Buying a home in Kalamazoo Michigan is a major achievement in most everyone’s life. Pride of ownership, tax breaks and equity are just a few of the many benefits you’ll enjoy with your new home.

Your home purchase may also be one of the largest you will ever make. During the emotional excitement of buying your Kalamazoo Michigan home, you may encounter terms with which you are unfamiliar.

For some, it can be bit embarrassing to ask what they consider too many questions. Others may make a note of their questions but simply forget to revisit those points.

To ensure that you have complete confidence during your home loan process, invest a moment to read this report and become familiar with the concepts and terms you’ll encounter when applying for a mortgage in Kalamazoo Michigan.

Knowledge is power, and the more you know, the more successful your decisions will be and the more soundly you will sleep at night having made them.

Adjustable Rate Mortgage (ARM)
Also referred to as a Variable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.

Annual Percentage Rate (APR)
An interest rate that reflects the cost of a mortgage as a yearly rate. This rate takes into account any points and fees and is based on the loan going to it’s full-term.

Assumption
An agreement between buyer and seller in which the buyer assumes responsibility for the seller’s existing mortgage. This agreement usually saves the buyer money because closing costs and the current interest rate, possibly higher, do not apply.

Buy-down
A method of lowering the buyer’s monthly payment for a short period of time. The lender or home-builder subsidizes the mortgage by lowering the interest rate for the first few years of a loan.

Caps
A limit in the amount the interest rate or monthly payments for an adjustable rate mortgage that may change.

Closing
Also referred to as settlement. The meeting at the conclusion of a real estate sale in which the property and funds are exchanged between the two parties involved.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results from dividing a borrower’s monthly payment obligation on long-term debts by the borrower’s gross monthly income.

Discount Points
Prepaid interest assessed at closing by the lender. A point is equal to 1 percent of the loan amount.

Down Payment
Cash paid by the buyer at closing that makes up the difference between purchase price and the mortgage amount.

Earnest Money
Money given by a buyer to a seller as a deposit to commit the buyer to the future transaction. Earnest money is subtracted from closing costs.

Equity
The value an owner has in real estate over and above the obligation against the property. Equity is fair market value minus the current indebtedness.

Escrow
Funds given to a third party which will be held to cover payments such as tax or insurance payments and earnest money deposits.

Fixed Rate Mortgage
A mortgage in which the interest rate remains constant throughout the life of the loan.

Loan-to-Value Ratio
The ratio between the amount of the mortgage loan and the appraised value of the property.


Market Value
The price that a property could possibly bring in the marketplace.

Mortgage Insurance
Insurance that protects lenders against loss if a borrower defaults. This is required when the loan-to-value ratio is greater than 80 percent.

Origination Fee
A fee charged by a lender for processing a loan application; usually computed as a percentage of the loan.

PITI
Refers to Principal, Interest, Taxes, and Insurance.

Underwriting
The decision-making process of granting a loan to a potential home-buyer.

Variable Rate Mortgage
Also referred to as Adjustable Rate Mortgage. A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.

There is a lot of free information available to you about buying, selling or investing in Kalamazoo real estate.  For complete information about the Kalamazoo MI real estate market including Kalamazoo homes for sale, property values and more, please visit the most complete website dedicated to everything Kalamazoo real estate. Go to http://HomesofSWMichigan.com and spend some time looking over all of the Kalamazoo home buyer tips.

For a FREE Weekly List of Homes For Sale Kalamazoo and surrounding areas, you may fill in the form below and we will compile a list from our three wholesale databases and send them to you right away.

Just fill in the form below with your correct name and e-mail address and we will e-mail you the list.

You may specify in the comments box if you have a particular interest in Kalamazoo foreclosures,  or Kalamazoo HUD homes for sale. 

If you or someone you know are in need of a competent and caring Kalamazoo real estate professional in or near Kalamazoo MI,  my name is Joel Nelson and I hope you will contact me.

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 Tags: Kalamazoo Real Estate, Kalamazoo homes, kalamazoo mi real estate, homes for sale kalamazoo, joel nelson

Article's Author

Joel Nelson
Keller Williams Realty - Kalamazoo
Kalamazoo, MI

Contact Joel Nelson