b'MOVE MKE: FINANCING YOUR HOMErate can be changed (1, 3, 5, 7 or 10reservist, or on active military duty, yousuch as installing a new roof, furnace or years, for example). Rates are generallymay qualify for a loan guarantee from thewater heater. Home inspections, which lower than fixed-rate mortgages, but carryDepartment of Veterans Affairs. Thesetypically cost between $300 and $600, the risk that an increase in interest ratesloans have low down payments.can reveal structural problems that may will lead to higher monthly payments.impact the selling price and your interest in the home. Home inspectors are FHA-Insured Loans Home Inspectionslicensed by the state.The Federal Housing Administration (FHA)Lenders may require that you have yourUnder Wisconsin law, building inspectors offers several low-down-paymentprospective home inspected by aare liable for damages that arise from an mortgage products for eligibleprofessional before they approve youract or omission relating to their participants. FHA-insured loans aremortgage. Even if they dont, hiring aninspection. In addition, they are prohibited available from most lenders who offerinspector is a good way to protect yourfrom performing any repairs, maintenance conventional loans. For information andinvestment. They may uncover structural,or improvements on the inspected eligibility requirements, contact yourelectrical or plumbing problems that couldproperty for at least two years after the lender or visit:hud.gov/fha .impact the sales price. But a thoroughinspection has occurred.inspection can be beneficial in otherFor more information about regulations or VA-Guaranteed Loansways. The final report can be a blueprintto check the status of an inspectors for things the buyer should be thinkinglicense, call (608) 266-2112 or search for If you are a veteran of military service,about five or more years down the road,home inspections at dsps.wi.gov.Common Financial Terms APR (Annual Percentage Rate): Because Escalator Clause: A provision that allows PITI: An acronym that stands for princi-it includes points, expenses and otherthe lender to change the interest rates orpal, interest, taxes and insurance. This is costs charged by the lender, this is thethe amount of the loan if market condi- the total monthly payment owed to the actual interest rate you will be paying.tions change.lender. It includes payment on the princi-Since all lenders must calculate this figurepal and interest, as well as money the same way, the APR provides an excel-Fixed-Rate Mortgage: A loan with a fixedescrowed for insurance and taxes.lent method for comparing mortgage pro- interest rate that remains constant over posals. the life of the loan. Points: Interest that is paid in advance of the loan. A point is equal to one percent ofAppraisal: An estimate of the propertys Home Warranty: Insurance purchased bythe loan value. Three points on a $100,000 market value based on the condition ofthe seller that covers the cost of repairingmortgage is equal to $3,000. Paying points the structure, the value of the land and themajor appliances, such as the furnace andlowers the monthly payments. neighborhood. Appraisals are usuallywater heater, if they fail within a year of needed whenever a home is bought, soldthe purchase date. Private Mortgage Insurance (PMI): or refinanced.Insurance that protects the lender in the event the homeowner defaults on theAssumable Loan: A mortgage that can be Interest-Only Mortgage: A loan in whichmortgage. It is typically required when the taken over by the buyer for a fee. Thesethe mortgage holder makes payment onlydown payment is less than 20 percent of mortgages avoid closing costs and loanon the interest.the homes cost but can vary by lender. fees.Joint Tenancy: A type of ownership that Title: A document that indicates a buyerClosing Costs: Payments made on closingallows two or more parties to own a parcelhas clear ownership of a property. In order day to cover attorney fees, appraisals,of property together. In the event of oneto protect themselves, lenders typically will credit reports, escrow fees, prepaid insur- joint tenants death, ownership of thenot issue loans without this document. ance premiums and other fees property automatically passes to the sur-viving joint tenant(s). Title Insurance: Insurance that protectsCommon Area Assessments: Also knownthe homeowner and the lender in the as homeowner association fees, these are Loan-to-Value Ratio: The percentage ofevent there is an ownership dispute. charges paid by unit owners to maintaina propertys value that can be lent to a the property.borrower. Typically, financial institutions Variable-Rate Mortgage: A mortgage in will not lend more than 80 percent.which the interest rate is adjusted toDown Payment: The amount of cash paidreflect market conditions. Variable-rate by the homeowner at the time of closing. Mechanics Lien: A lien against the title ofmortgages feature interest rates lower Any down payment that is less than 20a property for work done on a house.than fixed-rate mortgages, but the rate percent of the purchase price usuallyCourts impose liens for non-payment ofcan change quickly. They typically have requires mortgage insurance, whichhome-related services and must be satis- caps that prevent the rate from exceeding increases the buyers monthly payments.fied at the time a home is sold.a fixed amount.discovermilwaukee.com 73'