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photo by steed media service
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Are you a first-time homebuyer? Congratulations. Now, it’s time to do
your homework. As you read your mortgage loan agreement, you’ll notice
quite a few acronyms that you might not be familiar with. These
agreements contain more acronyms than the box score of a baseball game;
so instead of assuming their meanings or ignoring them all together,
learn what they mean. Below is a list of terms and their meanings. –delgie jones II
APR (Annual Percentage Rate) –
The interest paid on a loan annually. It’s a good idea to use this
figure to compare the actual cost of potential mortgages. Be sure to
look for loans with a fixed APR, rather than an APR that fluctuates
from year to year.
ECOA (Equal Credit Opportunity Act) –
A federal law that prohibits prohibits creditors from discriminating
against credit applicants on the basis of race, color, religion,
national origin, sex, marital status, age, or because an applicant
receives income from a public assistance program.
GFE (Good Faith Estimate) –
A federal mandate that requires lenders to give potential borrowers an
estimate of all costs associated with the mortgage. This is designed to
protect the borrower and allow them to compare mortgages. Note: a
lender has three days to present you with your GFE after your
application has been submitted.
GPM (Graduated Payment Mortgage) –
This is a type of mortgage where the introductory payments begin very
low and gradually increase. This increase eventually levels off after a
given period of time expressed in the loan agreement.
HELOC (Home Equity Line of Credit) –
This is a revolving line of credit that is secured by your property.
Beware of a higher rate with this type of mortgage, which is commonly
considered secondary to a first mortgage.
