Mortgage Terms to Know When Buying a Home

If you are not a real estate professional, it can be easy to get confused about all of the mortgage terms that are used throughout the home buying process. Understanding all of the terms is one of the most important aspects of the home buying process, since it allows you to fully understand where you money is going. To help ensure that you understand some mortgage terms, keep these important mortgage terms defined in mind from the U.S. Department of Housing and Urban Development glossary.

  • Back end ratio – a ratio of your gross monthly income to the total of all of your monthly debt payments, which include car loans, mortgage, and real estate insurance.
  • Balance sheet – a specific financial statement that shows the liabilities, assets, and net worth of a company or an individual.
  • Balloon loan – sometimes called a balloon mortgage, is a mortgage that offers low rates for a set period of years, and after that set time, the balance is either due or can be refinanced by the borrower.
  • Bi-weekly payment mortgage – a mortgage payment that is made twice a month instead of just once. It can be used to reduce the amount of interest that is paid on the loan.
  • Bridge loan – short term loan that is paid back fast. Typically only used until a long term loan is able to be processed.
  • Buy down – seller pays a specific amount to the lender so that the lender provides them with a lower payment. The seller may opt to increase the sales price of the home to cover the cost of doing a buy down.

For all of your home buying needs to ensure that you stay up to date throughout the entire process, contact the lending experts at Avis Lending. We will make sure that you are getting the house of your dreams, without being left in the dark about where your money is going.

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