Yardley PA Mortgage Lender

Buying a home isn’t something we do every day so often the process and the language used isn’t something we’re familiar with. Very often mortgage jargon can lead to confusion which can then lead to paying more than you intended. A recent study conducted by the London based Nationwide Building Society found that 40% of US and UK home buyers were confused by the terms lenders used to describe mortgages. When it comes to purchasing your home, you’ll want to be confident in the terms used so you don’t make any ill-informed decisions.

Also according to the same study, only 31% of home buyers understood what the term “LTV” meant. LTV is an acronym that stands for “Loan To Value”. It describes the difference between the amount of the mortgage and the actual value of the home.

The study not only showed that homebuyers didn’t understand most of the mortgage jargon but that they were also too shy to ask for explanations in order to clarify the meaning of certain terms.

In order to make an informed decision and to choose the correct home for you, you’ll need to ensure that you understand all the terms and their meanings. You’ll want to make sure you do your research ahead of time to avoid any pitfalls. Don’t forget to enlist the help of your real estate agent either, that’s one of the reasons you’ve hired them. A good real estate agent understands that most home buyers don’t use these terms every day and will be glad to help clear up any confusion.

To get you started, here are a few of the most common mortgage terms that often confuse homebuyers:

Adjustable Rate Mortgage

An adjustable rate mortgage refers to a loan with an interest rate that will fluctuate over time. Typically this occurs every three years or every year after the first five years. An adjustable rate mortgage can be a smart option if you plan to sell your home within the first few years of purchasing it. Conversely, a fixed rate mortgage does not fluctuate.

Qualifying Ratios

This is a calculation used by your lender to determine the largest mortgage amount you could potentially qualify for. This final number is determined by considering your income, your existing debt and other factors.

Stips Or Stipulations

If you hear the term “stips” being used it’s an abbreviation of the word stipulations. When your lender uses this word they are talking about the requirements that must be met in order for you to close on your mortgage. Often these stipulations/requirements include verifications of your bank statement, proof of employment and proof of rent. Terms that may also be used in this same discussion are VOR and VOE which stand for Verification of Rent and Verification of Employment.

HUD

Finally, the last term we’ll clear up is HUD. HUD is an abbreviated version of the US Department of Housing Development Settlement Statement. This is the statement you’ll be required to sign when closing on your mortgage. The HUD statement documents all the details agreed upon between you and the lender, this includes all fees agreed upon.

These are just a few examples of confusing terms you may encounter in the purchase of your home. If you have any further questions, don’t be shy and be sure make them clear with your mortgage professional.

For more information on how to take advantage of our Heroes First program, please contact Bill Mervin Team.

Helpful local public sites in Yardley, PA:

• Yardley Township
• Yardley Chamber of Commerce
• Yardley School District