A mortgage is a loan you take out from a bank or lender to buy a home. Instead of paying the full price upfront (imagine having $400,000 just sitting around!), you borrow most of it and pay it back over time — usually 15 or 30 years — with interest.
Fixed vs. Adjustable Rate
Your interest rate never changes. A 30-year fixed at 7% stays at 7% the entire loan. Predictable payments — great for buyers who want stability.
Your rate is fixed for a few years (e.g. 5 years), then adjusts annually based on market rates. Can be cheaper upfront, but comes with risk if rates rise.
Principal & Interest
Every mortgage payment has two parts: Principal (the amount you borrowed) and Interest (the lender's fee for the loan). Early in the loan, most of your payment goes to interest. Over time, more goes to principal — this is called amortization.
- Principal: On a $350,000 loan, this is the $350K itself.
- Interest: At 7%, the lender charges you 7% of the remaining balance each year.
- The twist: In month 1 of a 30-year loan, roughly 80% of your payment goes to interest!
At the closing table, you'll see a Closing Disclosure that shows the loan terms. Clients will ask you to explain what they're signing — knowing fixed vs. ARM and how principal/interest work helps you answer confidently.
When you buy a home, you pay a portion of the price upfront — this is your down payment. The lender covers the rest. The bigger your down payment, the smaller your loan (and monthly payment).
How Much Do You Need?
- Conventional loan: Typically 5–20% down. Most buyers aim for 20%.
- FHA loan (government-backed): As low as 3.5% down — popular with first-time buyers.
- VA loan (for veterans): 0% down in many cases.
What Is PMI?
PMI stands for Private Mortgage Insurance. If you put down less than 20%, lenders require you to pay PMI — an extra monthly fee that protects the lender (not you!) if you stop paying.
Down payment: $40,000
Loan: $360,000
PMI: ~$100–$200/month until you reach 20% equity
Once your loan balance drops to 80% of the original purchase price, you can request PMI removal. It's automatic at 78%.
Clients often don't realize PMI exists until closing day. If you're a Client Coordinator, you can set expectations early — "Have you discussed PMI with your lender?" That one question builds massive trust.
Before a buyer can make an offer on a home, they need to know how much they can borrow. This comes in two stages: pre-qualification and pre-approval.
Quick estimate based on self-reported income and debt. No credit check. Takes minutes online. Not very reliable — sellers don't take it seriously.
Lender verifies income, employment, and credit score. Issues a letter stating the approved loan amount. This is what sellers want to see.
The Pre-Approval Process
- Buyer applies with a lender (bank, credit union, or mortgage company)
- Submits pay stubs, tax returns, bank statements, and ID
- Lender pulls credit report and checks debt-to-income ratio
- Lender issues pre-approval letter with max loan amount
- Letter is valid for 60–90 days
Why Credit Score Matters
Your credit score (FICO score) affects what interest rate you qualify for. A score of 760+ typically gets the best rates. Every 20 points lower can mean a slightly higher rate — which adds up to thousands of dollars over 30 years.
As a Client Coordinator, your first question to a new buyer should always be: "Have you been pre-approved?" If not, the deal can't move forward. Connecting them with a trusted lender early saves everyone weeks of wasted time.
Closing costs are fees paid at the end of a real estate transaction — the moment when the title transfers from seller to buyer. These typically add up to 2–5% of the loan amount.
Common Closing Costs
- Loan origination fee: The lender's charge for processing the mortgage (0.5–1%)
- Title insurance: Protects against any hidden ownership claims — this is what Title X provides!
- Appraisal fee: A licensed appraiser's assessment of the property's value (~$400–$600)
- Escrow fees: Paid to the third party managing the transaction funds
- Property taxes & insurance prepaid: Usually 2–3 months upfront
- Recording fees: Government fee to officially record the deed (~$50–$150)
The Closing Disclosure (CD)
Three business days before closing, buyers receive a Closing Disclosure — a 5-page legal document showing the final loan terms, projected monthly payments, and all closing costs. It's required by federal law (TRID).
Title insurance is one of the biggest line items on the Closing Disclosure — and it's Title X's core product. Understanding the CD means you can explain to every client exactly what they're paying for and why it protects them.
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