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Understanding Mortgage Loan Concepts

Consumers who are beginning the journey towards home ownership are often at a loss right out of the gate. It is hard to blame them, with esoteric terms like “escrow” and “points” being tossed around as if everyone knows what they mean.

You might be tempted to throw in the towel when faced with what can often sound like a foreign language, but the truth is, trying to get the best deal on a home mortgage loan without really understanding the terminology and the way the process works is a recipe for disaster.

Contact a reputable mortgage broker who is licensed in your state. He or she can get you up to speed by explaining that escrow, for example, is money held in a special account out of which the lender pays fees such as real estate taxes and insurance costs. They will de-mystify points as well, demonstrating how purchasing points, each of which cost 10 percent of the loan’s value, is a form of pre-paying interest that can lower your interest rate and pay off in the long run.

More than just clarifying these concepts, a good mortgage broker will analyze your circumstances and explain how they will impact your particular situation. Your broker will know how to determine if buying points is a good move or if doing so is likely to cost, not save money. He or she will calculate how escrow will impact your monthly payment.

Limiting your options by not looking into all the choices means you may not get the most out of your home-buying dollar. Let a licensed mortgage broker show you how you can make today’s volatile market as favorable as possible.

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