House hunting can be overwhelming, especially if you’re a first time buyer. It’s exciting and exhausting at the same time. How do you even know where to start in the process? If you;
Homebuying Acronyms You Need to Know
PMI, APR, … say what? Don't stress when you hear acronyms you don't recognize – we're here to help! Let's get started with some of the most important acronyms and their definitions, so you can sound like a pro as you go through the homebuying process.
- APR (Annual Percentage Rate): The annual percentage rate tells you the annual cost of borrowing money based on the loan amount interest rate, and certain others fees. The APR is the bottom-line number you can use to shop and compare rates among lenders.
- FRM (Fixed-Rate Mortgage): A has an interest rate that does not change during the entire term of your loan. This is the most common type of mortgage, giving you certainty and stability over the life of the loan.
- DTI (Debt-to-Income): The debt-to-income is the percentage of your monthly income that goes toward your monthly debt payments. Lenders typically use this to measure your ability to manage monthly payments and repay debts.
- PMI (Private Mortgage Insurance): is an insurance that protects lenders from losses if a homeowner is unable to pay their mortgage. It is required for homebuyers who make down payments that are less than 20% of the home purchase price. Typically, PMI will be incorporated into your monthly mortgage payment.
- P&I (Principal and Interest): Principal and interest are the portion of your monthly mortgage payment that goes toward paying off the money you borrowed to buy your home. For most homeowners your principal and interest make up the majority of your monthly mortgage payment — but not all of it.
When you hire a Maurer Agent, we will make sure you fully understand the process. Call us when you are ready to start the homebuying process!
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