A Peek Into the Mortgage Lingo

May 7, 2020

It’s important to be aware of the language any industry uses to sell something — from cars to beauty products, even houses. Yes, there is a mortgage “language” and it can seem very foreign and difficult to understand. We would like to help with that. Here are some commonly used mortgage terms with definitions to help you have a better understanding of this lingo during your homebuying process.

The difference between a Mortgage Lender and Mortgage Broker: Put simply, a lender is a financial institution that loans money directly to you. Mortgage brokers do not loan money; they act as the middleman between you and the lender, which can result in higher/unnecessary fees to the borrower. Tabor Mortgage Group is a Mortgage Lender.

PMI (Private Mortgage Insurance): A monthly insurance premium you’ll pay on certain loan types, such as FHA, USDA, and Conventional loans where you put less than 20% down. VA loans have no PMI required.

Cash to Close: Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a mortgage transaction.

Earnest Money: This is the money you give to show you’re serious about buying the home. The money will go into an escrow account until financing is in order, then will be credited to the purchase price.

Pre-Approval: Getting pre-approved is a crucial first step in the home buying process. A lender will look at your credit history; finances to determine if you are a suitable candidate for a mortgage and if so, what your maximum loan amount will be. Typically, a pre-approval letter is good for about 30 days, but with Tabor Mortgage Group they’re good for 90 days.