Your Financial Terms Glossary
Sure, you know enough to make your way through the financial world. You may not prefer to spend all of your free time learning the fine details of financial terms, though. Fortunately, that does not mean that you need to dig through a dictionary every time you need to look up a new word. To help you, here is a quick glossary of terms you may encounter when buying or refinancing.
- Amortization: The process of paying off a debt in regular payments over a set time. When you make your monthly mortgage payments of principle plus interest, you are amortizing your loan. When it is paid off, it is fully amortized.
- ARM: An Adjustable Rate Mortgage is a kind of mortgage in which the interest rate fluctuates with the current market.
- FICO Score: Banks utilize this number to get a quick read on your creditworthiness. Think of it like a grade for how well you have used your credit. Scores range from 300 to 850. Anyone with credit below 620 may have a difficult time getting competitive interest rates.
- Fixed-Rate Mortgage: This type of mortgage has an interest rate that is fixed for the life of the loan. That means that your monthly payments will always stay the same.
- PMI: Private Mortgage Insurance is a policy that mortgage lenders use to protect themselves against a possible borrower default. PMI is generally required if the home buyer is paying a down payment of less than 20 percent, and is often wrapped in with the mortgage payment.
Eastland Escrows is here to assist you in processing your sale or refinance.