MORTGAGE LOANS
 MORTGAGE PROFESSIONALS AFFILIATED WITH SLBR
HOME AFFORDABILITY CALCULATOR (Realtor.com)
UMLA, Utah Mortgage Lenders Association
FANNIE MAE, affordable mortgages via local lenders
FREDDIE MAC, affordable mortgages via local lenders
FHA-eligibility for and details of assisted loans
HUD-mortgage assistance, regulation and insurance
VETERANS ADMINISTRATION, about VA home loans
A mortgage loan is money given by a financial institution to buy a property. It requires a contractual agreement that the borrower will pay back the loan with interest in specified monthly payments over a stated period of time. There is a choice of terms. The longer the term extends, the lower the monthly payment, -- but the more paid in total interest.
The mortgage process: The potential homeowner applies for a mortgage by filling out forms. The information that is supplied is verified, and a credit report on the applicant is completed. The property is appraised to determine its market value. When all the information is collected, it will be reviewed for loan approval. This process takes approximately 30 days.
TYPES OF MORTGAGE
The list represents the most common types in their most straightforward form. Loans are frequently customized to a particular buyer's needs by mixing the most popular elements of several types of loan.
A conventional mortgage refers to a loan underwritten by banks, savings and loans, or other types of mortgage companies. It can be sold on a secondary market.
Fixed Rate Mortgages offer stability -- the principal and interest portion of the payment will not change during the life of the loan. Terms can span from 10 to 40 years (usually in 5 year increments). The 30-year variety is the most popular, and the 10-year variety typically costs the least in interest.
Adjustable Rate Mortgages (ARM) have a variable interest rate that fluctuates and corresponds to a financial index (benchmark.) They are adjusted at intervals, which could be monthly, yearly or longer. The benefit is that ARM interest rates usually start lower than fixed rate mortgages. The interest rate on some ARMs is capped.
In a graduated payment mortgage the earliest payments are small and grow larger over the life of the loan
A balloon mortgage is a short-term mortgage -- up to 30 years -- that combines interest and principal in monthly payments. The borrower must pay the balance of the loan in one payment at the end of the loan term.
VA loans, available only to past and present members of the United States military, make home loans available with zero down payment and no mortgage insurance through the Department of Veterans Affairs.
FHA loans are backed by the Federal Housing Administration, and are especially designed for first-time buyers. They are very useful for buyers who have little money available for a down payment and/or credit that is regarded as too risky for conventional loans. They are available through most mortgage lenders.
MORTGAGE TERMS AND WHAT THEY MEAN
A mortgage broker is an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages. Mortgage brokers normally pass on the actual funding and servicing of loans to capital sources who act as loan "wholesalers." There are approximately 20,000 mortgage brokerage operations across the nation that originate over half of all residential loans in the United States. A mortgage broker is also an independent contractor working, on average, with 40 wholesale lenders at any one time. By combining professional expertise with direct access to hundreds of loan products, a broker provides consumers with an efficient and cost-effective method of offering suitable and customized financing options.
A mortgage banker is a company, such as a bank, that lends its own funds to borrowers. Most also collect the monthly payments on the loan.
Pre-qualification for a mortgage loan describes a lender's initial evaulation of the applicant's credit, assets, and debt status. An adequate evaluation takes at least a day. The lender isn't obligated to lend money to the applicant.
Pre-approval for a mortgage loan is the next step. The lender undertakes a more detailed assessment of the applicant's creditworthiness, a process that can take a month. The result is a written commitment from the lender on a loan up to a certain amount.
Closing costs are the up-front fees you pay the lender when taking out a mortgage loan. These may include points.
Points refers to the one-time charge paid to the lender to buy a lower interest rate than the current one. Each point equals 1 per cent of the amount borrowed (i.e. on a loan of $90,000, one point costs $900.) Points are paid at the closing of the transaction. Points are usually found in the form of the origination fee or discount points fee.
Amortization of the loan is the reduction, then elimination, of a debt after regular payments covering the principal and interest.
The Annual Percentage Rate (APR) describes the total cost of the loan -- interest, closing costs and fees -- that reflects the interest rate on which the loan is based. The total costs are amortized over the life of the loan, and must be spelled out clearly by law.
A buy-down is an incentive offered by buyers that allows payment of an initial lump sum as a way to lower the initial interest rate. A buy-down also describes paying extra points up front at the closing of the loan in order to have a lower interest rate over the life of the loan.
The co-signer is a person who assumes joint liability for a loan or other contractual obligation. The co-signer of a loan agreement is not necessarily, however, a co-owner.
The down payment is the cash put into the purchase by the borrower. Lenders prefer deposits of 20 percent or more as the borrower's increased investment makes foreclosure less likely.
Interest is money charged for the use of borrowed funds, usually expressed as a percentage of the total loan.
Prepaid interest is paid at closing for the number of days left in the month after closing.
Foreclosure is the legal action taken to void a homeowner's right to a property so it can be sold in a foreclosure sale to satisfy a debt.
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