Every Monday Morning at 8:15am, join me on my Facebook page as I sit down with a local lender, and do a live interview and talk about a Mortgage Tip that may help YOU with your next Real Estate Purchase. 

This morning I sat down with Justin Froiland from Fairway Mortgage. Listen as Justin explains some of the common terms used by lenders during the mortgage process.  You can reach Justin at 605.695.1429 or justin.froiland@fairwaymc.com.  His office is located at 412 5th St., Brookings SD 57006 or on the web at www.BrookingsMortgage.com 



Common Mortgage Terminology Explained


- Good morning everybody. Shane Andersen with the Brookings Home Team powered by Century 21. We are still continuing with our recordings. We're doing our little Zoom videos here. So we're keeping our social distancing yet. But thank you, Justin, again for stepping in kind of short notice. We'll get you back on track here in a couple weeks, but we weren't able to have one of the scheduled lenders join us this Monday. So Justin volunteered to jump in again and help. So thanks for doing that.

- Yeah, no problem.

- This is episode, believe it or not, 125. So 125 episodes, which is hard to believe. It's crazy. So, you have been with me since day one. So thank you for that.

- Yes.

- And you're actually the very first one I think, so.

- I think so, I think so.

- So, here we are 125 episodes later, but it is Monday morning. It means we have a Monday morning mortgage tip, and we'll just jump in to it here, Justin. So, thanks again. And what do you have for us?

- Definitely. Thanks for having me again, Shane. Today I just wanted to talk about some very basic mortgage terminology that I've been, I'm going over some different things with clients lately. It's come up a couple of times where they've maybe talked to a different lender, and they weren't aware of this terminology. Those darn online lenders are the worst at it. They just try to get you through the door. I think, I think for the most part all of our local lenders are real good about it. But the two terms that I want to talk about today real quickly is an escrow account and PMI, which kind of goes hand in hand with the escrow account. And so, an escrow account, what that is is it's kind of like a savings account that's attached to your mortgage. And so every month you make your monthly payment and your principle interest goes to repay back the loan, and then your hazard insurance, your, otherwise known as homeowners' insurance, property taxes, and then PMI goes and sits in an escrow account. And once a year when your insurance is due and twice a year when your property taxes are due, they're paid out on your behalf by your lender. And so it's kind of an out of sight, out of mind where you don't have to remember to pay these once and twice a year when they come due. And so, it is a requirement that lenders put in place unless you have 20% to put down, and then you can elect out of that and pay those on your own if you would like. But even at that point, I'm seeing a lot of people elect to do it just because like I said out of sight, out of mind. One less thing to forget about. And so, so that's how that escrow account works. The PMI portion of that, PMI is called private mortgage insurance. And it's not a very fun topic to talk about because it doesn't really do anything for the borrowers, themselves. It what it is is a protection for the lender. And so, it's a protection for the lender should you ever default on the loan. And it, you're gonna find it on all of your lower down payment options. Again, the only way to avoid that is by having a full 20% to put down on a conventional loan, and then you don't have to pay that PMI. And so, it's really again not a very fun topic to talk about because it's kind of just like extra interest for the borrower. But it's something that I think is very important for people to understand that it will be a portion of their payment in there. And so, so those are two topics that I like to go over a lot because you know at the end of the day it's really important to know what that monthly payment consists of 'cause you're gonna be making it for a long time so.

- And like you said--

- Yeah, that's kind of what I wanted to talk about.

- Okay, yeah. And sorry I didn't mean to interrupt, but like you said there, you know, a lot of them, lot of them will just show you what your principle and interest payment is. And that always looks awesome.

- Yep, right, yep.

- Really, really looks good. And by the time you add your insurance, your taxes, and your PMI, you know, it's almost double then sometimes depending on your loan points and stuff, so. So yeah.

- Yeah, and another thing. And another thing, Shane, to just real quickly add to that escrow account. Those aren't necessarily the only items that could show up into that. For example if your property is in a flood zone, you could have flood insurance included into that, which is, can be quite expensive. Also, we don't have it a whole lot here in Brookings, but like when you get down to Sioux Falls and some of the bigger places, it's a little bit more common, but like a HOA fee, a homeowners' association fee. Sometimes that can be included with that escrow account, but sometimes, a lot of times I should say, you can elect to pay that out of pocket on a monthly basis as well.

- Okay, perfect.

- So, yeah. But that's what I had for today.

- Perfect, sounds good. Well, thank you again for joining us and jumping in. Hope everybody had a great weekend. Oh and by the way, happy late Mother's Day to everybody that is a mother. And had Mother's Day yesterday so, but yeah. As you guys jump on here, if you know of anybody else that would benefit from this video, please feel free to share that with them. Feel free to tag them and give us a heart. Give us a thumbs up. If you do have questions for either of us, let us know in the comments or just direct message us, either way. We will be happy to answer that and maybe even answer it on the next, next episode. So Justin, thanks again. Appreciate it. Everybody.

- Yeah, definitely.

- Everybody continue to stay safe and stay healthy out there and hopefully we'll get back to normal sometime.

- I hope so. Thanks guys.

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