North Texas Real Estate Blog

It is always a good idea to begin looking for a mortgage before looking for your Southlake, Texas home—or any real estate in North Texas.  We’ve taken clients to see homes around Grapevine and Colleyville, too, and then watched some of them have to start all over because they could not get approved for the Tarrant County real estate that they wanted.  (When you are ready, call Dave Warden at (817) 706-3291, or e-mail dave@davewarden.net to learn about great deals on real estate in the DFW metroplex.)

So, today, we are going to begin explaining some common mortgage terms to help you along on the journey to owning Greater Fort Worth real estate. 

Alternative financing:  This term refers to the types of mortgages that are in the news this year and include adjustable rate, graduated payment, buy-down and hybrid mortgages.  Some start at an initially lower rate.

Amortization:  These types of loans apply a large portion of the payments in the early years of the loan to the interest, leaving the principal to be paid during the later years.

Assumable loan:  When a buyer takes over payments for someone else’s loan, he can save thousands of dollars in closing costs and loan origination fees by only paying a small assumption fee.  FHA and VA loans are assumable but most conventional loans are not.

Closing costs and prepaids:  Money needed in addition to the down payment on closing day.  These can include fees for an attorney, loan origination, appraisal, credit report, document prep, escrow, survey, recording, tax escrow, hazard insurance, flood-zone certification, and private mortgage insurance. 

Disclosure:  Document describing terms, conditions, interest rate caps, A.P.R. and other parameters of the loan.

Down payment:  The difference between mortgage amount and the purchase price.

Earnest money:  Deposit given to seller to show seriousness of buyer’s intent; this money is applied to down payment or may be forfeited if deal does not go through.

Equity:  This is the difference between the home’s fair market value and the loan amount.

Lock-in:  A period of time between 30 and 270 days that a lender will guarantee an agreed upon interest rate and points.

Market rate:  The average rate being charged by lenders for conventional, FHA, or VA loans.

Negative amortization:  This happens when the principal balance of the loan increases when payments are too low.

Origination fee:  The lender’s fees included in the closing costs.

Points or discount points:  Prepaid interest of one percent of the loan amount that can be paid to the lender to issue a loan below market rates.  Points may be tax deductible.

Prepayment penalties:  Fees charged to borrower for paying off a loan early.

Private mortgage insurance (PMI):  Insurance required with conventional financing if a buyer puts down less than 20 percent.  This is different from credit life insurance.

Qualifying:  After undergoing the process of proving to a lender the capacity to repay a loan, the lender agrees to a certain loan amount and terms.

Title:  A title to a piece of property that shows that the buyer has clear ownership.

Title insurance:  The lender requires the buyer to insure the title against future claims.  A borrower may also purchase it to protect their equity.