Guide to Refinance, Mortgage,
& Home Equity Loans in
Leominster, Massachusetts (MA)

Leominster is a mid-sized town located north of Worcester and east of Boston. One of the oldest towns in America, it was settled by Europeans in 1653 and incorporated in 1740. Leominster was a major stop on the way to Canada on the Underground Railroad.

Leominster is a beautiful community with lovely, tree-lined neighborhoods. It is a hilly area with great hiking trails that give you beautiful views over the surrounding area. Leominster has a system of city parks and contains two large forest parks: Doyle Reservation and Leominster State Forest.

You may be a Leominster homeowner interested in refinancing or looking for a home equity loan, or you may be purchasing a home. In any case, you will be looking for a lender and applying for a loan. It will be helpful for you to know what certain terms mean and how they affect how much you will pay for your home loan.

Loan Cost Terms

• Earnest money: Money you put down when you make an offer on a home to secure that offer. If your offer is accepted, it becomes part of the down payment; if it is rejected, you will get it back. If you rescind your offer, you forfeit the earnest money.
• Down payment: Money you pay toward the purchase of a home. Traditional loans usually require a down payment of 20% or more, but there are many ways to purchase a home with a smaller down payment. You may have to pay PMI (private mortgage insurance) if your down payment is less than 20%. PMI is included in and increases your house payment.
• Escrow is a separate account that the lender maintains. Part of your monthly payment goes into the escrow account and is used to pay insurance and taxes.
• Closing costs are fees and costs involved in transfer of ownership that are due when you take ownership or the loan is funded. All closing costs should be detailed in your Good Faith Estimate.
• Interest is the amount you pay for the use of the bank’s money.

Interest Terms

• Fixed interest: You pay one interest rate for the entire life of the loan.
• Adjustable or variable interest: The interest rate is indexed and increases or decreases at specific intervals, depending on what the index is doing.
• Index: a standard against which lenders measure interest changes on an adjustable rate mortgage (ARM). Treasury certificates are commonly used as an index.
• Margin: An amount added to the index to come up with your interest rate.
• Interest rate: The rate of interest you pay on a monthly basis; the interest rate can vary in an ARM.
• APR (annual percentage rate): The interest rate you pay on an annual basis. This includes adjustments and some fees.

Other Terms

• FICO: A numerical score based on your credit report and ranging between 350 and 850. Higher scores are better. People with FICO scores over 720 are considered prime borrowers and get favorable interest rates. People with FICO scores under 620 are sub-prime borrowers and will pay higher interest rates and may have other fees assessed.
• GFE: Good Faith Estimate. The lender is required by the Truth in Lending Act to give you a Good Faith Estimate of all charges and fees related to your loan within three days of your application.
• Equity: Your home’s value minus what you owe on it. Equity is essentially the amount of money you would net if you sold it and paid off your mortgage. You can borrow against your equity with a home equity loan, home equity line of credit or a cash-out refinance.
• Amortization: Paying down the principle of your loan through monthly payments. The loan is calculated so that the principle will be paid off at the end of a certain period of time, usually 15, 20 or 30 years. Some home loans, called option ARM’s, allow you to make minimum payments during the introductory period of the loan that are less than the accumulated interest that month. This can result in negative amortization (neg am) and result in you owning more on your home than it is worth.

Itis important to know what the terms mean, and it is important to find the right mortgage lender. We can help with that. Fill out the form at the bottom of this page and one of our agents will contact you to discuss your home loan needs.