Additional Borrowers

Borrowers who contribute income and credit history to the qualification process of a loan and whose names appear on all closing documents. Each additional borrower is equally liable for the debt and condition of the property.

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Adjustment Date

The date the interest rate changes for an adjustable rate mortgage (ARM).

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Adjustment Period

The interval of months between the interest rate adjustment dates for an adjustable rate mortgage (ARM).

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Adjustable Rate Mortgage (ARM)

A mortgage loan in which the interest rate is adjusted periodically according to a pre-determined adjustment criteria.

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Amount Financed

The Amount Financed is not the amount of the loan. It is the requested loan amount minus the prepaid finance charge. The Amount Financed is the amount on which the APR is based. For example, if the borrower requests $100,000 and the Prepaid Finance Charge totals $4,000, the Amount Financed would be $96,000.

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Annual Percentage Rate (APR)

The actual cost of a mortgage loan expressed as a yearly rate. The APR will be higher than the interest rate stated on the application and note if it includes fees which are categorized as pre-paid finance charges such as: interest, discount points, origination fee, required mortgage insurance and other related fees. The Truth in Lending Act requires lenders to disclose an APR to assist the borrower in measuring the actual cost of a loan on an annualized basis.

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Application

A form used by mortgage lenders to document necessary information concerning the mortgage loan applicant(s).

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Appraisal

An official report created by a qualified appraiser that establishes an opinion or estimate of property value. The estimate of value is generally obtained by comparing homes similar to the "subject" home within the same location or neighborhood.

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Appraised Value

An opinion or estimate of property value provided by a certified property appraiser. The estimate of value is generally obtained by comparing homes similar to the "subject" home that are within the same location or neighborhood.

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Available Cash

The amount of liquid assets (i.e. checking, savings, mutual funds, etc.) immediately available to pay closing costs and down payment.

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Average Interest Rate

The actual average interest rate for a combination of debts based upon a total weighted interest rate calculation. Utilizing each loan balance and interest rate, the calculator determines an average interest rate for multiple debts.

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Borrower

An individual (also known as mortgagor) who receives funds in the form of a loan with an obligation to repay the principal with interest.

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CAPS

Safeguards on ARM loans that limit the amount a monthly payment or interest rate may increase. An interest rate cap limits the percent the rate can increase or decrease for the initial and additional adjustment periods. The payment cap limits the amount the payment can increase or decrease for each adjustment period. An ARM loan must also have a "life of loan" cap limiting the maximum percent the rate can increase or decrease for the life of the loan.

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Cash Needed

The total dollar amount required for payment of closing costs and down payment.

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Cash Out Refinance

A mortgage loan that allows the borrower to pay off an existing debt and obtain excess money from the equity of their home for payment of closing costs and additional funds for personal needs (i.e., college tuition, home improvement, remodel home, purchase automobile and etc).

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Closing

The final meeting where the sale and transfer of property and/or loan settlement is fully executed. This meeting generally requires the borrower(s), seller(s), lender (or their agent) to be present. The closing includes the delivery of a deed, signing of notes, and the collection and disbursement of funds necessary to complete the sale and loan transaction. Also known as Settlement.

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Closing Costs

The costs associated with purchasing a new home (or transfer of home) and obtaining a mortgage loan. Fees are generally assessed at closing and may include: insurance, loan fees, title fees, transfer fees, taxes, settlement or closing fee, survey fee, title insurance, appraisal fees, etc. The total closing costs are approximately 5% of the mortgage loan amount.

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Co-borrower

Borrower(s) who contribute income and credit history to the qualification process of a loan and whose name(s) appear(s) on all closing documents. The co-borrower is also liable for the debt and condition of property.

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Collateral

An item of value pledged as security for a debt. The real estate is pledged as collateral for a mortgage loan and is bound by signing and recording a mortgage or deed of trust.

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Condominium

A structure of two or more units where the interior space is individually owned, and the balance of the land (structure and land) are commonly owned by the owners of each individual unit.

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Cooperative

A structure of two or more units in which the right to occupy a unit is obtained by the purchase of stock in the corporation that owns the building or units.

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Cost to Refinance a Loan

The fees and total cost associated with obtaining a new mortgage loan and refinancing an existing mortgage loan. Generally fees are assessed at closing and may include: insurance, title fees, transfer fees, taxes, settlement or closing fee, survey fee, title insurance, appraisal fees, etc. The total closing cost is typically 5% of the mortgage loan amount.

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Credit Report

A report obtained from a credit bureau agency or company that discloses a borrower's credit history and current credit status.

