Banking Terms Every Buyer Should Know
If you are a first time home buyer, here are some banking terms you should become familiar with:
Interest Rate. The interest rate is the amount a lender charges a borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned. Interest rates are typically quoted on an annual basis, known as annual percentage rate (or “APR”).
Discount Points. Discount points are used to “buy down” the interest rate, either temporarily or permanently.
Origination Fees. The origination fee for a mortgage is a fee charged by the lender for processing the loan. Origination fees are paid by the borrower when the loan is funded and are usually based on a flat percentage of the loan amount.
Loan Term. The loan term is the length of time it will take the borrower to repay loan – like 15 or 30 years – with payments usually being made on a monthly basis.
Should you have any questions, ask your REALTOR or lender.
