Monday May 25, 2020
Purchasing a home for the first time can often be a confusing experience because there is so much to know and learn. You may be faced with financial and industry terms you’ve never heard before. Here is a little primer on some of the more-used vocab you will likely encounter during this exciting process.
Term – The number of years your mortgage lasts is called a term. The term can vary from 30 to 15 years or less depending on how much you borrow and how long you want to take to pay it off.
Discount Points – It is possible to receive a lower interest rate (which can mean a lower monthly payment) on your loan, but to do so, you may have to purchase points for a fee. The fee is determined by the interest rate, how many points you’d like to buy and the loan amount.
Deed – This very important piece of paper is the document that transfers ownership of the property to you!
Private Mortgage Insurance (PMI) – Mortgage insurance is required on conventional loans when putting less than 20% down payment.
Debt Ratio – This is simply the ratio of your monthly debt to your monthly gross income and is used by banks and lenders to determine how much money they are willing to lend you, which will in turn let you know how much house you can afford to purchase. A good guideline is around 43%.
Is your San Joaquin Valley Homes house your first home purchase? You will soon realize there is a real learning curve to understand all the terminology. If you need help with the lingo, we’re very happy to help.
If you are searching for a new home, please know San Joaquin Valley Homes is still busy building homes throughout the Central Valley. Our model homes are open daily, we offer private in-person appointments and our virtual tours are available on our website.