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Debt Consolidation Loan

A type of loan that allows the borrower to payoff all or a portion of existing debt (including the existing mortgage loan) from loan proceeds.

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Deed of Trust

An instrument used in many states in place of a mortgage. The property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary) and reconveyed upon payment in full.

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Deposit

A sum of money given to the seller, real estate broker or escrow agent with an offer to purchase real estate as evidence of good faith. Also known as earnest money.

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Discount Points

An amount payable to the lender paid by the borrower or seller to increase the lender's effective yield and reduce the interest rate. One point is equal to one percent of the loan amount. Also known as discount fee.

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Down Payment

A percent of the purchase price that is paid in cash to the seller. The down payment is the difference between the sales price and mortgage loan amount. Typically, the down payment is 5-20% of the purchase price.

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Earnest Money

A sum of money given to the seller, real estate broker or escrow agent with an offer to purchase real estate as evidence of good faith. Also known as deposit.

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Estimated Property Value

The Purchase Price or Current Market value of a specific property.

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Equifax Credit Services

A credit reporting agency that provides a detailed report itemizing an individual's credit history and current credit status.

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Equity

The portion of a property's value over and above the loans (liens) against it (i.e., value of property minus loans against property).

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Finance Charge

The total amount of interest, prepaid finance charge and specific required insurance premiums (if applicable) that the borrower is expected to pay over the life of the loan.

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First Mortgage

A real estate loan with a lien (i.e., mortgage or deed of trust) on the subject property that has priority over any subsequently lien.

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Fixed Interest Rate

An interest rate that does not change during the entire term or life of the loan.

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Fixed Monthly Debt

The amount of monthly payment required to be paid each month. Sometimes referred to as "minimum monthly payment" for credit card or revolving accounts.

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Gift Funds

Transfer of funds to assist with payment of closing costs and/or down payment. Investors typically require that gift funds may only be received from the borrower's parents and/or grandparents with no intent for repayment.

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Gross Monthly Income

The total monthly income earned before taxes and any other deductions.

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Hazard Insurance

Insurance for a specific property that protects the insured for loss caused by natural causes (i.e., fire, disasters and vandalism, depending on the terms of the policy also known as Homeowner's Insurance).

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Home Equity Loan

A type of loan that allows homeowners to acquire a loan in addition to their original mortgage/lien using a portion or all of the equity in their home (primary residence). A home equity loan is a generally a second mortgage on the subject property and may be used for any personal needs (i.e., college education, debt consolidation, home improvement, etc).

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Homeowner's Insurance

Insurance for a specific property that protects the insured for loss caused by natural causes (i.e., fire, disasters and vandalism, depending on the terms of the policy also known as Hazard Insurance).

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Installment Loans

A loan that has a fixed (or closed-end) term (i.e., 36 months) and fixed unchanging monthly payments. When the loan is paid in full the borrower cannot advance additional money unlike a revolving loan.

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Interest Rate

The percentage of an amount of money that is borrowed and is paid for during a specific period specified in the terms of the loan.

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Investment Property

A property designated solely as a "rental" or "leased" property.

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Lender Name

The name of the mortgage lender that has been assigned to review and process the loan application.

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Lien

A legal claim against a specific property as security for payment of a debt. The mortgagor (borrower) still holds legal title to the property, however, a lien is pledged as collateral.

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Line of Credit (Revolving Line of Credit)

A loan with a maximum credit limit that allows the borrower(s) to disburse funds up to the maximum credit line as needed. Funds may be disbursed repeatedly as the principal balance is paid down up to the maximum credit limit available. A line of credit functions similar to a credit card and may be accessed by writing a check or a using a debit card.

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Loan Amount

The total amount requested by the borrower to be financed. This amount is the basis of many loan fee calculations. For refinance loans, the loan amount will include the balance of all loans the borrower requests to be paid off, including the original mortgage, other personal debt and/or cash out amount.

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Loan Balance

The outstanding balance of a loan not paid in full, excluding any accrued interest.

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Loan Product

The loan program that dictates the finance type, amortization term and other pertinent loan functions (i.e., fixed or adjustable rate and 360 or 180 months).

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Loan Term

The total number of payments required to pay the loan in full. This is also known as amortization term.

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Loan-To-Value Ratio (LTV)

The ratio between the amount of a given mortgage loan and the lower of sales price or appraised value. To determine a loan-to-value ratio, divide the loan amount by the sales price or appraised value.

