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| Abstracting | For a refinance loan only, the title is updated from the last transaction shown on the title.
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| Appraisals | The appraisal, done by a qualified appraiser, determines the market value of your home. It confirms that the purchase price is not more than the property is worth and that there are no major defects in the physical structure of the home. Appraisals do not guarantee, however, that the property is free from defects. That determination comes from a home inspection.
You pay North Shore Mortgage for the appraisal when you apply for your mortgage. You receive a copy of the appraisal before closing.
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| APR | The loan with the lower APR (annual percentage rate) is the less expensive loan in the long run. The APR (annual percentage rate) is the actual cost of the home loan including the fees and points paid to the lender. The APR is expressed like an interest rate. Some lenders advertise very low interest rates but include the APR in fine print. When used correctly, the APR will allow you to compare loans that have the same interest rate to see what the actual cost of the loan really is.
Lenders are required to provide the APR along with a loan's interest rate in the
Truth in Lending Disclosure Statement. This document will be mailed within 3 days after you submit a loan application.
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| Closing | The last step in the process of buying or refinancing your home is the closing. You will meet at the title company with the sellers and realtors to finalize the transaction. At the closing you will pay your down payment and sign the legal documents that give you ownership of the home and the mortgage money to buy it with. Closing can also be referred to as settlement.
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| Closing Costs | Closing costs include the closing fee and other expenses related to getting your loan, buying the property and having the title transferred. The property buyer usually pays these costs, but in some cases, a seller may be willing to pay some of your closing costs. Use the What will my closing costs be? calculator to estimate your loan's costs.
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| Closing Fee | A fee charged by the title company to finalize, or close, the transaction. |
| Commitment Fee | A fee charged for underwriting the loan.
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| Credit Report | A report from a credit bureau that shows an individual’s credit history for the last 7-10 years.
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| Down Payment | The difference between the purchase price and your loan amount. To meet your financial situation and goals, there are programs with 0%, 3% and 5% down, as well as up to 20% down or more. There is even a program that allows you to finance the entire purchase price plus an additional 3% to pay closing costs. However, if you make a down payment of less than 20%, you may be required to make monthly mortgage insurance payments. |
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| Escrow Account | Many loans require that you pay a portion of the annual real estate taxes and homeowner’s insurance along with your monthly loan payment. This is commonly known as an escrow account. Your money is held by the lender who pays the property tax and homeowner's insurance bills when they are due.
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| File Transfer | An administrative fee charged by the secondary market investor for transferring and setting up the new loan. |
| Flood Certification | A third party determination as to whether the property is located in a flood zone.
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| Homeowner | A person or persons who, although they may still owe lots of money on their
home, can say the home is theirs and can do whatever they want to it — paint
the kitchen pale yellow, dig up the lawn and plant perennials, tear out a
wall or put one in, contribute to the value of their neighborhood in their
own unique way. |
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| Inspection | Many homebuyers make their offer on a home contingent on a passable inspection. A qualified home inspector examines structural components and gives you a written report of any defects in the home. Once you know if there are any problems, you may negotiate with the seller to make repairs or accept the house "as is." Remember, the appraisal that the bank orders is not a home inspection. The appraiser considers whether the home is adequate collateral for the loan you want and does not inspect for all possible defects.
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| Interest Rate | The interest rate on a loan determines your monthly payment. The higher the interest rate, the higher your monthly payment. The lower the interest rate, the lower your monthly payment. To see how that works and how much a certain rate affects the payment, use our How much will my payments be? calculator.
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| Loan Origination Fee (LOF) | The fee charged by the lender to process the loan. |
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| Mortgage Insurance | When downpayments are less than 20%, a mortgage insurance policy gives the lender insurance against default by the borrower. The borrower pays a monthly premium for the coverage. For instance, although an insured conventional loan allows as little as 3% down, the monthly mortgage payment will increase to include a premium for mortgage insurance. The mortgage insurance usually must remain in effect until you have 20-22% equity in the property, either by paying down the loan or increased property value.
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| Mortgage Registration Tax | A tax paid to the county government at the time the mortgage is filed. |
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| Plat Sketch | A document showing the location of the house, garage and other structures within the lot boundaries.
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| Points | Points are prepaid interest paid to the lender at closing. Each "point" is equal to 1% of the loan amount. For a $100,000 loan, one point equals $1,000.
You can lower the interest rate by paying more points. In most cases, you'll want to live in the house for several years to recoup the cost of points in interest savings. If you're low on cash, then go for fewer or no points on your loan. See APR.
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| Prepaid Interest | The interest due on the loan from the day of closing to the first day of the next month. This amount is paid at closing. Prepaid interest is higher if you close early in the month, and lower if you close late in the month. |
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| Recording Fee | A fee charged by the county government to record documents in the public record.
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| Title | The title is the document that shows you own the home. Every house has a title, and as well as showing ownership, it will show other items that may affect the ownership, such as mortgages or easements. Before a house can be sold, the title is updated by the title company to determine the current status.
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| Title Exam | A review of the title of the property to confirm the legal owner and check for any title problems. |
| Title Insurance Premium | Premium for a title insurance policy that insures the lender against losses from problems with the title to the property. |
| Title Search | A final check on the title to the property just prior to closing of the loan.
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| Warranties | Most homes do not come with warranties. Sellers typically sell a home "as is." You can buy a warranty, which is essentially an insurance policy, for problems that occur with appliances and the heating, plumbing and electrical systems. Ask your realtor about buying a warranty. Consider the cost and the coverage provided when making a decision on whether to purchase a warranty.
For newly constructed homes, the builder is required by Minnesota law to provide a 1-year warranty for the entire home and a 10-year warranty for structural defects. |
| Warranty Deed | You'll see this document at closing. The seller signs it, and thereby transfers title to the buyer and agrees there are no claims against the property that could cause the buyer to lose it. The deed is recorded at the local courthouse to make it public record. |
| Warranty Deed | You'll see this document at closing. The seller signs it, and thereby transfers title to the buyer and agrees there are no claims against the property that could cause the buyer to lose it. The deed is recorded at the local courthouse to make it public record. |
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