A Beginners Guide to PA Mortgages

By: Angela Quinn

The state of Pennsylvania is home to some of the most historic happenings in the entire country, so it's not a surprise that so many families are relocating to or buying their first home is this celebrated state.

But no matter where you are, purchasing your first home can be a scary topic. Besides all of the legalities involved in transferring property, the mere thought of a mortgage (and its involved process) can be one of the most intimidating subject matters of one's hectic life. The options you have can keep you from sleeping for weeks - never mind the terminology used by those within the lending industry! Lucky for you that you've stumbled upon all of the information you could possibly need about terminology used for securing a mortgage in Pennsylvania:

Amortization Schedule- For however many years you're repaying your loan (let's say 30), you will receive a schedule of your monthly payment for each year of the note, showing exactly how much money goes on the loan's principal and how much to the interest.

ARM- Adjustable Rate Mortgage- You will hear this as "arm", not the letters spelled out. This simply means that your mortgage interest rate will be the same for a pre-designated timeframe before "adjusting". A "1 year ARM" would mean that your mortgage interest rate is the same for one year, then it will "adjust" or rise (as laymen refer to it). A 2 Year ARM would fall into the same category, adjusting after two years. And so on. Mortgage professionals also like to say things like "A 2-28 ARM". When you add 2 + 28, you get 30. 30 is the number of years of your mortgage: two years are a fixed rate, and the remaining 28 are not.

Escrow Account- You may elect this convenience for money paid each month, in addition to your principal and interest payment, to cover your property taxes and hazard insurance. (It's much easier to put $250 aside each month than come up with $3,000 come tax time.)

Fixed Rate- The interest rate is the same for the entire loan.

Loan Life- How long the loan is (usually 15 to 30 years).

PMI- Private Mortgage Insurance- This is extra money that you may be required to pay each month. It's not hazard insurance, its mortgage insurance- put in place by the lender to insure your mortgage against possible default on your part.

Prepayment Penalty - This is an implemented fee should pay off your note too early. This can be as much as 6% of your mortgage balance, but will diminish the farther into your loan you are. Your lender will have all of the specifics for you, so be sure to ask if they aren't volunteered.

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