Indianapolis Mortgage Rates Glossary of Terms

When you start looking into Indy area mortgages you’ll find that Indianapolis mortgage rates have a lot of other confusing terms that go along with them. If you’re looking into getting a home loan and you’re a first-timer, just the confusing mortgage lingo alone can send you headed for the hills. But no fear! These are words just like any other, and if we just take a deep breath and relax we can learn them in no time. At least that’s what I’ve been telling myself.

So here are some different mortgage words and what they mean. If you need to know more information you should talk with a local mortgage loan officer or consultant. They can help steer you in the correct direction for you and your particular loan situation.

 

Indianapolis Mortgage Rates and the Index

What is the index? The index is a rate that lenders look at and refer to to help them figure out what interest rate adjustments they should make. This is only applicable for ARM or adjustable-rate mortgages and mortgage rates. Here's another great post with information about the Indianapolis mortgage rates.

Closing Costs

What about closing costs? Closing costs are charges that you get when you’re doing a mortgage or real estate deal. You as the borrower have to pay the closing costs, but sometimes the cost is also shared with the seller. It all depends on what your terms are for your loan.

Things that are usually included in closing costs are things like fee paid to the loan originator, any discount points involved in the loan, all attorney’s charges involved in your loan, fees for the title insurance, fees for the appraisal costs, taxes, and other things like that.

Ask your lender for a copy of your Loan Estimate. This will tell you all the different costs that you’ll have to pay at the closing of your loan. You should be able to get this pretty quickly after you first apply for your mortgage, so make sure that your lender or your loan officer knows that you want a copy of these and you will be able to get them no problem.

Down Payments

A down payment is how much money you put down in cash at the beginning of your home loan. This money is subtracted from the total price that you owe for the loan. Depending on your particular loan and situation, you may be required to put anywhere from 5 percent to 20 percent down of the total home sale price. You don’t always have to do a down payment at all. Again, it all just depends on your situation, credit history, and the type of loan you’re getting.

Prepayment Penalties

A prepayment penalty is a bit counterintuitive. It is a fee that you have to pay if you borrow money for a mortgage and then pay the mortgage off sooner than when you’re supposed to set forth in your loan payment. If you want to pay off your mortgage early, or refinance your mortgage by paying off your mortgage and getting a new one, then you may have to pay some sort of prepayment penalty.

Some states actually put a maximum limit on how much you have to pay for a prepayment penalty. But you could end up paying thousands of dollars for your prepayment fees if you pay off your loan early. Ask your loan officer or lender to provide you with the details of your prepayment penalty fees if they exist.

All For Now

That’s all for now. There are many, many more mortgage terms that you should know if you’re trying to get a home loan. That’s why it’s always best to have a mortgage consultant, loan officer, or broker help you with all the particulars. This is a complicated area and mistakes can cost you thousands of dollars in the long run. Be safe and have fun!