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Adjustable Rate Mortgage
A mortgage with an interest rate which changes based on a particular rate index. Examples of rate indexes are Prime, LIBOR and COSI. Often these types of mortgages have caps and often come in 1-, 3-, 5- and 7-year terms. The advantage of an adjustable rate mortgage is the interest rate is usually initially lower than a fixed rate mortgage. ARM loans are great for people who don't plan to stay in the property long-term, or expect their income to rise over time.
The fee charged by lenders to cover costs associated with the initial processing of your loan package.
A fee paid by you to obtain a professional opinion or estimate of value on the home you wish to finance. This is required by the lender to determine the property's estimated value. The fee typically ranges anywhere between approximately $250 and $500 depending on the property value and location.
A short-term mortgage with principal and interest payments based on a longer term that do not fully amortize (or pay off) the full principal balance within the actual loan term. The principal balance then becomes due and payable in a lump sum at the end of the balloon term. Balloon mortgages can be very risky and are intended for borrowers who are able to arrange permanent financing before the balloon term ends.
A short-term loan that "bridges" the period between the closing date of a new home purchase and the sale of your current home.
Fees paid to courier services to deliver documents in a timely fashion for the escrow/settlement firm, appraisal company, title company, or broker. This fee is typically included in the customer's closing costs.
A numeric representation of your creditworthiness at a particular point in time based on several different factors including, but not limited to, your credit history, your payment history, the amount of your outstanding debt and the types of credit you use. Credit scores generally range from 200-900 with the higher credit score representing a higher level of credit worthiness.
Credit Report Fee
A fee that ranges between $15 to $30 required for the lender to obtain your credit report. Lenders may require a credit report from a company that combines reports from all three credit bureaus (Experian, Trans Union, and Equifax).
A mortgage loan that meets all requirements to be eligible for purchase by federal agencies such as Fannie Mae and Freddie Mac.
Adapted from the U.S. Department of Housing and Urban Development.