Friday, June 14, 2013

Understanding Mortgage Terms when you are Purchasing your Lake of the Ozarks Home!

Purchasing a Lake of the Ozarks home will likely be one of your largest financial transaction, so it's important to make sure you understand the terms and information that you will hear from your Realtor, Lake Ozark Mortgage Lender and Title Company.

Over the next few weeks, we are doing a series of blogs to help you understand some of these terms that you may hear but not completely understand.  This week we are specifically looking at Mortgage Terms.
  • 2/1 Buy Down Mortgage - The 2/1 Buy Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long term rates; however, even keeping the loan in place for three full years or more will keep their average interest rate in line with the original market conditions.
  • Adjustable-Rate Mortgage (ARM) - A mortgage with an interest rate that changes during the life of the loan according to movements in an index rate. Sometimes called AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages)
  • Balloon Mortgage - A mortgage with level monthly payments that amortizes over a stated term but also requires that a lump sum payment be paid at the end of an earlier specified term.
  • First Mortgage -The primary lien against a property.
  • Fixed-Rate Mortgage (FRM) - A mortgage interest that are fixed throughout the entire term of the loan.
  • Growing-Equity Mortgage (GEM) - A fixed-rate mortgage that provides scheduled payment increases over an established period of time. The increased amount of the monthly payment is applied directly toward reducing the remaining balance of the mortgage.
  • Guarantee Mortgage - A mortgage that is guaranteed by a third party.
  • Mortgage - A legal document that pledges a property to the lender as security for payment of a debt.
  • Mortgagor - The borrower in a mortgage agreement.
  • Step-Rate Mortgage - A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.
  • Two-step Mortgage - An adjustable-rate mortgage (ARM) with one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
  • VA Mortgage - A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.
  • "Wrap Around" Mortgage - A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the "Wrap Around" mortgagee, who then forwards the payments on the first mortgage to the first mortgagee. These mortgages may not be allowed by the first mortgage holder, and if discovered, could be subject to a demand for full payment.
We realize that you may need additional information and we would love to help you understand the process of getting a Loan for you Lake of the Ozarks Home!  Please give us a call and we can set up a time to speak with you!  You can call me direct at (573) 746-7211 or send me an email at mlasson@fsbfinancial.com.

For Lake area news, resources and tips on financial services, please 

Michael Lasson
Sr. Residential Mortgage Lender

2140 Bagnell Dam Blvd, Suite 303B
Lake Ozark, MO 65049
Direct:  (573) 746-7211
Cell: (573) 216-7258

Fax:(573) 693-9141
Email:  mlasson@fsbfinancial.com
NMLS #: 493712


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