Books and songs have titles; so do homes! The word "title" has a specific meaning in relation to property; it essentially means valid, provable ownership. If you "hold title" on a home, you own it. Its not as automatic and clear-cut as you might expect, so its worth watching this short video to get the basic idea. If youve ever played a board game where you own properties, houses and hotels...thats a great way to get keep "title" in mind. Imagine what would happen if the game table fell over, and all the pieces and cards were scrambled. Being absolutely sure who owns what, and where the pieces should go, suddenly gets complicated. Fortunately, in the world of real property, government entities act like a neutral party keeping records. In the long run, your home may become one of your biggest assets. You can insure your ownership of the asset with title insurance. Meet Stickman; hell explain title insurance with that board game.

You are likely to hear the term "closing" frequently in buying or selling a home. That short word captures most of the final steps involved in finishing the transaction and financing, and becoming the owner. Many of these steps have costs, so youll hear the term "closing costs" as well. Closing may be a small word, but closing costs can become sizable. Buyers are well advised to understand the cash that will be needed for closing costs as early as possible. Required forms and steps in the mortgage process, such as the Loan Estimate form covered in other videos here, will help you know the range of costs to expect. This short video will help you relate various closing costs and processes to understand them more clearly.

Your credit history will matter in your application for a mortgage. It pays to check it regularly - use annualcreditreport.com - and address errors and issues. Basic factual errors can usually be remedied by writing to the credit bureau; explain the mistake and provide clear evidence that it is an error. If an issue isnt an error, and an explanation would help, you may request to have your own remarks attached. For example, if you missed a payment because of an accident, add that to the record. In the long run — and in the mortgage — the better your credit history, the better your mortgage terms are likely to be.

Companies involved in the mortgage loan process are required to follow detailed regulations. Many of these are detailed in the Real Estate Settlement Procedures Act — the Federal law commonly called "RESPA." The RESPA rules spell out the information that a lender has to provide to potential customers, step-by-step. They mandate detailed, full information about all costs, servicing details, account and escrow practices. They also mandate that lenders disclose any business relationships that they have with other parties involved in the transaction. In plain English, that means that you should be informed of existing relationships. If the mortgage process requires you to get your car washed, and the lender gets a commission from the car wash across the street, they have to tell you. Same for other not-so-silly business arrangements. The Dept of Housing and Urban Development - HUD - provides information on the RESPA regulations. Here are some of the current links: RESPA page that says nothing particularly useful. Settlement Costs Booklet The Settlement Costs booklet is quite useful and detailed — a recommended resource if youre starting the mortgage journey. HUD also sponsors housing counselors. Some consumers can qualify for counseling without any charges; where charges are involved for counseling, HUD requires that any counseling fees be "commensurate with the level of services provided." The HUD housing counseling agencies directory is here: https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

Heres a short explainer video to help you compare mortgage loan options from different lenders. Most of us arent involved in mortgages every day, so the terminology and decision factors can be intimidating. Creating a simple, structured process to compare your loan options can make it a bit easier. Devise your own "checklist", and keep the same details for each lender and loan program as you shop. Your checklist should include company-level details: How big is the lender? (Offices, personnel, number of loans per year, or something other measurable factor.) Do they have local representation? Who is the key contact, and how can you reach them? For each loan, youll want to track consistent details. Some recommended items: Type of mortgage — fixed (15? 30?), ARM, balloon and so on. Minimum down payment required Current interest rate Points options and terms, if applicable. Closing costs Prepayment terms If the lender provides information on loan-processing timelines, that may be helpful to know. Because interest rates can change rapidly — even daily — accumulating this information gradually may not be effective. If you can arrange to call the lenders on your list on the same day, youll have a better basis for comparison. If you are already working with a real estate agent, they may have a list of lenders to help you get started.

The terms "pre-qualify" and "pre-approve" sound similar, but they fit at opposite ends of the journey to a loan application. Pre-qualification should be done early. Its an informal estimate, without any commitment from a lender, to assess how much you might be able to borrow. Pre-approval is "just about ready to apply", typically when you have everything except a purchase contract. It involves completing a loan application, which lets the lender begin verifying your information. Successful pre-approval gives you a "pre-approval letter" that confirms the lenders offer to lend a specific amount. This letter may be helpful in shopping and negotiating the actual purchase.

Mortgage insurance is a policy that covers the lender in the case of loss. For some borrowers, the FHA (Federal Housing Authority) provides mortgage insurance. For other borrowers, a policy from a private mortgage insurer (PMI) may a better option. PMI companies usually have larger down-payment requirements and more-stringent qualification guidelines than the FHA. They may also cover loans that are large than the FHAs limits. Premiums from these lenders are often lower than FHA premiums, though. Most lenders will have guidelines and information about PMI options, for situations where mortgage insurance will be required. Ask your lender if PMI is an option for your situation.

The term "mortgage insurance" can be a bit confusing; this video might help. Mortgage insurance covers thelender, not the homebuyer, but mortgage insurance premiums are paid by the homebuyer. Confused? Read on. If a home buyer cant make a large enough down payment, the lender is taking a bigger risk that they might not be repaid. Its a silly example, but if you made a $1 down payment on a $1M dollar house, you wouldnt have a very big reason to stick around if market conditions or personal situations go bad. In general, if the down payment is under 20% of the loan (including that $1 down payment), the lender wants insurance that they will be repaid. So you, the buyer, agree to pay mortgage insurance because the lender is taking a bigger risk. If the borrower cant repay, the lender might foreclose on the property, and file a claim with the mortgage insurer for losses. If mortgage insurance comes up in your loan shopping, ask about FHA programs; there may be options that help you. If you do take a loan that requires mortgage insurance, keep track of your equity. You will probably have the option of dropping mortgage insurance when your equity is high enough.