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Manufactured Home

A type of house that is constructed in a factory, delivered to a property location and set on a foundation. In the past, manufactured homes were called "mobile homes". However, "mobile" is no longer an accurate name because fewer than five percent of such homes are ever moved off the owner's original site.

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Maturity

The termination or due date on which final payment of a loan must be paid in full.

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Maximum Monthly Payment

The maximum payment a borrower may qualify for based on their income and debt. The maximum payment is calculated by using a debt-to-income ratio.

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Mobile Home

A type of home that is 100% constructed in a factory, delivered to a property location and set on a lot or foundation. A mobile home can generally be moved off of the owner's original site.

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Monthly Housing Payment

Typically the total amount of principal, interest, taxes, and insurance (PITI) paid each month on a mortgage loan. Many lenders and investors limit the monthly housing payment to 28% of the gross monthly income.

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Monthly Payment

The amount of principal and interest paid each month on a loan. The monthly payment on a mortgage loan may also include an escrow payment for taxes and insurance.

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Monthly Payment Savings

The total monthly payment reduction a borrower may gain by refinancing their mortgage loan.

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Mortgage

An instrument used in some states as a claim in real estate pledging the subject property as collateral for a mortgage loan and terminating once the loan is paid in full.

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Mortgage Insurance (MI)

Insurance required by investors to protect the lender in case the borrower defaults on the loan. Mortgage Insurance is typically required for conventional loans that have a down payment less than 20% of the purchase price. FHA and VA loans have different insurance and guidelines. Also known as Private Mortgage Insurance.

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Mortgagee

The lender on a mortgage loan transaction.

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Mortgagor

The borrower on a mortgage loan transaction.

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Multi Family

A term generally to distinguish a house designed for use by more than one family.

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Note

A written agreement and promise from the borrower(s) to pay a definite sum of money at a stated interest rate during a specified date and term. The note contains a description of the collateral and conditions under which the loan is to be repaid.

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Number of People Applying for Loan

The total number of individuals who will be contributing income and credit to the approval process. Investors may limit the number of individuals applying for a loan.

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Number of Years at this Address

The total number of years the borrower has lived at the current residence. Many loan programs may contain specific criteria allowing higher Loan-to-Value or Debt-to-Income ratios based upon years at current residence.

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Number of Years with Employer

The total number of years the borrower has been employed with the current employer. Many loan programs may contain specific criteria allowing higher Loan-to-Value or Debt-to-Income ratios based upon years with current employer.

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Origination Fee

The fee charged by a lender to originate a mortgage loan. Typically the fee is a percentage of the loan amount, such as one percent.

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Outstanding Debt to Consolidate

The total amount of all debt the borrower desires to payoff and consolidate into one loan and monthly payment.

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Payment Schedule

A schedule detailing the amount and due date of payments required to be paid over the life of the loan. The dollar figures represent principal, interest and private mortgage insurance (if applicable). This schedule does not reflect payment for taxes and insurance.

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Points

An amount payable to the lender paid by the borrower or seller to increase the lender's effective yield and reduce the interest rate. One point is equal to one percent of the loan amount.

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Preferred Communication Method

A process of communication used to respond to a borrowers loan request.

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Pre-qualification

A request by a prospective loan applicant for a preliminary determination of whether the prospective applicant would likely qualify for credit under a lender's standards, or of the amount of credit for which the prospective applicant likely would qualify. Some lenders evaluate pre-qualification requests through a procedure that is separate from the lender's normal loan application process; others use the same process. Pre-qualification is generally not a commitment to lend.

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Prepaid Finance Charge

Certain charges made in connection with the loan that must be paid upon the loan closing. These charges are defined in Regulation Z of Federal Register and entail, but not inclusive to: Loan Origination Fee, Discount Points, Private Mortgage Insurance and Tax Service Fee. Some loan fees are excluded from the Prepaid Finance Charge such as appraisal and credit report fees.

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Primary Borrower

An individual who is listed first on the mortgage loan application and is considered to be the primary borrower. Some lenders allow a non-occupying co-borrower or co-signor to be on the application. In this case, the borrower occupying the property will need to be the primary borrower.

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Primary Home

A property that the owner intends to occupy and will be their primary residence.

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Primary Residence

A home which the borrower intends to occupy as the principal residence.

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Principal and Interest (PI)

A portion of the monthly payment that is applied toward the loan balance and accrued interest. Payment for property taxes and insurance is considered PITI (principal, interest, taxes and insurance).

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Principal, Interest, Taxes and Insurance (PITI)

The monthly payment that is applied toward the loan balance, accrued interest and escrow account. Principal, interest, taxes and insurance are the four major components of a regular monthly mortgage payment. Payment for principal and interest is considered PI (principal and interest).

