Useful Closing Terms for Buyers

5 Mortgage Closing Terms Every Buyer Should Know

Annual Percentage Rate (APR)

This term reflects the cost of all credit and finances as determined by the length of a year, including the interest rate, points, broker fees, and other credit charged obligated by the buyer.

Down Payment

Like many transactions involving large sums of money, the mortgage process involves a down payment- the amount a home buyer pays in order to make up the difference between the purchase price and the mortgage amount.

Truth – In – Lending Disclosure (TIL)

Required by federal law, the Truth – In – Lending Disclosure explains all lender required costs for the loan including, but not limited to , the annual percentage rate, the terms of a loan and the amount and due dates of all payments necessary to repay the loan.

Private Mortgage Insurance (PMI)

PMI is typically required if a borrower puts a down payment that’s less than 20 percent of the home’s value. The charge is usually included in the monthly mortgage payment in an attempt to protect the lender from possible default.

Closing Costs

Closing costs may also be referred to as transaction costs or settlement costs and may include various fees and charges associated with finalization. These may include or be related to application fees, title examination, title insurance, property fees, as well as settlement documents and attorney charges. The Real Estate Settlement Procedures Act ensures that the borrower receives a food faith estimate of closing costs with in three days of the application from the lender, which states in detail each expected cost.