There are a lot of people that sit down with a mortgage broker, and are unable to follow exactly what they are saying. The reason behind this is a lack of knowledge for the basic mortgage related terminology. Therefore, the following is a blog entry that encompasses a few key terms that should be understood.
- Mortgage. The receiver borrows money from a lender with the intent of paying the lender back with agreed upon payments. In this transaction, the receiver must put up an asset (usually their house) that can be collected by the lender if the full payment is not returned.
- Mortgage Broker. The individual who acts as the knowledgeable intermediary person who is responsible for setting up the transfer of money between lender and receiver.
- Second Mortgage. A receiver is able to take another mortgage out on their house instead of refinancing their first mortgage. This is usually best used for high expense reasons such as the purchase of a vehicle or college tuitions.
- Home Equity Loan. A loan that uses the house as collateral. The loan comes from the portion of the receiver’s house that money is not owed upon. Simple calculation: Value of Home – Current Balance of Mortgage = Home Equity Loan