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Principal Balance

The outstanding balance due on a debt, excluding any accrued interest or other fees.

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Private Mortgage Insurance (PMI)

Insurance required by investors to protect the lender in case the borrower defaults on the loan. Mortgage Insurance is typically required for conventional loans that have a down payment less than 20% of the purchase price. FHA and VA loans have different insurance and guidelines. Also known as Mortgage Insurance.

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Proceeds from Sale of Current Home

The total funds remaining from the sale and transfer of a current home. The proceeds are calculated by subtracting all settlement fees and lien payoffs from the sales price (purchase price). Many borrowers use the proceeds from the sale of the current home as down payment and/or payment of closing costs for the purchase of a new home.

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Product Type

The loan type typically details the purpose of the loan (i.e., purchase new home, refinance existing home, home equity, debt consolidation and second mortgage). Many loan programs may contain specific criteria allowing only certain loan types.

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Property Class

A description of the structure of the property determining whether it is uses as a Single (one) Family Home, Multi Family Home (2-4), Condominium, Town Home, Manufactured or Mobile Home and Cooperative Housing.

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Property Taxes

A tax collected on real estate property by local, state and/or federal government. The amount of tax is determined by the value of the property.

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Property Type

A description of the property that determines whether the property will be used as a Primary Residence Home, Investment Property or Second Home.

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Property Use

A description of the property that determines whether the property will be used as a Primary Residence Home, Investment Property or Second Home.

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Purchase Price

The amount of money paid for a specific property and is based upon a written agreement (purchase agreement) between the seller and buyer. Also known as sales price.

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Qualify

A process of preparing a borrower for a mortgage loan by analyzing their financial data and comparing to loan program criteria to determine the best-fit program based upon loan-to-value ratio, debt-to-income ratio and credit information (if applicable).

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Rate Type

A factor that determines the payment structure and whether the rate may adjust during the life of the loan. Generally fixed or adjustable (ARM).

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Refinance

The process of obtaining a new mortgage loan to pay off the existing debt from loan proceeds using the same property as collateral. This type of loan is generally requested to obtain a lower interest rate and/or reduce payment or term.

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Revolving Loan

A loan with a maximum credit limit that provides the borrower with the ability to disburse funds up to the maximum credit line as needed. The line of credit can be accessed repeatedly as the balance is paid down. A revolving loan functions similar to a credit card and may be accessed by writing a check or a using a debit card.

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Sales Price

The amount of money paid for a specific property, the sales price is based upon a written agreement between the seller and buyer (also known as purchase price).

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Second Home

A property designated as a second residence or vacation home and is livable year round. The property owner generally resides at different property referred to as "Primary Home."

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Security

Real estate property pledged as collateral to secure the payment of a debt, most commonly used in mortgage loan transactions.

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Settlement

The final meeting where the sale and transfer of property and/or loan closing is fully executed. This meeting generally requires the borrower(s), seller(s), lender (or their agent) to be present. The closing includes the delivery of a deed, signing of notes, and the collection and disbursement of funds necessary to complete the sale and loan transaction (also known as closing).

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Single Family

A term generally to distinguish a house designed for use by one family.

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Specific Monthly Payment

A desired monthly payment or pre-determined monthly payment.

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State Property is Located

The actual state of which the property is located.

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Student Loans

A government affirmed loan obtained to finance the cost of tuition for approved colleges and universities.

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Survey

The measurement of the boundaries of a parcel of land documented by a registered surveyor.

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Term

A period of time (usually months) that a loan must be repaid.

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Title

The evidence of ownership and rights an individual has to a specific property/real estate.

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Title Insurance

Insurance obtained from a title insurance company that insures the purchaser, lender (mortgagee), or other agent from any loss caused by defects of title on the subject property/real estate.

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Total of Payments

The Total of Payments represents the sum of all payments made toward principal, interest and mortgage insurance (if applicable) for the life of the loan.

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Total Fixed Monthly Debt

The total monthly sum of all monthly loan payments for all borrowers. This total should only include the minimum required payment and not the actual payment made (if excess payment is made).

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Transfer Tax

State or local tax on the transfer of title (ownership) when the title passes from one owner to another.

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Type of Property

A description of the structure of the property determining whether it is uses as a Single (one) Family Home, Multi Family Home (2-4), Condominium, Town Home, Manufactured or Mobile Home and Cooperative Housing.

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User Name

A specific name used to access or input data from or to the database.

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