Indigo Mortgage’s Loan Term Dictionary

Buying a house is a stressful thing; it can feel like all legal mumbo-jumbo and often hundreds of pages of paperwork to review and sign.

Yes, home buying can be a stressful experience, but it does not have to be if you educate yourself on the process and what all that legal stuff really means.

At Indigo Mortgage, we want to help you understand what you are doing. To get you started, we have prepared a list of terms that are often related to mortgage loans and mortgage lending.  

Loan Terms Unveiled

• Auto-Debit -- you know when your credit card bill automatically takes a payment out of your bank account so that there is no confusion and debt pile up? Well, that is essentially what Auto-Debit is -- direct withdrawal of your funds to make payments towards the loan.
• Capitalization is used to describe computing interest. If your loan capitalizes, then it means the rate just went up.
• Cosigner is the person agrees to cover the debt I you somehow become unable. Usually, this can be your parents or spouse. It is used to allow the borrower to meet credit worthiness and makes the cosigner the primary holder of loan.
•  Credit-based is a process that looks up your credit history and current income to determine if you are financially able to pay back the loan like you claim to be. It essentially looks to see how responsible you are and if you lie to your friends about what you make every month.
• Credit Score -- when mortgage companies are coming to a decision on if they can trust you with their money or not, they look at your credit score. Just like in grade school, the higher the number, the better your chances of passing their qualifications.
• Deferment is also best explained like a credit card or even financing. You know when it says make no payments until June 2013? That is deferment; it gives you time to pay it off without interest. With houses though, it is basically a way to give you the time to settle in and sell your old house.
• Fixed Interest Rate is a stable interest rate that does not change; for the most part, you want one of these. Get it for a low as possible and make sure they can’t change it on you.
• Interest is the extra percent that you pay to the mortgage company for them letting you borrow it in the first place.  
• Origination Fee is a fee that is charged to you by the lender that varies on where the money came from and what fees may have incurred because of it.
• Variable Interest means that your interest can change -- possibly for better but worse is also a possibility.

We, at Indigo Mortgage, hope that you now have a better understanding of them. Remember that if you are looking for a lender, we consider you to be part of our family and not just another customer.

Posted by Indigo Mortgage at 10:38 AM 1 comment: