It is impossible to become a mortgage expert for most of us. We don’t really need to be proficient in mortgage lingo if it is not something we handle daily. Many of us will only deal with applying for a mortgage a few times in our lives. Some will have experience in refinancing and even fewer in reverse mortgages. It is important however, to have at least the most basic understanding of the terms used within mortgage contracts. Even the most technical mortgage terms can be broken down to allow even the most novice mortgage seeker to understand exactly what they are paying for at the end of the day.
On a mortgage application or contract the term administration fee is often used. This is the fee that is charged by the provider of the mortgage to cover the costs to evaluate and procure the documentation needed for a valid mortgage contract. This fee is nonrefundable in the event you decide to terminate your mortgage contract. It is a variable fee that is dependent upon the rate charge by your mortgage provider.
There are two main parts within your actual monthly mortgage payment: the principle and interest. This means that when you make that one payment monthly you are actually dually paying on your mortgage. One portion of the amount paid goes directly towards the interest payment on the original loan amount while the other goes to pay down the overall principle loan amount. Depending on the contract the amount you pay is split up differently in how money is applied. Some individuals looking to decrease the amount of interest paid overall will opt for a larger down payment or one large lump sum payment on the mortgage principle.
Another term that is often used is owner’s equity. This refers to the difference between what is owed on the home loan verse what the home would sell for. Without taking into consideration any increase in the value of the property it comes down to the difference you paid originally minus principle payments made on the home loan.
It is important to note that once the mortgage contract is issued it cannot be altered or changed in any way. The only process in which to decrease the interest rate on the loan or the terms of the mortgage is to refinance. Refinancing will cost the homeowner additional in administrative fees and such because it is essentially entering into a new mortgage in which you will proceed through each step once again.
Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.
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