Congratulations on making the decision to become a homeowner. As your local Milton mortgage broker, we understand how big of a commitment this is. To help make this process easier, our team at Loewen Group Mortgages have created a list of definitions for the most common mortgage terms.
Adjustable Rate Mortgage: Also referred to as an ARM, is a loan where your monthly payments are determined by the prime lending rate. This is not a fixed rate and can change throughout the duration of your loan term.
Amortization Period: Also known as your loan term, is how long you have to completely pay off your loan balance. The most popular loan term is generally 25 or 35 years.
Appraised Value: The value of your home determined by a professional.
Closed Mortgage: A loan that has set terms such as how much you owe monthly and how long it will take you to pay it off. The usual term for this type of loan is five years.
Closing Costs: These are costs owed when you close on a home. This includes but is not limited to: title insurance, lawyer fees, an appraisal, down payment, and a home inspection.
Conventional Mortgage: A loan where you owe 80% or less of your home’s purchase price.
Credit Report: A detailed list of your credit history.
Debt Consolidation: Combining all your debt into one monthly payment. Specific Milton mortgages can help make this happen; call 289-270-1586 for more information.
Down Payment: The amount of money you pay towards your home’s purchase price.
Equity: The difference between your loan balance and your home’s purchase price.
Fixed Rate Mortgage: A loan where your monthly rates are consistent and never change. The interest rates are typically a little higher than an adjustable rate mortgage, however, a fixed rate mortgage can help you accurately budget because you will know your exact balance and how long it will take you to pay it off.
High-Ratio Mortgage: This loan is for those who cannot pay at least 20% towards their home’s down payment. This loan requires mortgage insurance, paid for by the borrower, to protect the lender in case a default on the payment occurs.
Interest Rate: A percentage of your loan that is paid for every month. Your mortgage interest rate is determined by the lender.
Open Mortgage: The opposite of a closed mortgage where you have no strict amortization period and can pay off your loan whenever you’d like without being charged a fee.
Pre-Approval: Where a mortgage broker checks your finances to see if you qualify for a mortgage. This is a great way to see if you are financially ready to become a homeowner before you apply for a mortgage. It is also tells you exactly how much you can borrow so you know what price range to shop in.
Refinancing: When you obtain a second mortgage to pay off your first mortgage. This is beneficial if you want a lower interest rate or cheaper monthly payments.
Our Team at Loewen Group Mortgages would love to work with you and help finance your dream home. For information on mortgage rates in Milton or to get started on your application today, please contact 289-270-1586.