Dave Ramsey Mortgage Payoff Calculator – With Video

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Stuck on the terminology with mortgages? We know it’s not that easy so here’s an easy terminology for you to come back to each time you need to remember what each term means and hopefully it’s not that complicated!

• Principal: The amount of money borrowed that you are paying back over the life of the loan. Your monthly payment goes towards this principal amount and the interest.
• Interest: The cost of borrowing the money, expressed as a yearly percentage rate (APR). This is a portion of your monthly payment.
• Escrow: An account held by your lender where a portion of your monthly payment goes to pay for property taxes and homeowners insurance. These are then paid by the lender on your behalf when the bills are due.
• Monthly Payment: The fixed amount you pay to the lender each month that covers principal, interest, and sometimes escrow.
• Loan Term: The length of time you have to repay the loan in full, typically 15, 20, or 30 years.
• Annual Percentage Rate (APR): The interest rate on the loan plus any fees charged by the lender for originating the loan. This is a key figure to compare loan offers.
• Origination Fee: A fee charged by the lender to cover the cost of processing your loan application. This fee can be a flat amount or a percentage of the loan amount.
• Private Mortgage Insurance (PMI): An insurance policy that protects the lender if you default on your loan. PMI is typically required if your down payment is less than 20% of the purchase price of the home.
• Interest Rate Reduction (IRR) or Points: A fee you can pay to the lender to lower the interest rate on your loan. Each point typically reduces the interest rate by a certain percentage.
• Default: Failing to make your mortgage payments on time. This can lead to foreclosure, where the lender repossesses the property.
• Escrow Payment: The portion of your monthly payment that goes into your escrow account to pay for property taxes and homeowners insurance.
• Impound Account: Another term for an escrow account.

Additional Terms:

• Adjustable-Rate Mortgage (ARM): A mortgage where the interest rate can change over time.
• Fixed-Rate Mortgage: A mortgage where the interest rate remains the same for the entire loan term.
• Prepayment Penalty: A fee charged by the lender if you pay off your loan early.

Also if you’re exploring your options and are looking to get Grants, Debt Relief, Loans and access to many other free financial programs designed to put cash in your bank account check out the Benefits Authority:

 

 

 

 

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Photo by KATRIN BOLOVTSOVA: https://www.pexels.com/photo/writing-materials-and-a-calculator-6193086/