Real Estate Mortgage Loan Terms and Lingo

Real Estate Mortgage Loan Terms and Lingo is a post from: Everything Finance

Mortgage Glossary

Mortgagor
You, if you’re getting the mortgage.

Mortgagee
The lender.

Pre-qualification
This is an informal opinion a lender gives you about your ability to borrow money. Unfortunately, many lending institutions use pre-qualification as an often meaningless promotional gimmick to entice you into using their product. DCU has a pre-qualified process, but we do our best to make sure the pre-qualification is as close to “pre-approved” as we can make it.

Pre-approved
A pre-approval is more meaningful. A pre-approval tells you the maximum the lender will give you. It usually is conditional upon the appraised value of the home you are buying, a title search, and other property-related issues. The credit-related issues have been resolved. Some lenders charge you hundreds of dollars for a pre-approval. At DCU, pre-approvals are free.

FHA and VA
These are governmental agencies with programs that may help you obtain an easier or cheaper loan. Read on.

FHA loans
The Federal Housing Authority was formed to help persons with lower income buy a home. If you qualify for an FHA loan, your mortgage company may accept a smaller down payment. It may have a lower interest rate, but often a conventional mortgage is just as good (if not better). We’ll tell you if you qualify for an FHA loan. The FHA doesn’t make loans itself, it guarantees that you will pay your loan.

VA mortgage loan
If you are on active duty, are a former spouse of a person in the military, or are a veteran – and if you’re eligible, a Veteran’s Administration (VA) loan can be a good choice. VA mortgages don’t require any down payment as long as the value of the house is within certain limits. The paperwork on these can be daunting, but we handle the application process for you. We even provide an online application.

Conventional mortgage
A mortgage loan not insured by a government agency like the VA or FHA. Depending on the lender, conventional loans can be more expensive or about the same. What makes a mortgage conventional? Usually two things: you’re making at least a 5% down payment, and/or your mortgage is too big for the government to insure. The maximum size for FHA and VA mortgages usually changes yearly.

Conforming mortgage
You want one of these if your situation allows. A conforming mortgage loan falls within the loan limits set by a government-sponsored agency – either Freddie Mac or Fannie Mae.