Getting a Mortgage Loan

Kiko: Figuring out how to fill out this Mortgage loan application is like trying to read a foreign language. I don’t know what all these terms mean.

Rafael: Let’s see if we can figure it out together. I think we want a Fixed-rate mortgage, not an Adjustable-rate mortgage. We want To lock in a good Annual percentage rate and not worry about the rate going up.

Kiko: All right, I think that’s what we want. We want the Principal and Interest payments to be predictable.

Rafael: That’s right.

Kiko: And what are Points?

Rafael: I think that has to do with fees for getting the loan.

Kiko: It looks like we have to get an Appraisal of the house we want to buy.

Rafael: Yes, that’s standard, I think.

Kiko: Do we have to pay for Private mortgage insurance?

Rafael: Not if we have a Down payment of more than 20% of the price of the house.

Kiko: Okay, so we don’t need to worry about that expense, but what about all these others?

Rafael: Like what?

Kiko: Like Homeowners insurance and Title insurance?

Rafael: I’m not sure.

Kiko: And what are Balloon payments and Prepayment penalties?

Rafael: You got me.

Kiko: And what’s included in the Closing costs?

Rafael: I’m really Out of my depth here.

Kiko: Me, too. What should we do now?

Rafael: Continue to rent?

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