underwriting later on in this book.
Finally, we come to closing, where the loan is completed and funds are transferred to escrow and title. Lending seems to be complex. But if you think of the whole process as these five steps, it doesn’t seem complicated at all. A borrower is pre qualifed, they find a home and originate their loan, it is processed, it’s underwritten, and then it’s closed. However, just because the main five steps seem simple doesn’t mean that there isn’t plenty of room for things to go awry. This whole book is based on the idea that a lot can go wrong with a lender, so you have to be on your toes. With that in mind, let’s focus on the three main categories that make up a typical mortgage: rate, insurance, and size.
TYPES OF MORTGAGE RATES
Almost all mortgages are either “fixed-rate” mortgages or “adjustable-rate” mortgages. In a Fixed-Rate Mortgage (FRM), the interest rate is set for the entire term of the mortgage. An FRM is advantageous to borrowers because they’ll know exactly how much money they will pay back on the loan and also know exactly how much each payment will be from the first day to the last day. For some people, committing to paying a bit more in interest is worth it for the peace of mind that they have a fixed amount to pay for the duration of the loan. In that case, FRMs can be the ideal choice. However, if a borrower wants a lower interest rate at the beginning, a few different types of mortgage may be available.
There is a buydown loan. We are hearing alot about these types
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