<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1955936548054264&amp;ev=PageView&amp;noscript=1">
All Posts

7 Popular Mortgage Terms Decoded

Let’s make sense of a few confusing mortgage terms you may not be so sure about. We get it, you can always ask Siri or Alexa, type in a question online, or even phone a friend for help. But, home loans are kind of our thing here at Churchill Mortgage so we thought we’d get down to the nitty gritty on some of these popular terms. This insight will help you look like a mortgage rock star … and ultimately help get you a mortgage you won’t regret.

#1 Down Payment- This is exciting…you’ve managed to save up some money for down payment! But what does that really mean? Ultimately, you’re putting cash up front on the final price of your home before your mortgage starts. Putting 20% down will help you avoid paying mortgage insurance but it doesn’t mean you need to put all your cash in hand toward your down payment. Anywhere from 3-10% down could be your best bet. Talk to your Home Loan Specialist to see what works best for your situation.

#2 Closing Costs- When you’re buying a house or getting a mortgage refinance, closing costs are part of the contract. The average home buyer pays about 2-5% of the loan amount in closing fees. So, what’s included in closing costs? Usually you’ll have a variety of fees such as: your application fee, attorney’s fees, administrative or processing fees, insurance fees, property taxes, and expenses from the title company.

#3 Interest Rate- This is the cost you’ll pay each year to borrow the money on your home loan. In this case, the lower the interest rate percentage, the more you’ll save over the life of your loan (which is a good thing, of course). Many homeowners choose to “lock” their interest rates 60-90 days before closing on their home loan to avoid potentially rising rates.

—Find out how you can find the truth about loan quotes—

#4 Escrow- When you purchase, build, or refinance a home, an escrow account can be set up to pay your property taxes and insurance premiums for you. A part of your monthly mortgage payment will go toward this account. Each year, the escrow account will be analyzed to determine any changes in what is owed for property taxes and insurance payments.

#5 Equity- The easiest way to understand home equity is start with your home’s value and subtract the amount that you owe on your mortgage. Equity can increase with a healthy real estate market, home improvements, and general upkeep. With most mortgages, the more you pay on your home loan, the quicker your equity builds. Remember, having more equity is a good thing!

#6 Homeowner’s Insurance- Just like you need insurance for your car, you also need it for your home. You may want to get several quotes from various insurance companies to get the best rate for your policy. Your rates are usually based on when the home was built, where the home is located, square footage, etc. It’s recommended you review your policy every few years to coverage any changes that need to be made.

#7 Amoritization- This is the process of spreading out a home loan into a series of  fixed monthly payments over a period of time. Your total payment remains the same but your payment is made up of parts of your mortgage that may change over time. A portion of each payment will include the interest costs and your loan principal (or your mortgage balance). Amoritized loans are designed to be paid off over a set period of time (i.e. 15, 20, or 30 years). 

These are just a few mortgage terms to wrap your head around, but if you have additional questions regarding loan products, mortgage insurance, or other terms not covered here, please contact a Churchill Home Loan Specialist.

Get Started

Connect With An Expert!

With so much of your hard-earned money on the line, it’s best to seek advice from a trusted home loan expert and have the confidence that you are in qualified hands.

vector man and woman at desk with graphs and charts

By submitting this form, I/we agree to your Privacy Policy Terms of Use and authorize Churchill Mortgage Corporation and/or their Preferred Provider for our area and/or The Churchill Agency to receive the above information to assist in obtaining a home loan.

I/we also authorize Churchill Mortgage Corporation, The Churchill Agency and/or their Preferred Provider for our area to contact us regarding but not limited to mortgage and insurance services and products via telephone, mobile phone (including through automated dialing), and/or email, even if telephone numbers or email I/we provide are on any Do Not Call/Contact Registry, such as corporate, state, or the National Do Not Call Registry. The submission of this form does not constitute in any way a formal loan application or a commitment for a loan. By communicating with us by phone, you consent to calls being recorded and monitored. By participating, you consent to receive text messages sent by an automatic telephone dialing system. Consent to these terms is not a condition of purchase.

Related Posts

Don't Be a Victim of Wire Fraud: Protect Yourself

Wire fraud is nothing new in the mortgage industry but hackers are getting more and more intelligent with...
Churchill Mortgage Jul 2, 2020 3:34:05 PM

6 Ways to Be a Good Neighbor

Getting along with your neighbors makes your community a better place to live! Whether you're out of eggs...
Churchill Mortgage Jun 22, 2020 7:05:32 AM

Enter the Stay Cool Sweepstakes!

Churchill Mortgage is currently hosting our Stay Cool Sweepstakes! You can enter to win a YETI Roadie® 20...
Churchill Mortgage Jun 18, 2020 10:53:40 AM