b'MB-006 2020-21 Relo - Single Page_MB-706.qxd2/21/20219:08 PMPage 66FINANCING YOUR HOMEthe lender if the homeowner defaults.mortgage products for eligiblemortgage, but its a good idea, even if This can add an additional $50 to $200participants. FHA-insured loans arethey dont. Home inspections, which to the monthly payment.available from most lenders who offertypically cost between $300 and $600, ADJUSTABLE-RATE MORTGAGESconventional loans. For information andcan reveal structural problems that may eligibility requirements, contact yourimpact the selling price and your interest With an adjustable-rate mortgagelender or visit: hud.gov/fha . in the home. Home inspectors are (ARM), the interest rate changesVA-GUARANTEED LOANSlicensed by the state. Under Wisconsin periodically. They are typicallylaw, building inspectors are liable for characterized by the amount of time thatIf you are a veteran of military service,damages that arise from an act or must pass before the rate can be changedreservist, or on active military duty, youomission relating to their inspection. In (1, 3, 5, 7 or 10 years, for example).may qualify for a loan guarantee fromaddition, they are prohibited from Rates are generally lower than fixed-ratethe Department of Veterans Affairs.performing any repairs, maintenance or mortgages, but ARMs carry the risk thatThese loans have low down payments.improvements on the inspected property an increase in interest rates will lead tofor at least two years after the inspection higher monthly payments.has occurred. For more information Home Inspectionsabout regulations or tocheck the status FHA-INSURED LOANS Lenders may require that you have yourof an inspectors license, call (608) 266-The Federal Housing Administrationprospective home inspected by a2112 or search for home inspections at (FHA) offers several low down paymentprofessional before they approve yourdsps.wi.gov . Common Financial Terms APR (Annual Percentage Rate): Because Escalator Clause: A provision that allows PITI: An acronym that stands for principal, it includes points, expenses and other coststhe lender to change the interest rates orinterest, taxes and insurance. This is the charged by the lender, this is the actualthe amount of the loan if market conditionstotal monthly payment owed to the lender. interest rate you will be paying. Since allchangeIt includes payment on the principal and lenders must calculate this figure the sameinterest, as well as money escrowed for way, the APR provides an excellent method Fixed-Rate Mortgage: A loan with a fixedinsurance and taxes.for comparing mortgage proposals. interest rate that remains constant over the life of the loan Points: Interest that is paid in advance ofAppraisal: An estimate of the propertysthe loan. A point is equal to one percent of market value based on the condition of the Home Warranty: Insurance purchased bythe loan value. Three points on a $100,000 structure, the value of the land and thethe seller that covers the cost of repairingmortgage is equal to $3,000. Paying points neighborhood. Appraisals are usually need- major appliances, such as the furnace andlowers the monthly payments. ed whenever a home is bought, sold orwater heater, if they fail within a year of the refinanced.purchase date Private Mortgage Insurance (PMI): Insurance that protects the lender in theAssumable Loan: A mortgage that can be Interest-Only Mortgage: A loan in whichevent the homeowner defaults on the mort-taken over by the buyer for a fee. Thesethe mortgage holder makes payment onlygage. It is typically required when the mortgages avoid closing costs and loanon the interestdown payment is less than 20 percent of fees.the homes cost but can vary by lender.Joint Tenancy: A type of ownership thatClosing Costs: Payments made on closingallows two or more parties to own a parcel Title: A document that indicates a buyer day to cover attorney fees, appraisals, cred- of property together. In the event of onehas clear ownership of a property. In order it reports, escrow fees, prepaid insurancejoint tenants death, ownership of the prop- to protect themselves, lenders typically will premiums and other fees erty automatically passes to the survivingnot issue loans without this document. joint tenant(s).Common Area Assessments: Also Title Insurance: Insurance that protects known as homeowner association fees, Loan-to-Value Ratio: The percentage of athe homeowner and the lender in the event these are charges paid by unit owners topropertys value that can be lent to a bor- there is an ownership dispute maintain the propertyrower. Typically, financial institutions will not lend more than 80 percent. Variable-Rate Mortgage: A mortgage inDown Payment: The amount of cash paidwhich the interest rate is adjusted to reflect by the homeowner at the time of closing. Mechanics Lien: A lien against the title ofmarket conditions. Variable-rate mortgages Any down payment that is less than 20 per- a property for work done on a house.feature interest rates lower than fixed-rate cent of the purchase price usually requiresCourts impose liens for non-payment ofmortgages, but the rate can change quick-mortgage insurance, which increases thehome-related services and must be satisfiedly. They typically have caps that prevent the buyers monthly payments.at the time a home is sold.rate from exceeding a fixed amount.66 YOUR RELOCATION RESOURCE'