Annual Percentage Rate (APR) – this 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 charges obligated to the buyer.
Private Mortgage Insurance – PMI is typically required if a borrower puts a down payment that is less than 20% 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.
Down Payment – Like many transactions involving large sums of money, the mortgage process involves a down payment – the amount a homebuyer pays in order to make up the difference between the purchase price and the mortgage amount. 20% of the purchase price is recommended, and often required to avoid having to pay for PMI. (see above)
Closing Costs – these are sometimes called transactions costs or settlement fees and may include various fees and charges associated with finalizing the purchase such as application fees, title insurance, property fees, settlement document fees and attorney fees. The Real Estate Settlement Procedures Act ensures that the borrower receives a good faith estimate of closing costs within 3 days of your loan application.
Truth-In-Lending Disclosure – Required by federal law, the TIL explains all lender required costs for the loan including, but not limited to, the APR, the terms of the loan and the amount and due dates of all payments necessary to repay the loan.