depends on the changes in the economy.

Amortization – It is a method of loan repayment wherein the amount borrowed would be repaid in installments for a particular period of time.

Annual Percentage Rate (APR) – It is the gross annual cost of the mortgage, which includes the interest rate, points and different charges which are payable on the loan.

Balloon mortgage – It is a mortgage terminology used for a mortgage loan which requires fixed and low monthly payments for a short period of time.

Buy-down – This particular tool will allow you to bring down the interest rate on your mortgage loan fixed rate for a short period, which is usually for one to three years.

Cash out refinance – This is a kind of refinancing a mortgage which is done at a higher amount than the balance on the current loan. By this you can use the additional money for personal use.

Fannie Mae – It is a mortgage terminology used to indicate the government-sponsored enterprise (GSE) which is chartered by Congress and it is also the largest home mortgage funds supplier in the U.S.

Foreclosure – It is a legal process in which the borrower is dispossessed of the right to own his property when he fails to pay back the amount of loan.

Home equity line of credit – A kind of mortgage loan which can be taken out to support your

financial needs by using home equity as a loan security.

Points – Points used to lower the rate of interest to a considerable amount by paying points on the mortgage loan.

Refinance – This is the process through which you can pay off an existing loan while keeping the same property as security by taking a new loan.

By Mortgage Community