Pittsburgh mortgage terms can be confusing to people who are not familiar with the real estate and mortgage lending industries. Specialized banking terms, slang, abbreviations and other forms of industry jargon can make the process more difficult for a mortgage borrower, and in some cases it can actually deter them from getting the home of their dreams or the refinancing they need. Understanding these terms can help you save thousands over the life of your mortgage and ensure that you get exactly the loan you need. The following are key terms in the Pittsburgh mortgage industry beginning with the letter “a.”
“A” Credit
Regardless of what type of home you’re looking to buy or in what market, you’ll always get the most favorable loan terms if you have “A” credit. This refers to a FICO (Fair Isaac Co.; responsible for the traditional algorithms that are used by credit agencies to rank a consumer from bad credit to excellent credit) score of 720 or higher. Consumers in this range are likely to get the best interest rates, while consumers below this range are likely to receive higher rates.
ARM
ARM is an acronym for Adjustable Rate Mortgage. This type of mortgage is aptly named, as the interest rate is adjustable. Generally the mortgage borrower is given a fixed rate for a certain period of time, after which the rate can be adjusted by a very specific, prescribed manner that lenders do not control or manipulate. This type of loan is excellent for first time homebuyers who expect regular increases in income.
Adjustment Interval
The Adjustment Interval refers to the amount of time between any scheduled adjustments on an ARM. The adjustment interval is set by contract and in most cases cannot be altered without a refinance or buyout.
Agreement of Sale
The Agreement of Sale is an important document that describes the details of the contract between the buyer and the seller. This includes those often forgotten items like oil left behind in the tank, the continuation of maintenance contracts, issues with pools or spas, and much more. It’s critical that this document set out the exact details of the sale as agreed to by the buyer and seller.
Amortization
In simple terms, Amortization refers to how long it will take to pay off a loan or other balance with a prescribed, consistent payment, interest rate and other factors. In most cases lenders will not be able to write any loan that negatively amortizes; meaning a loan that still increases in balance despite regular payments.
You can check the amortization rate of your existing or future loan or mortgage using online calculators or by contacting your lender.
APR
The APR is the Annual Percentage rate of interest. In most cases this is disclosed to you as a straight rate, but for many important mortgage related documents this rate must be expressed not only with straight interest included, but also any points, fees or other items. Most states and some federal laws describe what APRs are acceptable and what are excessive.
Appraisal/Appraiser
The appraisal is a rigorous evaluation that seeks to determine the total value of a given property. This includes all land, buildings, outbuildings, roads/driveways, bridges, and all other items included in the sale. The appraisal is generally based on fair market value for the home, which can fluctuate based on changes in the economy, among other things. The professional conducting the appraisal is referred to as an appraiser.
In the next installment of Pittsburgh Mortgage Terms we’ll detail all of the essential mortgage terms beginning with the letter “B.” But if you’re seeking a mortgage quote right now, simply call the number at the top of your screen for an immediate quote and consultation. Conversely, you can fill out our online application to get started immediately.
