Dallas Mortgage

**Texas Mortgage 'Glossary'**

Annual Percentage Rate (APR)
A stated interest rate that reflects all the financing costs of a mortgage. The APR includes points, origination fees, and other finance charges in addition to the interest on the mortgage, and includes them all in a yearly interest rate. As a result, the APR is usually higher than the interest rate alone It also provides a benchmark for comparing different types of mortgages based on the annual cost for each loan.

Appraisal
An estimate of the value of a property, made by a State Licensed professional appraiser

Closing
The meeting between the buyer, seller, and lender (or their agents) where the property and funds legally change hands. Also called settlement.

Closing Costs (Settlement Costs)
The costs and fees associated with the official change in ownership of the property and with obtaining your mortgage that are assessed at the closing or settlement. Closing costs include required certifications, insurance, taxes, and other fees, and typically total between 3 and 6 percent of the mortgage amount.

Credit Report
A report that documents a borrower's credit history and current status. Borrowers can examine their own credit reports, although most credit reporting companies charge a fee to provide a report.

Equity
The value of your home after the outstanding balance of any loans are subtracted.

Escrow
A special account set up by the lender in which money is held to pay for taxes and insurance. "Escrow" can also refer to a third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement.

Interest
The sum paid for borrowing money, which pays the lender's costs of doing business.

Loan Origination Fee
The fee charged by a lender to prepare all the documents associated with your mortgage.

Points (Loans Discount Points)
Points are prepaid interest on your mortgage, charged by the lender at the time of the closing. Each point is one percent of the loan amount that is, 2 points on a $100,000 mortgage would be $2,000.

Pre-Paids
The expenses that are put into escrow at closing, usually including real estate taxes, insurance, and interest.

Principal
The amount of debt, not including interest, left on a loan; also the face amount of the mortgage.

Private Mortgage Insurance (PMI)
An insurance policy the borrower buys to protect the lender from nonpayment of the loan. Private mortgage insurance policies are usually required if you make a down payment that is below 20% of the appraised value of the home.

Survey
A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any buildings.

Title Insurance
An insurance policy which insures you against errors in the title search (to determine legal ownership), essentially guaranteeing your and your lender's financial interest in the property.

Underwriting
The process of deciding whether to make a loan based on credit, employment, assets, and other factors.

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