Let’s face it…the mortgage process can be tough enough without having to hear a lot of industry mumbo-jumbo you don’t understand.
We’ve compiled a glossary of mortgage terms that can help you better understand what’s going on with your loan: AMORTIZATION: The number of months principal and interest payments are calculated for loan repayment.
APPRAISAL: The documents that are used to determine the exact market value of the collateral we will use on the loan.
It is performed by a licensed real estate appraiser. Mortgage payments will change or fluctuate based upon the adjustment cycle.
2/28 ARM: The loan is amortized for a term of 360 months.
The payments are fixed for the first two years, and then the loan becomes a six month adjustable loan, causing the payments to fluctuate higher or lower.
THE BENEFIT: The starting rate is lower that a straight fixed rate loan for the first two years.
This allows the payments to also be much lower than a straight fixed product.
Since you may refinance mortgage after the first two years anyway, then you will benefit by the lower payment (during the first two years).
3/27 ARM: The mortgage loan is amortized for a term of 360 months.
The mortgage payments are fixed for the first three years, and then the loan becomes a six month adjustable loan, causing the payments to fluctuate higher or lower.
THE BENEFIT: For the first three years, the payments and rate start off lower than a straight fixed product and you still get the benefit of having a fixed payment in the first three years.