Sunday, August 20th, 2017

iAB Bank offers housing 101 terms to know

Posted: Thursday, July 2, 2015

In recognition of American Housing Month, iAB Financial Bank offers housing terms to know for customers to feel fully prepared in the home buying process. “Having a working knowledge of some of the more common verbiage and phrases used to buy a home are very helpful for the new home buyer,” said Gary Blount, vice president and mortgage center manager. “Those terms will be used frequently in the process, so it’s best to be prepared by knowing what they mean and how they affect you and your home purchase.”

APR: Short for annual percentage rate, APR is how much your loan will cost over the course of a year. This figure is almost always higher than the interest rate, because it takes into account the interest charged as well as fees or additional costs associated with the loan. Since all lenders use the same formula, it can be a more effective way of comparing mortgages rather than just the interest rate.

Closing Costs/Settlement Fees: The costs, in addition to the price of the property, that buyers and sellers are charged to complete a real estate transaction. Costs include such things as loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges.

Escrow: An account held by a neutral third party (called an escrow agent) who works for both the lender and the borrower. Escrow accounts are usually required by lenders to cover property taxes and mortgage insurance. After an initial deposit, borrowers pay into the escrow monthly – usually as part of the mortgage payment.

Good Faith Estimate (GFE): An accurate estimate of fees associated with a loan provided to the customer by a mortgage lender or broker. A GFE is required by law under the Real Estate Settlement Procedures Act (RESPA). The estimate must be provided within three business days of applying for a loan.

Mortgage Broker: This is an individual or company who connects borrowers and lenders for the purpose of facilitating a mortgage loan. Unlike a mortgage lender, a broker does not make the loan or service the mortgage. A mortgage broker may represent various lenders or may offer loans from one single source.

Points: Borrowers can pay lender points to reduce the interest rate on the loan, resulting in a lower monthly payment. The cost of one point is equal to one percent of the loan amount. Depending on the borrower, each point lowers your interest rate by one-eighth to one one-quarter of a percent.

iAB Financial Bank, a wholly-owned subsidiary of Independent Alliance Banks, Inc., is one of the largest locally-owned community banks in the area and employs approximately 290 people throughout Allen, Huntington, Marshall, and Wells counties.