Key Mortgage Terms Overview
Welcome to our comprehensive guide on key mortgage terms—an essential resource to help you navigate the world of home financing with confidence. Whether you’re a first-time homebuyer or a seasoned homeowner, understanding these terms is crucial for making informed decisions about your mortgage.
Amortization
The process of paying off a loan through regular, fixed payments over time, with a portion going toward both principal and interest.
APR (Annual Percentage Rate):
The total cost of borrowing, expressed as an annual percentage of the loan amount, including interest and certain fees.
Closing Costs
Fees and expenses associated with finalizing a mortgage loan, including appraisal fees, title insurance, and attorney fees.
Escrow
An account held by the lender to cover property-related expenses such as property taxes and homeowners insurance.
Fixed-Rate Mortgage
A mortgage with a constant interest rate and monthly payments that do not change over the life of the loan.
Adjustable-Rate Mortgage (ARM):
Equity
The value of ownership in a property, calculated as the property’s current market value minus any outstanding mortgage balance.
Loan-to-Value (LTV) Ratio
The ratio of the mortgage amount to the appraised value of the property, expressed as a percentage.
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