Homebuying terminology you need to know

The homebuying process can feel overwhelming. We have created a helpful guide to explain the essential terms you need to know, such as mortgage lender, down payment, credit score, debt-to-income ratio, and closing costs. Read on for more information.
A mortgage lender is a financial institution or mortgage broker that offers and underwrites home loans. Mortgage lenders set the terms, interest rate, repayment schedule, and other critical aspects of your mortgage.
A down payment on a house is the cash that the buyer pays upfront in a real estate transaction. Typically, buyers put down 5 to 20% of the purchase price toward the cost of their home. However, some homebuyer programs do not require a down payment.
Your credit score is the numerical representation of your credit history. Lenders check your credit score and history to assess your record of paying bills and debts on time. Many mortgages have minimum credit score requirements. Your credit score could dictate interest rates and loan terms.
Your debt-to-income ratio, or DTI, is a percentage that tells lenders how much money you spend on paying off debts versus how much you have coming into your household. You can calculate your DTI by adding up your monthly minimum debt payments and dividing it by your monthly pre-tax income.
Closing costs are processing fees you pay to your lender. Lenders charge these fees in exchange for creating your loan. Closing costs cover your home appraisal and searches on your title. Your closing costs depend on the type of loan you take.
For more information, call our home loan experts at KFS Mortgage Co. at 207-873-5153 or visit kfshomeloan.com. We’ll answer your questions and ensure that you find a mortgage that’s right for you. NMLS#2097505, Equal Housing Lender.