Everyone knows that you should never sign on the dotted line without reading the contract.  This same term applies to loans.  Signing a loan without knowing the terms and what everything means can be detrimental to your finances, credit and future investments.  Before you sign on the dotted line, make sure that you know these terms and how they will apply to you.

1.  Interest rate.  The interest rate is the percentage of your loan that is added on every month.  The percentage will vary according to the economy and will make a difference in your payments.

2.  Fixed Rate.  A fixed rate will be an interest rate that stays at the same percentage throughout the entire period of your loan.

3.  Variable Rate.  A variable rate will change according to the economy and the charts that are stating what the rates should be for interest.  A variable rate usually changes every year and adjusts according to a specific given range of percentages.

4.  Principal.  The principal is what you will be paying on your actual house.  Whatever you pay on your principal is what you will see in the end as your investment.

5.  Escrow.  This is similar to a savings account of your loan.  Whatever you put in escrow will accumulate without paying directly into the loan.  At the end of the term you can use it to finish paying off the loan or to invest in another loan.

6.  Title.  A title will be what you get to your home after it is officially yours, stating that the property belongs to you.

7.  Deed.  A deed will most often be used as a title for a commercial area.  Instead of giving ownership it shows that the property is leased to the one who is using it as a business.

8.  Home Equity.  This is a loan or line of credit that you can get for your home.  It will finance up to eight percent of your other loan and get paid back later.  This helps if you want to consolidate loans or invest more into the property.

9.  Appraisal.  After an inspection of the home is made, an appraisal will be made.  This will be an estimated value of what the home is worth.

10.  Equity.  This will be the actual amount of the property that you own.  Most likely, it is what is being paid off of your principal amount.

Once you know some of these basic terms, you will be able to expand on your knowledge and find the exact loan that will fit your needs.  These basic definitions will help you in making the right decision for the type of loan that you want.

If you are like most, you know that it would be beneficial to just have money handed over your way.  You work hard at what you do and are financially stable.  You know that it is time for you to move into a new place and want to make sure that you have the best opportunities available for you.  The first investigation to make in order to step forward is through a loan pre-qualification.

Loan pre-qualifications will determine if you have the financial ability to invest in real estate in the beginning.  By having the right pre-qualification, you can be guaranteed a specific amount of money and will have the ability to move into the home of your dreams.

The first thing that is determined with loan pre-qualification is how much you make each year from your job.  By finding this, it will allow for lenders to know how much you will be able to put into a loan in relation to other expenses that you may have.  Things such as personal debt and car loans, as well as credit card expenses will be calculated in this figure to show the first step to finding the right loan.

After these specific points have been added up, the time frame in which you will pay your loans will be factored in.  This will give the companies an idea of how much you can pay and how this will relate to the debt and finances that you have coming in and out of your pocket.  This will be defined by using formulas that will relate how much money you are making in relation to how much you can pay to balance out your loan.  Usually, pre-qualification formulas will divide things by factoring in ratios for standards of living.

If you want to make sure that you have the right loan, then becoming pre-qualified is the first step that you will need to take.  This will enable you to move forward with what you want and need for your loan.  By knowing what to expect, you can prepare for the process of getting a loan and can move into the property that you want.