A Glossary of Terms For VA Loans

A Glossary of Terms for VA Loans

Appraisal – Appraisals are professional evaluations of the fair market value of the property being purchased.

ARM – Adjustable Rate Mortgage – ARMs are mortgages that have an initial low rate of the interest that is fixed for the first 2 or 3 years of the loan, which can then fluctuate with current market rates after that period.

Assumable Mortgage – An assumable mortgage can be taken over by a new buyer instead of acquiring a new mortgage.

The seller will still be liable for payment of the mortgage if the new buyer defaults.

Balloon Payment – With a balloon mortgage, the buyer makes payments for a specific amount of time, generally five to ten years, after which the mortgage must be paid in full.

This type of loan is generally used by people who do not intend to stay in the house for a long period of time or those who intend to re-finance the mortgage before the payoff amount comes due.

Certificate of Eligibility – A Certificate of Eligibility is a document that proves your past or current military service. It is required for a home loan through the VA Guaranteed Loan Program, which offers home loans for veterans.

Employment Verification – Employment verification proves your place of employment and the amount of salary you receive that will enable you to make mortgage payments each month.

Escrow – Escrow is an account that holds money for the distribution of various costs, such as a lender’s escrow account that holds payments for taxes and interest.

An escrow account can also be used to hold earnest money during the home purchasing process.

IRRRL – Interest Rate Reduction Refinancing Loan – The IRRL is a streamlined process for refinancing mortgages through the VA Guarantee Loan Program.

Mortgage Insurance – Mortgage insurance provides money to the lender in case you default on your home mortgage.

It is generally required if you put less than 20 percent down payment on your home.

PITI – Principal, Interest, Taxes and Insurance

The PITI is the total amount of your monthly mortgage payment that includes the principal on the loan, the monthly interest, a portion of your real estate taxes for the year and a monthly portion of your home insurance payment for the year.

Points – A “point” is 1 percent of the mortgage loan amount that is often paid up front to negotiate a lower interest rate on the loan.

Paying the amount up front can often save thousands of dollars over the term of the mortgage.

Prepayment Penalty – This is a fee paid to the lender if you pay off the mortgage before the term of the loan has ended.

Many lenders will offer “no prepayment penalty” loans. The VA home loan program requires no prepayment penalty loans.

Pre-qualification – Pre-qualification allows homebuyers to provide their credit and employment information to secure a loan in advance of finding a home to purchase.

Settlement – Settlement is a term often used to mean the closing of the loan.

Title Insurance – Title insurance is a type of insurance that provides protection for the owner and the lender against disputes concerning ownership of the property.

Variable Interest Rate – Variable interest rates change with changes in the financial market.

VA Eligibility - The VA loan program requires applicants to provide proof of their military service.

This information is requested on a VA form 26-1880, which is then submitted to Veterans Affair Administration and is subsequently provided to the lender.

Walk-through – The walk-through is the final inspection of the home by the buyer to ensure that it is in the proper condition under which they agreed to purchase the property.

Our VA Loan Specialist helps veterans obtain the loans they are entitled to.

He served in the United States Marine Corps, and now devotes himself to the Veteran home buyer in the Phoenix area, fulfilling a passion of his while at the same time helping others achieve home ownership.

Be a proud homeowner today.

For more details call 480-351-5904 or visit the site

www.valoansforvets.com

VA Loans for Vets7702 E. Doubletree Ranch Road, Suite 220Scottsdale, AZ 85258Phone: (480) 351-5904Email: jimmyv@fcbmtg.com