Released: April 26, 2007

The three worlds of mortgage lending

Source: Michelle Singletary, Washington Post (Free Registration)

There is a language of money, complete with its own vocabulary. It’s in your interest to know as much of the terminology as you can, so don’t be too embarrassed to ask what something means.

One participant in a recent online discussion asked me a few questions that some might dismiss as naive. But they were questions that many people should have asked before they bought their homes. After all, in a recent survey commissioned by Bankrate.com, 34 percent of homeowners with mortgages didn’t have a clue what type of loan they had.

“There have been many stories in the news about subprime loans,” the reader wrote. “What exactly is a subprime loan? And what exactly is the problem with defaulting on a subprime loan versus a prime loan? Are there signs to watch out for when you are discussing mortgages with a bank or a lender?”

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