Fresh Opportunity Mortgages

If you are buying or refinancing a home, your loan officer or real estate agent may be using some words that you are unfamiliar with. Below we have listed some commonly used terms you will hear throughout the home financing process.

Annual Percentage Rate (APR) – The annual percentage rate is a broad measurement that reflects your interest rate plus additional fees over the life of the loan. It is shown as a percentage of your mortgage amount.

Appraisal – An appraisal determines the value of the home you want to purchase. This is done by an inspection from an appraiser who will evaluate the home and compare it to similar real estate that has recently sold in the area.

Closing Costs – Closing costs include all the fees and costs that need to be paid before or at the time of closing. Your loan officer will go over all the costs that you will be responsible for according to your mortgage contract.

Closing Disclosure– This 5-page document specifies the terms of your home loan, such as your monthly payments, interest rates, and closing costs.

Credit Score – Your credit score gives your lender a quick and objective way to measure the risk of issuing you a loan. FICO scores are the most widely accepted credit score used.

Down Payment – The lump sum of money you pay toward your home upfront is called a down payment. A typical down payment ranges from 3% to 20% of the purchase price depending on your loan type. Some loan programs have no down payment amount required.

Debt-to-income Ratio (DTI) – Your Debt-to-Income Ratio is the percentage of your gross income that goes towards paying off your overall debt every month. The lower your debt-ratio, the better your chances are of qualifying for a mortgage.

Escrow- account set up by a lender in which funds to pay for real estate taxes and homeowners insurance are deposited as part of the borrower’s monthly mortgage payment, then disbursed as tax and insurance payments come due.

Fixed Rate Mortgage – A fixed rate mortgage has an interest rate that remains the same for the entire life of the loan. If your interest rate is fixed, your monthly payments do not rise or fall.

Homeowner’s Insurance – Before a loan can close, you are required to secure a home insurance policy. This policy protects your home and all the things inside it in the case of a fire or other qualifying event.

Loan Estimate-Disclosure to help consumers understand the key loan terms and estimated costs of a mortgage before they make a complete application. After a consumer submits 6 key elements: name, income, social security number, property address, estimated property value and desired loan amount, the lender is required to provide this form. All lenders are required to use the same standard loan estimate form to make it easier for consumers to compare and shop for a mortgage.

Origination Fee – when applying for a mortgage loan, borrowers are often required to pay an origination fee to the lender. This fee may include an application fee, appraisal fee, and fees for all the follow-up work and other costs associated with the loan.

Prepaid expenses

The expenses that are usually paid in advance, such as escrows for taxes and insurance (which are paid at closing).

Prepaid interest

Interest collected at the closing of a first mortgage, covering the period from the date of disbursement to the start of the next payment period.

Principal – The total amount you owe on your home is called the principal. As you pay down this balance, you are earning more equity in your home.

Private Mortgage Insurance– Private mortgage insurance is normally paid monthly, but in some cases, there is an option to make a large upfront payment. The amount depends on the down payment made on the property as well as the borrower’s credit score and is usually between 0.3 and 1.5 percent annually. If your down payment is less than 20 percent of the purchase price, PMI is almost always required 

Still, have questions? Contact us any time with any of your home financing questions, we are always happy to help.

https://www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/

Our customer experience ambassador provides guidance to applicants on the actions and resources needed to improve an individual’s credit profile and overall loan readiness. These include credit score, budgeting, lowering existing debts, and working through all other financial obstacles preventing individuals from realizing the dream of homeownership.

Review the additional resources and opportunities for technical assistance, provided through our Justice Fund Initiative.

• Earnest deposit for Purchase Agreement if offered accepted varies from $500 to $3000
• Property Inspection Fees (paid to Third-party Vendor selected by applicant) fees vary from $250 to $1000
• Property Appraisal Fee (paid to Opportunity Resource who pays Third-party Vendor) fees vary from $350 to $1100
• Homeowner’s Insurance Policy- (paid to Third-party vendor selected by applicant) fees vary based on the individual applicant
• 3%-10% down payment amount of sales price of the home
• Closing costs – title fees, transfer tax, property taxes, initial escrow account set-up, etc.) 3%-10% of sales price varies based on third-party vendor fees.

The pre-approval process general takes 30 days from the time a complete application package is provided by the applicant.

P.M.I. stands for Private Mortgage Insurance. These are privately-owned companies that provide mortgage insurance that protects lenders against some or most of the losses resulting from a default on home mortgages. OppFund only requires PMI on a Fannie Mae or FHA Conventional Mortgage Loan, when the loan exceeds 80% loan to value.

A pre-qualification is only an estimation a Loan officer makes regarding an individuals ability to buy a home. The estimation is based on credit score and self-reported details such as income, existing debts, and credit history. Pre-qualifications help applicants decide on which mortgage program best fits their needs.

A pre-approval is an official commitment made by Lender that details how much you can borrow. This occurs after a Lender has completed a formal underwriting process and reviewed all required documents.