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Jumbo Loan--.loan amounts of 275,001 and
above are considered jumbo and are usually subject to a
slightly higher rate.
Loan to Value Ratio (LTV)--.A ratio
determined by dividing the sales price or appraised
value into the loan amount, expressed as a percentage.
For example, with a sales price of $100,000 and a
mortgage loan of $80,000, your loan to value ratio would
be 80%. Loans with an LTV over 80% may require Private
Mortgage Insurance, defined below.
Lock or Lock In--.A commitment
you obtain from a lender assuring you a particular
interest rate or feature for a definite time period.
Provides protection should interest rates rise between
the time you apply for a loan, acquire loan approval,
and, subsequently, close the loan and receive the funds
you have borrowed.
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Market
Value--.The highest price that a
buyer would pay and the lowest price a seller would
accept on a property. Market value may be different from
the price a property could actually be sold for at a
given time.
Mortgage Broker--.arranges
financing for a borrower by placing loans with lenders.
Mortgage brokers are paid a fee by the borrower or
lender when the loan closes.
Non-conforming Loans--.loans
that do not comply with Fannie Mae or Freddie Mac
guidelines for various reasons such as loan amount,
credit profile and underwriting guidelines.
Offer to Purchase--.Also known as a
purchase offer, earnest money agreement, contract of
purchase, or deposit receipt. A document that
lists the price conditions, and terms under which the
buyer is willing to purchase a property.
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PITI--.Principal,
interest, taxes and insurance, which comprise your
monthly mortgage payment.
Private Mortgage Insurance (PMI)--.In the
event that you do not have a 20 percent down payment,
lenders will allow a smaller down payment - as low as 5
percent in some cases. With the smaller down payment
loans, however, borrowers are usually required to carry
private mortgage insurance. Private mortgage insurance
will usually require an initial premium payment and may
require an additional monthly fee depending on your
loan's structure.
Pre-approval--.a
commitment by a lender to extend credit provided that
specific conditions are met.
Prepayment Penalty--.A penalty found in a
Promissory Note imposed by the lender when the loan is
paid before it is due.
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RESPA--.Short for
the Real Estate Settlement Procedures Act. RESPA is a
federal law that allows consumers to review information
on known or estimated settlement costs once after
application and once prior to or at a settlement. The
law requires lenders to furnish the information after
application only.
Stated Income Loan--.Some
loan products require only that applicants "state" the
source of their income without providing supporting
documentation such as tax returns.
Stipulations--.Conditions (information,
documents, etc.) attached to a pre-approval which must
be met before your loan is completely approved.
Title Insurance--.Insurance
to protect the lender (lender's policy) or the buyer
(owner's policy) against loss arising from disputes over
ownership of a property.
Underwriting--.The
process of deciding whether to make a loan based on
credit, employment, assets, and other factors.
Variable Rate Mortgage--.a mortgage in
which the interest rate is adjusted periodically based
on a pre-selected index. Also sometimes known as the
re-negotiable rate mortgage, or the variable rate
mortgage.
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