Park City Mortgage Information
The Benefits of Using a Park City Mortgage Lender for Your Real Estate Financing Needs
Knowledge of the Local Market: A local Park City lender has in-depth knowledge of the real estate market in the area and can provide valuable insights into the local conditions that can affect your home-buying process.
Quick Response and Personalized Service: Working with a local lender allows quicker response times and more personalized service. They are more accessible to answer questions, provide guidance, and can offer more flexible financing options that suit your unique needs.
Familiarity with Local Regulations: Park City has its own set of regulations and requirements when it comes to real estate transactions. A local lender is familiar with these regulations and can help you navigate them more effectively.
Expertise in Local Programs and Incentives: Local lenders know about special programs and incentives available to Park City buyers. They can help you identify and use these opportunities to save money on your home purchase.
Greater Accountability and Trust: A local lender has a reputation in the community to uphold, which means they are more likely to be accountable to their clients. They have a greater stake in ensuring their clients are satisfied with their services, leading to greater trust and confidence ie home-buyers.
Terms to Know/Glossary
Annual percentage rate (APR)
The annual cost of a loan is expressed as a yearly rate. APR considers interest, discount points, lender fees, and mortgage insurance so that it will be slightly higher than the interest rate on a loan in nearly all circumstances.
A software system that analyzes borrower data (employment, credit, income, debts, etc.) about mortgage loan program guidelines and provides “findings.” These findings yield an approval or decline, along with a list of items required for the loan to close based on the entered data being verified.
Costs included in a mortgage transaction and paid by borrower and/or seller during a mortgage loan closing. These typically include any loan origination fee, discount points, attorney’s fees, title insurance, survey, etc.
True NO Closing Cost Loan
Many people feel “too good to be true” when told they can qualify for a “NO COST MORTGAGE LOAN.” But, unfortunately, there are many cases where loan officers try to use the jargon of “No Cost” to entice consumers when the loan officer intends to add the closing costs to the new loan and increase the principal balance – this should be referred to as a “no money out of pocket” loan – BIG Difference.
No Closing Cost mortgages do exist – certain lenders such as First National Finance and Equity can still offer a “True No Cost Loan” where no closing costs are due at closing, and No closing costs are added to the loan…this is a program few loan originators offer. However, it is still available for many homeowners and can be VERY beneficial.
This program may have a slightly higher interest than the “lowest advertised rates.” Still, it is often the best option for many consumers, especially those planning to move in the coming years or who want to conserve equity while saving monthly.
Debt-To-Income Ratio (DTI)
The ratio, expressed as a percentage, results when a borrower’s monthly payment obligation on long-term debts (such as auto, student loan, credit cards, etc.) is divided by total verified monthly income.
Account held by a lender containing funds collected and accrued from part of monthly mortgage payments for annual expenses such as taxes and insurance, which are paid by the lender so that the homeowner does not have to pay a large lump sum when these come due.
Good Faith Estimate (GFE)
This document outlines the costs associated with a mortgage, including the interest rate, lender fees, title charges, prepaid interest, and insurance. The government requires that your lender give you a GFE within three days of receiving your loan application. The GFE is only an estimate; some fees can adjust based on credit score, late payments, etc. Lender fees and the interest rate (if you have locked your rate) may not increase unless there is a good change of circumstance, and certain other costs (such as title fees) may not increase by more than 10 percent from the GFE.
A mortgage loan with a balance higher than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because these two agencies cannot fund jumbo loans, they may carry a higher interest rate.
Loan-to-value ratio (LTV)
The percentage of the property value borrowed. (Loan amount/property value=LTV)
Points (or Discount points)
Interest is prepaid to the lender at closing to obtain a lower interest rate. Each point” is equal to 1 percent of the loan amount. Paying additional points generally reduces a loan’s interest rate and monthly payments.
Principal, Interest, Taxes, and Insurance (PITI)
Also called “monthly housing expenses,” principal, interest, taxes, and insurance are the components of a monthly mortgage payment.
Rate Buy-down A situation in which a borrower or seller contributes funds allowing the lender to give the borrower a lower rate, is often referred to as a discount point. For example, with With a refinance, this could be included in the new loan amount.
2/1 Buy-down There is another type of buy-down, often referred to as a 2/1 buy-down meaning that the borrower pays an additional fee to have the interest 2% lower the 1st year than the final fixed rate and 1% lower the 2nd year than the final fixed rate and then in the 3rd year the loan goes to the final fixed rate for the remainder of the loan term.
Funds contributed by the seller toward the buyer’s closing costs on a purchase transaction. This usually occurs when the buyer offers an additional amount on the purchase price and then requests that the seller contributes a certain amount to offset part or all of the buyer’s closing costs to minimize any funds needed at closing by the buyer.
Adjustable-rate mortgages often employ a “qualifying rate” different from the “start rate.” For example, the qualifying rate may be a pre-determined percentage of interest (i.e., “8 percent”), expressed as the “highest possible rate of interest at the beginning of the 2nd year”, based on the start rate (i.e., “start rate + 2 percent), expressed as the “Fully Indexed Accrual Rate” (“FIAR”) or another amount.
Lenders use this qualifying rate to calculate debt-to-income ratios on adjustable rate and 2/1 buy-down loans to assure that borrowers will be able to meet the financial obligation of the mortgage once the rate adjusts.