| The mortgage industry is full of terms and abbreviations that could be completely unfamiliar to you. Mortgage Professionals love using acronyms! The following glossary of terms should help you translate the mortgage language into English and help you make sense of the mortgage process. A-D / E-H / I-P / Q-Z Appraisal An expert opinion on the value of a property Annual Percentage Rate (APR) This is not the note rate applied for, but rather is a government mandated formula that shows the cost of the loan in a yearly rate by using the note rate plus certain other upfront costs. ARM Loan Adjustable Rate Mortgage. Mortgage characterized by an interest rate that can adjust up or down at certain intervals based on a current index (commonly the 1 year T-Bill) plus a preset margin. Balloon Mortgage characterized by level fixed payments for a predetermined time frame followed by either a refinance or adjustment in interest rate. Capital Gains The tax paid upon certain types of real estate transactions. Contact accountant for specifics Cash to Close The amount needed from the borrower at closing. Consists of down payment, closing costs and prepaid items. This amount needs to be in the form of a cashier check made payable to the buyer. Closing Date Date stated on the purchase agreement that buyer and seller agree to finalize or close the transaction Closing Costs Various costs of setting up and funding the transaction - including closing fee, title insurance, appraisal fees, underwriting fee, mortgage registration tax etc. Condo/Town Home Property types that usually have the following characteristics: they are attached, have a homeowners association and dues, the outside maintenance is taken care of by the association, and common areas and amenities available to all owners in the association. Conventional Financing Standard, non-government financing. Credit Bureaus Agencies that provide compilations of your credit history. The three main credit bureaus are Experian, Trans Union, and Equifax. Credit Report Report provided by the credit bureaus which shows the history, current status, and profile of an individual Credit Scores The number generated by the credit bureaus which is a numerical representation of the subjects credit profile, range is from 450 on the low side to 900 being the highest score possible. Debt Ratios (DTI) Ratio of debt to gross income, often expressed as a front (housing payment only) or back (all debt) ratios. Discount Points One point equals one percent of the loan amount. Points are used to lower the interest rate. One point does not equate into lowering the interest rate one percent. Generally lowering the interest rate 1/8 will cost about 1/2 point, although this can vary based on daily pricing. Typically is tax deductible. Down Payment Difference between loan amount and purchase price. If Refinance, difference between loan amount and appraised value. |
| It's Greek To Me -Terms to Know |
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