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Closing costs
Closing costs are the total expenses that the buyer pays at the time a real estate transaction is completed. closing costs generally range between 3 and 6 percent of the home purchase price. With conventional loans, the following closing costs cannot be paid by the Seller for the Buyer: Pre-paid interest, Hazard insurance impounds, or Property tax impounds. |
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Effective interest rate
The effective interest rate is the mortgage cost on a yearly basis expressed as a percentage includes charges paid when closing the loan including compounded interest. Higher closing costs or more frequent compounding result in a higher effective interest rate. |
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Jumbo Loan
A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Jumbo loans cannot be funded by these two agencies, and usually carry a higher interest rate. A loan which is larger than $322,700. |
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Refinancing
The process of paying off one loan with the proceeds from a new loan secured by the same property. The main reasons for refinancing is to better the borrower with a lower interest rates, loan term reduction, switch to or from a fixed or ARM loan, receive cash out, debt consolidation, or to eliminate a balloon payment. |
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