The wonderful world of home buying can sometimes overwhelm the first time home buyer. They are inundated with information riddled with terms of art. ARMS, points, interest rates, good faith estimates, pay-downs, lock-in dates, so on and so forth. Though some or all of these terms may seem somewhat foreign to you, do not get overwhelmed, there are simple explanations for each and every one of them.
Let us start with the different types of loans there are. Typically all home loans fall into two basic categories: mortgages and home equity loans. Mortgages are simply a loan against property that is secured with a “mortgage”. This “mortgage” is basically a lien against the property until such time that loan is satisfied. So a mortgage is a loan against property that is secured with a lien against it.
A home equity loan is a loan that is also secured with a lien against the property. The home equity loan lien is secondary to the first mortgage on the home. This type of loan is based on the amount of equity in the house. Equity is the difference in dollars between the value of the home and the amount owed on it. Equity can be a positive number...
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