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FINANCING TERMS


Mortgage
A mortgage is a voluntary lien on real estate. The person who borrows money to buy a property voluntarily gives the lender the right to take the property if borrower fails to repay the loan.

Interest
It is a charge for using somebody else money

Loan Origination fee
It is a fee that the bank charges to cover the expenses involve in generating the loan.

Discount Points
Discount points are pre-paying interest at the time of the closing. To reduce interest rate, the bank might offer you to buy discount points. One point is 1% of the loan amount Ex: If the loan is $100,000 and you buy 3 points so you must pay 3% ($3000) at closing to reduce your interest rate.

Balloon Mortgage
It is a fixed rate loan for a specific period of time, with the balance due at the end of the time.

Fixed Rate Mortgage (Conventional)
Regarless of fluctution in the market, your principal and interest remain the same for the duration of the loan. This is the traditional choice of home buyers who plant to stay in their home for many years.

Interest Only Mortgage
Your mortgage payments covers interest only with no principal reduction for a designated period of time. When the interest only period ends, your payment is adjusted to include principal and interest in the amount that will fully amortize your loan over the remaining years of the loan. Your monthly payments are lower during the interest only period and increased once that period is over.

Adjustable Rate Mortgage
It offers an initail term with a lower interest rate and lower payment than conventional fix rate maortgage. After the initial term, the interest rate is reset periodically to keep in line with current market interest rate. If interest rate goes up your monthly payment will also goes up. If interest rate goes down, your monthly payment will go down. Most ARMs have their interest rate adjusted at specific intervals of time depending on the mortgage terms.

Anual Cap
It is the limit on how high the the interest rate of an ARM mortgage can rise during a single year.

Annual Percentage Rate (APR)
It is the true cost of a loan, expressed as an interest rate including finance charges and fees.The APR is the best way to compare loan programs from various lenders.

Appraised Value
It is an estimate of what the property is worth in the market. It is based on recent sales of comparable properties nearby. Lenders use appraisals to verify a home's value before making a loan, to justify their investment.

FHA/VA Loan Programs
The Federal Housing Administration (FHA) and the Department of Veterant's Affairs offer loan programs that enable qualified buyers to move into a home with little or no downpayment.
FHA and VA allow downpayment of less than 3% and also 100% financing. There is no minimum credit score and fewer employment requirement.

100% Financing Mortgage
Available to qualified buyers with an excellent credit history. No downpayment is required. Usually this type of buyer qualify for 80% conventional loan 20% home equity loan or line of credit. It is usually done when you must close on your new home before selling your current home.

Stated Income Mortgage
It is based on your income. If you have verifiable assets,confirmed employment and aceptable credit score you migth qualify.
Interest rate are generally higher than a fully documented loan because the lender is assuming more risk. This type of loan requires less documentation than a traditional home loan.

Downpayment
It is money that you give in advance that reduce your loan balance, the biggest your downpayment the less money you owe to the lender.

Closing costs
Closing cost are fees involve with the home sale such as lender processing fees, title company fees for handleing all paperwork, local goverment recording fees, and some other fees incurred in the transaction.

Earnest Money
Money deposited by the buyer when making an offer to purchase real estate. This deposit is evidence of the buyer's intention to carry out the terms of the contract in good faith. This money is forfited if the buyer default, but applied to the purchase price if the sale is closed.

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Marlen Hernandez
Phone: 786-752-1814
REALTORŪ
Florida Real Estate Licensed

Florida Realty of Miami | (305) 598-5488 | 9415 Sunset Dr. Suite 236 Miami, FL 33173

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