Home Loan Refinance Terms

Here is an informative list of terms used in the mortgage industry in Colorado and around the nation.

• Acceleration Clause:

This clause is inserted into most loan contracts that stipulates that the entire balance of the loan may be made due and payable immediately in case of default.

• Amortization:

This is the process of calculating how to divide a loan up into roughly equal payments so that the interest of the loan and the principal are paid off together.

• Certificate of Eligibility:

This is given to veterans as proof as to their eligibility for a V.A. Home Loan and lists the amount of loan they are eligible for.

• Escrow:

This is a third-party company or agent that holds funds until a transaction has been legally verified and cleared. Usually used in mortgages, escrow can be used in any situation where a large sum of money is being transferred in exchange for goods.

• Fixed Rate Loan:

A loan where the interest rate does not change during the entire life of the loan.

• Home Inspection:

An inspection of a home or property done by a professional in order to determine the structural condition of a property and also assess its possible value.

• Origination Fee:

This fee is usually imposed by a bank or lending institution as a fee for the service of making a loan available.

• Rate Lock:

A Rate Lock is the process of locking in the interest rate for a mortgage or loan. It can often be done before the loan is actually secured and the paperwork signed.

After getting to know these terms, don't forget to check out the information provided about refinancing upsides and downsides.