Whether you’re a first time homebuyer or a veteran in the mortgage office, there are always new terms to learn or relearn. And because buying a home can be stressful enough without feeling lost on closing day, GVC Mortgage is here to help. Today we are discussing three important mortgage terms you’re likely to encounter on your home buying journey.
1. Personal Mortgage Insurance (PMI)
Depending on how much money you put down on your house, you may be required to carry Personal Mortgage Insurance. PMI is a monthly insurance payment that protects your lender if you default on your loan. If your down payment was less than 20%, this insurance will be required. It is important to note that this type of insurance is not the same at homeowners insurance; that will need to be purchased separately.
Escrow is a legal arrangement in which a third part temporarily holds a sum of money until the two sides agree that all the conditions have been met to complete the sale. The escrow account protects the buyer’s earnest money and shows the sellers that you are serious about buying the home. On closing day, that money is released and usually applied to your down payment and mortgage closing costs.
3. Market Value
A property’s market value is the highest price a buyer would pay and the lowest price the seller would sell for. This price is determined by factors such as the the current housing market, the home’s unique features, and how the property compares with similar properties in the area.
Want to learn more about these or other mortgage terms before you take out a loan? Schedule some time with one of our home loan professionals at GVC Mortgage of Carmel, IN. We’ll gladly walk you through the home loan process and help you determine what type of mortgage is best for you. To schedule a free consultation, contact GVC Mortgage today at (317) 564-4906.