Choosing which type of mortgage works for you is an important decision.  Below are some keywords which may take some of the confusion out of the process.
Fixed Rate Loans Vs. Adjustable Rate Loans: When looking at a loan, the interest rate can either be fixed or adjustable.  If it is fixed, it will not change for the life of the loan.  While this may be a safe option the initial rate may be higher.  An adjustable rate fluctuates based on the prime rate.  They generally adjust annually with a capped annual rate and a maximum life cap.  Adjustable rates may be a good option for those who know they may not be in a home forever. 

Good faith estimate: Lenders are required by the federal Real Estate Settlement Procedures Act to provide you with a good faith estimate of fees due at closing within three days of applying for a loan.   These mortgage fees, also called settlement costs, cover every expense associated with your home loan: inspections, title insurance, taxes and other charges.   The worksheet shows who will be paying for each item.

Appraisal: A determination of property value by an authorized person.  This helps lenders determine the amount of money which may be borrowed.
APR: (Annual Percentage Rate) Is a measure of the cost of credit expressed as a yearly interest rate.

Truth-in-Lending: Perhaps the most important phrase to remember is Truth-in-Lending. RESPA requires all lenders to provide consumers with a “Truth-in-Lending” form. This form takes into consideration all factors that will be paid over the life of the loan, including some closing costs. It also adjusts the actual interest rate quoted by the lender or broker in an Annual Percentage Rate (APR).

Home Inspection:  a visual inspection of the structure and components of a home to find items that are not performing correctly or items that are unsafe. If a problem or a symptom of a problem is found the home inspector will include a description of the problem in a written report and may recommend further evaluation.  Though not required, borrowers can place stipulations on a purchase, based on the results of an inspection. 

Underwriting: The process requiring the lender to review your application, the property appraisal and your credit history.  The underwriter decides whether to issue the loan.
5200 Davisson Avenue,  Suite A-1, Orlando, FL   32810             (800) 299-3111             information@ipmloan.com
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