Quick & Easy Guide to Home Mortgages - First Republic Bank

Quick and Easy Guide to Home Mortgages

Gu?a f?cil y r?pida para cr?ditos hipotecarios

member fdic ? equal housing lender

See Page 18 for Spanish Version

If you're interested in buying your first home, your next home, or improving or refinancing your current home, First Republic Bank would like to help.

We've created this booklet to answer some of the questions you may have about securing a mortgage. For additional information or to find the lending office nearest you, please give us a call at (800) 392-1400 or visit our website at . We would be delighted to hear from you.

Homeownership is an attractive investment that allows you to build up equity over time. You can also tap the equity in your home in the future with a home equity loan or line of credit to finance a business, pay for education, improve your home or achieve other financial objectives.

Let's start with the basics.

2

What Is a Mortgage?

Since most home buyers don't have the financial resources to pay cash for a home, they borrow money from a lender in the form of a mortgage. A mortgage is a longterm loan that a borrower obtains from a bank, savings and loan, independent mortgage broker or credit union. The house and the land that it occupies, or if a condominium, the unit deed, serve as collateral for the loan. This means that you agree to forfeit your interest in the property to the lender if you are unable to repay the loan under the agreed upon terms. Mortgage loans are generally structured to be paid off in monthly installments over a 15- or 30-year period.

Every Mortgage Loan Contains Four Components:

1. Principal: The amount of money you borrow.

2. Interest: The amount that you pay the lender for the use of the borrowed funds.

3. Term: The amount of time in which you agree to repay the loan.

4. Amortization: The gradual reduction of a debt by periodic payments of interest and principal that is large enough to pay off a loan at maturity.

Who Are the Players in the Mortgage Process?

Buyer

The purchaser of the home who takes out the mortgage and is obligated to repay the loan over time with interest.

3

Seller

The person or entity offering a property for sale.

Real Estate Agents

Licensed representatives engaged by a buyer and/or seller and paid a commission--a percentage of the sales price--for their efforts.

Mortgage Lender

First Republic Bank is a mortgage lender. Mortgage lenders include commercial banks, savings and loans, credit unions, mortgage bankers, mortgage brokers and others that are chartered or licensed to lend money to prospective borrowers.

Credit Reporting Agency

Credit reporting agencies (credit bureaus) collect information about your credit performance. They prepare reports of an individual's credit history for lenders (as well as for employers and insurers), who in turn use these reports to determine a borrower's creditworthiness. This affects the credit decision and loan terms.

They also provide credit scores which reflect your past pay history and level of outstanding debt relative to available credit. Some loan products have minimum credit scores required to qualify.

Home Inspectors

Licensed home inspectors may be hired by the borrower to examine the home's physical structure and systems from the roof to the foundation. Home warranty insurance can be purchased to insure buyers against costly defects that aren't discovered during the inspection.

4

Appraiser Licensed, objective third party contracted to provide property value assessments.

Escrow Company A third party serving both the buyer and the seller who is responsible for transferring property from one party to another and ensuring the terms of the sale are met on each end.

Title Insurer Specialist who examines and insures that the title to the property is clear of encumbrances and reviews legal documents related to the sale.

What Other Terms Should I Know?

Annual Percentage Rate (APR) The annual percentage rate is the cost of the credit expressed as a yearly rate. You are encouraged to compare the overall loan costs among your loan options. The finance charges for your loan will include any points and fees assessed, and will be reflected in the APR for your loan. The APR is intended to disclose the real cost of borrowing by adding all charges that would not be part of the transaction if you paid cash for your home.

Closing Closing procedures transfer ownership from the seller to you. Closing costs include fees you pay for the services of the lender and other costs involved with the sale of the home.

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download