Austin Real Estate Blog

The mortgage industry is full of confusing terms and jargon. Many of the terms apply directly to the forms of loans. The Loans are often referred to by shortened acronyms, but not all. Some are simply put, but not clarified by eligibility. Two most common terms are Government Loans and Conventional Loans.

Government Loans - any mortgage insured by the FHA, or VA, or RHS constitutes a government mortgage. This includes loans to veterans, and home loans available through the rural housing service.

Conventional Loans - any mortgage financing that comes from the traditional lending institutions. This would include any loan made by a bank, mortgage company, or nontraditional owner financing.

So that sounds simple enough right? It should be, unfortunately many of the large mortgage brokerages and companies fail to explain this very simple point, which will lead to some confusion down the road. To further elaborate on some additional options and terms related to loans we have included the following terms:

Assumable Mortgage - A mortgage can be assumed by a buyer once they have qualified for all requirements made by the seller’s mortgage company. This is completed at the time of sale.

Balloon Mortgage - This is when a mortgage is written so the payments are steady for a specified period of time, and at a future date requires the remainder of the total paid in full. An example of this would be a 30 year amortization of a loan that comes due in 15 years. Payment until the 15^th year may be around 500 a month, however on the date determined the remainder of a 100 thousand dollar loan becomes due in full.

VA mortgage aka VA Loan - a mortgage insured by the Veterans Administration. This applies to qualified veterans only, and encourages private mortgage lenders to write loans for military and former military personal.