New Jersey Mortgage … Here are some terms to remember

Certain loan fees are established as a percentage of the loan amount or principal balance.this percentage is referred to as points. Therefore, one point is the same as one percent of the loan amount. A loan origination fee, a mortgage broker’s fee, discount points.are all percentages of the loan amount, or loan balance, and may be referred to  as points.

The loan origination fee is a fee charged as a percentage of the loan to cover the lender’s cost and profit for preparing documents and providing other services in processing the loan in-house. An example would be a $ 200,000 loan x 1 point = $2,000.

Loan to value is the amount of money you borrower in relation to the value of the property you are purchasing or refinancing. This value is always determined by an independent appraiser. Loan to value is never determined by the sales price or contract price, its always by the appraised value. An example is a home appraisal has a value of $ 200,000 you are borrowing $ 160,000 in this case the loan to value is 80 %

Rates this is the percentage of interest you will be required to pay along with principal in order to pay down or amortized your loan. nj mortgage rates vary from day to and in some cases can change on a hourly basis.

A lock-in, also called a rate lock is a lender’s promise to hold a certain interest rate and a certain number of points for a consumer for a specified period of time while his loan application is processed. A lock-in could ensure the consumer is able to afford the mortgage

Prepaid interest (per-diem interest) represents the interest that the buyer will be charged at closing for the use of the loan proceeds from the date of the closing of the loan to the first day of the following month. Because it is common practice in the mortgage lending business to have a loan begin on the first day of the month, at closing the borrower will pay interest for the period between the closing date and the first day of the following month based on the loan’s interest rate.

Tax and Insurance Escrows these are simply an account similar to a bank account. This account is usually started with several months of taxes and insurance in it. Borrowers will make additional deposits through their monthly mortgage payments. The amount will be equal to 1/12 of the annual taxes and insurance premiums. In New Jersey the taxes are paid quarterly and the insurance annually. This insures the lender has sufficient funds in you account to pay these bills.