WHAT ARE ALL THESE TERMS?
Buying a home brings in another tyrant: terminology. You’ll hear terms like PMI, LTV, FICO, title exam, survey, abstract of title, and so on. Sheesh. The glossary at the end of this book is thorough, so if there’s a word you don’t understand, look it up and memorize it. Knowing how to speak mortgage lingo can give you the upper hand when negotiating your mortgage rate. When you hear terms you don’t understand being used rapid-fire during a loan application, it can intimidate you. But understanding the language can empower you.
TELL ME MORE
A couple has saved up $15,000 to help buy their first house. They go to their bank, sit down with their loan officer, and fill out an application. The husband asks, “I only have $15,000 to put down on a house. How much do I need for everything?” Fair enough question. As the loan officer begins to answer the question, probably taking up about twenty minutes of their time doing so, their eyes glaze over.
Now imagine that same couple walking into another bank one week later and the wife says, “We want to do an 80–15–5 purchase, but are also considering a 90-percent-financed MI. What can you offer us with the least amount of money out of our pocket under your best rate and term on a 30-year conventional?”
First, your loan officer’s chin will drop. But after he is mandibly enabled again, he understands that he’s not dealing with a couple of idiots but with people who may in fact know more about the loan process than the loan officer himself. Knowing how to talk the talk lets everyone in the loan process know that you’re not someone to screw around with, that you’re educated about the process, and that you’ve done more than your share of mortgage homework. Knowing the terminology and knowing who everybody involved in the process is and what they do is also important to you.