First Time Home Buyers
Friends Real Estate Services
Pre-Approval
An evaluation by a lender that determines whether the borrower qualifies for a loan and the maximum amount they qualify for.
Adjustable Rate Mortgage (Arm)
Interest rates are periodically updated to coincide with the current market interest rates.
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate with all financial cost: including interest, mortgage insurance, and loan origination fee.
Back End Ratio
The ratio of all fixed debt, including housing expenses to gross income.
Escrow
The mortgage company establishes an escrow account to pay property taxes and insurance during the term of the mortgage.
Private Mortgage Insurance (PMI)
A down payment of less than 20%, the lender requires PMI. This protects the lender from losing money if you end up in foreclosure.
Homeowner’s Insurance
Combined property and liability insurance designed for residential property owners.
Lien
A form of encumbrances that holds property as security for the payment of a debt.
Market Value
The amount for which something can be sold during the current market.
Fix Rate Loan
A loan whose interest rate never changes during the life of a loan.
