b'MB-106 2022-23 Relo - Single Page_MB-706.qxd2/14/20222:29 PMPage 68FINANCING YOUR HOME MOVEMKELocal Lendersstrating that you will be able to pay thethe risk that an increase in interest rates amount they are asking. will lead to higher monthly payments. Milwaukee has many local lenders who know the Milwaukee market and canFIXED-RATE MORTGAGESFHA-INSURED LOANSprovide valuable assistance with a mort-gage, including Equitable Bank,Fixed-rate mortgages feature an interestThe Federal Housing Administration Summit Credit Union and Waukesharate that stays constant throughout the(FHA) offers several low down payment State Bank. life of the loan, which typically range inmortgage products for eligible length from 10 years to 30 years. participants. FHA-insured loans are available from most lenders who offer MortgagesADJUSTABLE-RATEconventional loans. For information and MORTGAGESeligibility requirements, contact your Mortgages are available through mort- lender or visit:hud.gov/fha . gage brokers, banks, credit unions andWith an adjustable-rate mortgage savings banks. Whether you elect to(ARM), the interest rate changes work directly with a lender or through aVA-GUARANTEED LOANS mortgage broker, it is a good idea to getperiodically. They are typically pre-qualified. This will help you defini- characterized by the amount of time thatIf you are a veteran of military service, tively ascertain how much you canmust pass before the rate can bereservist, or on active military duty, you afford. It will give you a competitivechanged (1, 3, 5, 7 or 10 years, formay qualify for a loan guarantee from advantage with sellers, because you canexample). Rates are generally lower thanthe Department of Veterans Affairs. present them with a document demon- fixed-rate mortgages, but ARMs carryThese loans have low down payments. Common Financial Terms APR (Annual Percentage Rate): Because Escalator Clause: A provision that allows PITI: An acronym that stands for princi-it includes points, expenses and otherthe lender to change the interest rates orpal, interest, taxes and insurance. This is costs charged by the lender, this is thethe amount of the loan if market condi- the total monthly payment owed to the actual interest rate you will be paying.tions changelender. It includes payment on the princi-Since all lenders must calculate this figurepal and interest, as well as money the same way, the APR provides an excel-Fixed-Rate Mortgage: A loan with a fixedescrowed for insurance and taxes.lent method for comparing mortgage pro- interest rate that remains constant over posals. the life of the loan Points: Interest that is paid in advance of the loan. A point is equal to one percent ofAppraisal: An estimate of the propertys Home Warranty: Insurance purchased bythe loan value. Three points on a $100,000 market value based on the condition ofthe seller that covers the cost of repairingmortgage is equal to $3,000. Paying points the structure, the value of the land and themajor appliances, such as the furnace andlowers the monthly payments. neighborhood. Appraisals are usuallywater heater, if they fail within a year of needed whenever a home is bought, soldthe purchase date Private Mortgage Insurance (PMI): or refinanced.Insurance that protects the lender in the event the homeowner defaults on theAssumable Loan: A mortgage that can be Interest-Only Mortgage: A loan in whichmortgage. It is typically required when the taken over by the buyer for a fee. Thesethe mortgage holder makes payment onlydown payment is less than 20 percent of mortgages avoid closing costs and loanon the interestthe homes cost but can vary by lender. fees.Joint Tenancy: A type of ownership that Title: A document that indicates a buyerClosing Costs: Payments made on closingallows two or more parties to own a parcelhas clear ownership of a property. In order day to cover attorney fees, appraisals,of property together. In the event of oneto protect themselves, lenders typically will credit reports, escrow fees, prepaid insur- joint tenants death, ownership of thenot issue loans without this document. ance premiums and other fees property automatically passes to the sur-viving joint tenant(s). Title Insurance: Insurance that protectsCommon Area Assessments: Also knownthe homeowner and the lender in the as homeowner association fees, these are Loan-to-Value Ratio: The percentage ofevent there is an ownership dispute charges paid by unit owners to maintaina propertys value that can be lent to a the propertyborrower. Typically, financial institutions Variable-Rate Mortgage: A mortgage in will not lend more than 80 percent.which the interest rate is adjusted toDown Payment: The amount of cash paidreflect market conditions. Variable-rate by the homeowner at the time of closing. Mechanics Lien: A lien against the title ofmortgages feature interest rates lower Any down payment that is less than 20a property for work done on a house.than fixed-rate mortgages, but the rate percent of the purchase price usuallyCourts impose liens for non-payment ofcan change quickly. They typically have requires mortgage insurance, whichhome-related services and must be satis- caps that prevent the rate from exceeding increases the buyers monthly payments.fied at the time a home is sold.a fixed amount.68 YOUR RELOCATION RESOURCE'