Beginning the mortgage application process can be overwhelming regardless if you are a first-time buyer or a seasoned one. It is important to understand the different terminology involved throughout the process so you can confidently choose the best home loan for your financial situation.
To help you achieve a stress-free home buying process, your local Green Cove Springs general contractor with A&M Home Builders has defined some of the most common mortgage terms.
Home Loan Definitions
Adjustable-Rate Mortgage (ARM): An ARM is a common choice for first-time buyers. The appeal is the initial low-interest rate. This mortgage generally has a low-interest rate because it is dependent on how well the market is doing. If the market changes, that could negatively affect your loan. This makes it more difficult to accurately budget your finances since you can never truly know if your interest rate is going to change.
Amortization Period: This is how long you have to fully pay your loan back with regular payments.
Annual Percentage Rate (APR): This is the amount of interest that is paid to the lender every year.
Closing Costs: These are additional fees required before you can officially close on your home. These fees include, but are not limited to, your down payment, property appraisal, origination fee, lawyer fees, and the property title.
Down Payment: This is a set percentage of your home’s total value that is owed before you close on your home.
Equity: The difference between the amount owed on your home loan and the total value of the property.
Fixed-Rate Mortgage: This home loan is the opposite of an ARM because it has a set interest rate that does not change throughout the amortization period. A fixed-rate mortgage typically has a higher interest rate than the ARMs initial rate, however, it gives buyers peace of mind since they will know exactly how much they owe every month on their green cove springs home loan.
Contact Us
If you would like to receive more information on common mortgage terms or if you are interested in purchasing an affordable, high-quality home, then please contact your local green cove springs general contractor with A&M Home Builders at 904.955.1758 or email us at [email protected].
