An analysis of a buyer’s ability to afford the purchase of a home; reviews income, liabilities and available funds and considers the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that are likely.
A periodic reduction of a mortgage by making specific payments over a stated period of time.
The measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate.
An estimate of the value of property made by an appraiser who is considered to be an expert in real estate property evaluations, the appraisal usually determines how much money the lender will loan on that property.
An assumable mortgage can be transferred from the seller to the new buyer and generally requires a credit review of the new borrower and lenders may charge a fee for the assumption.
A loan which is amortized for a longer period than the term of the loan, usually this refers to a thirty year amortization and a five or seven year term.
The person who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.
An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself.
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business and mobile homes, certificates of eligibility may be obtained by sending the veteran’s separation papers to the local VA office with a Request for Certificate of Eligibility.
An appraisal issued by the VA showing the property's current market value.
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands, also called settlement.
Expenses over and above the price of the property that are incurred by buyers and sellers when transferring ownership of a property, closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc.
A promise by a lender to make a loan with specific terms or conditions to a borrower, also a promise by an investor to purchase mortgages from a lender with specific terms or conditions.
An up-front charge paid to bind an agreement to lend an amount of money at a specific interest rate.
Contract between purchaser and a seller of real estate to convey title after certain conditions have been met.
A conversion of an adjustable rate mortgage into a fixed rate mortgage, generally, the borrower must hold the adjustable rate mortgage for a specified amount of time, a fee is usually charged for this conversion.
An allowable percentage of monthly gross income which includes the proposed mortgage payment and any recurring debt.
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage, loan default may cause foreclosure.
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance, see negative amortization.
Failure to make payments on time, can lead to foreclosure.
A device used to equalize interest rate yields for lenders and investors.
The VA home loan benefit is called an entitlement , also known as eligibility.
The value a property owner has in real estate once the obligations and costs of selling are deducted.
An account held by the lender into which the home buyer pays money for tax or insurance payments.
A division of the Department of Housing and Urban Development, insuring of residential mortgage loans made by private lenders and setting standards for underwriting mortgages.
A loan insured by the Federal Housing Administration open to all qualified home purchasers, generous enough to handle moderately priced homes almost anywhere in the country.
A promise by FHA to insure a mortgage loan for a specified property and borrower, a promise from a lender to make a mortgage loan with specific terms.
An ARM with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.
A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage.
The right of a creditor to have all of a debtor's property, both real and personal, sold to satisfy a debt.
The lenders profit margin on an ARM.
A form of insurance in which the insurance company protects the insured from specified losses, such as fire, wind, vandalism, theft, etc.
A document that provides an itemized listing of the funds that are payable at closing, items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts.
This refers to the original interest rate of the mortgage at the time of closing, this rate changes for an ARM, also known as start rate or teaser.
A mortgage that is protected by the FHA or by PMI.
The percentage rate at which interest accrues on the mortgage, in most cases, it's also the rate used to calculate the monthly payments.
The payment of money to a lender to reduce the borrower's interest rate either temporarily or permanently, this would help reduce the buyer's payments and help him/her qualify for the mortgage.
The relationship between the mortgage loan and the appraised value of the property which is expressed by a percentage.
The highest price that a buyer would pay and the lowest price a seller would accept on a property.
Insurance from FHA to the lender against incurring a loss on account of the borrower's default.
The portion of the total monthly payment that is applied toward principal and interest.
The lender of money for the purchase of real estate.
Money paid to insure the mortgage when the down payment is less than 20%.
The borrower of money to purchase real estate.
The signed obligation to repay a debt such as a mortgage note.
Mortgage where the annual rate changes yearly.
The time frame between payment adjustments made on adjustable rate mortgages.
The date when a new monthly payment amount takes effect on an ARM.
A long term mortgage, usually ten years or more, also called an end loan.
The right of a borrower to pay off a loan before the maturity date without incurring penalty.
Lenders, such as savings and loan associations, commercial banks, and mortgage companies, who make mortgage loans directly to borrowers.
The amount borrowed or remaining unpaid.
Calculations used to determine if a borrower can qualify for a mortgage.
The document issued by the mortgagee when the mortgage loan is paid in full, also called a release of mortgage.
A mortgage in which a borrower receives a below market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property, may also apply to mortgage where the borrowers share the monthly principal and interest payments with another party in exchange for part of the appreciation.
Insurance issued to the owner of real estate to protect them against claims arising by reason of defects in the title to the property.
A federal law requiring disclosure of the APR to home buyers shortly after they apply for the loan, also known as Regulation Z.
A return on an investment which includes the interest rate charged, discount points paid and any other charges collected.