Construction Loan
A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses. |
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Down Payment
Money deposited towards the purchase of a home paid to make up the difference between the purchase price and the mortgage amount not finance with a mortgage. The larger the down payment, the less you need to borrow. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender. However, FHA allows gifts from any source. |
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Home Equity Line of Credit (HELOC)
A revolving line of credit secured on the equity in the mortgagor's house, usable for any purpose. |
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Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 3 percent in some cases. With down payments below 20%, borrowers are usually required to carry private mortgage insurance depending on your loan's structure. Private Mortgage Insurance, is paid on all non-government-insured loans and whose equity is less than 20%. When you have accumulated 20% in equity, your lender may waive PMI at your request. FHA and VA loans have different insurance and guidelines; see Mortgage Insurance Premium for FHA loans. |
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