Helping provide our customers with answers to their most common questions and concerns. |
A
Annual Percentage Rate (APR) - Your cost of credit plus your mortgage interest rate annualized over the term of your loan.
B
Balloon Loan or Payment - A loan that pays interest only or a minimum principal payment each month. Usually at the end of a specified term will have a remaining principal balance due. Normally required to be paid in full or refinanced.
C
Closed End Loan - Any loan that has a contractual end date and at which time having paid all your scheduled payments your principal balance will be paid in full.
Conforming Loan or Mortgage - Residential loan amounts under $252,701. Usually is .25% to .375% lower than jumbo loans. (For more information see example).
Credit Score - Credit scores are used for assessing and granting of credit. It is a scientific way of evaluating risk used by lending institutions. Credit Scores are derived from an individuals credit report. The higher the score the lower the risk.
D
Debt-to-Income Ratio - The percentage of ones total fixed monthly obligations divided by ones qualified gross monthly income.
E
Equity (or Home Equity) - The difference between your home's fair market value (sale or appraised value) and all unpaid liens.
F
Fair Market Value - Is the estimated value of your home determined by the closed sales of homes in your neighborhood that are similar in size, age, condition and improvements. What an appraisal will determine.
Federal Truth in Lending Act - A federal law that requires lenders to disclose in writing all costs and terms associated with a mortgage loan. Provides for equal opportunity lending without discrimination.
H
Home Equity Loan - A fixed rate, fixed term or a revolving-line of credit loan based on the available equity of a home.
J
Jumbo Loan or Mortgage - Currently any residential loan amount over $252,700. Usually are .25% to .375% higher in interest than conforming loans. (For more information see example).
L
Loan to Value Ratio (LTV) - The ratio or percentage of your total existing mortgage liens divided by your property's fair market value. Example: total mortgage liens $150,000 divided by a $200,000 fair market value equals 75% loan or loans to value ratio (LTV).
P
Pre-Payment Penalty - A cost incurred to the borrower for early settlement of a loan or mortgage.
Private Mortgage Insurance (PMI) - Private mortgage insurance insures the amount of the loan financed above 80%. Helps protect the lender and enables borrowers to finance loans beyond 80% loan to value. It is a non-tax-deductible expense. (avoid PMI expenses - see example)
S
Second Mortgage - a mortgage which is recorded behind a first mortgage. If any of these following loans are recorded behind your first mortgage loan it is considered a second mortgage. Equity loan, consolidation loan, home equity loan, equity line of credit, home improvement loan, etc.
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