Click Below For Additional Articles and Information
Understanding the terminology is important. Here are a few of the most common terms regarding mortgage loans.
| Mortgage Definitions |
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Click Below For Additional Articles and Information
Understanding the terminology is important. Here are a few of the most common terms regarding mortgage loans. |
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Appraised Value : The value assigned to a property by a licensed professional to assess its fair market value. Bankruptcy : A debtor that is judged legally insolvent and whose remaining property is then administered for the creditors or is distributed among them. Cash Out Refinance : A type of loan wherein an existing loan is refinanced and the borrower is allowed to receive cash in addition to the amount of the home loan. The cash is considered part of the amount financed and is part of the lien against the property securing the loan. Closing : The time at which all loan documents have been signed and a period wherein the borrower has the right to rescind has passed. A loan has closed when funds are disbursed to the appropriate parties and a lien against the property has been placed by the creditor for the amount of the "closed" loan.Credit History : A history of an individuals ability to pay their bills on time as well as any other relevant public records. Credit Report : A report outlining an individuals credit history, public records and credit worthiness. Equity : The difference between what is owed against a property and its fair market value is the properties Equity. Foreclosure : Procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payments or terms. Housing Expense Ratio : Also known as Debt to Income Ratio, This number is calculated by dividing all of a borrowers monthly obligations by their monthly gross income. Example : Mark has a total of $1200 in monthly bills and his gross income is $2400 per month. Therefore: 1200/2400 = 50%. Mark's Debt to Income Ratio is 50%. Interest Rate : A charge for a loan usually a percentage of the amount loaned. Joint Tenancy : Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property. Liability : Something for which one is liable; an obligation, responsibility, or debt. Examples of liability would include, a mortgage payment, a tax bill, an insurance bill, etc. Lien : A form of encumbrance which usually makes property security for the payment of a debt or discharge of an obligation. Examples would include: judgements, taxes, mortgages, deeds of trust, etc.
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Loan Origination : The beginning of the loan process. Initial contact wherein the borrower and lender agree to work together to secure a loan. Usually an application is taken and an initial quote is given. The borrower is asked to supply documents supporting the information that is included in the application and upon which the quote is based. Loan to Value (LTV) : The Loan to Value is the percentage of what is owed against the property vs. what the properties fair market value is. Mortgage : An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; procedure for foreclosure in event of default is established by statute. Mortgagee : One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation, a lender. Mortgagor : One who gives a mortgage on his property to secure a loan or assure performance of an obligation, a borrower. Net Worth : Net worth is the difference between an individuals assets and liabilities. Net worth takes into consideration all assets and liabilities liquid or not and can be a positive or negative number. Origination Fee : This fee is the mortgage lender's yield and are also known as points. Point(s) : A point equals one percent of the mortgage loan amount. If you were charged one point on a $100,000 loan you would pay $1,000.Principal : This term is used to mean the amount of money borrowed or the amount of the loan. Principal Balance : The balance of the amount of the loan that is outstanding. Processor : A liaison between the loan officer and the funder of a loan. The processor's responsibility is to meet all of the pre-funding conditions of a loan including, gathering all documentation and the clarification of information. Sub-Prime or sub prime : A sub-prime loan is any loan in which the borrower has challenges in obtaining mortgage financing because of poor credit, hard to document income or assets, or any unique situation that would prevent them from obtaining funding through "conforming" lenders.
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How much can I afford?
With many sites, it is easy to plug in numbers
and get a broad idea of a comfortable mortgage amount. But it is
important to understand this is merely a rough estimate and does not
consider all the factors that an experience mortgage loan professional
could uncover. Serious home buyers need to analyze specific
information...
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