There are many terms and phrases used in the mortgage industry that may be confusing for someone who is unfamiliar with the process of obtaining a mortgage. Here are a few examples of commonly used mortgage jargon:
- APR (Annual Percentage Rate): The annual cost of a loan, including interest, fees, and other charges, expressed as a percentage.
- Amortization: The process of paying off a loan over time through regular payments.
- Closing costs: Fees and expenses associated with obtaining a mortgage, such as appraisal fees, title insurance, and attorney's fees.
- Credit score: A numerical rating of a person's creditworthiness, based on their credit history.
- Down payment: The initial payment made by a borrower when purchasing a home.
- Escrow: Money held by a third party, usually the lender, to be used for property taxes, insurance, or other expenses related to the mortgage.
- Interest rate: The rate at which interest is charged on a loan.
- LTV (Loan-to-Value) ratio: The ratio of the loan amount to the value of the property.
- Principal: The original amount of a loan, not including interest.
- Refinancing: The process of obtaining a new mortgage to replace an existing one.
- Title: A legal document that proves ownership of a property.
This is not an exhaustive list, and there are many more terms and phrases used in the mortgage industry. It's always best to consult with a mortgage professional if you have any questions about specific terms or phrases.
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