- 15 Year Fixed
A mortgage loan which is amortized over 15 years using a fixed interest rate.
- 2-4 Family Home
A home with up to four individual units which each contain at least one bedroom, one bathroom, and a full kitchen.
- 30 Year Fixed
A mortgage loan which is amortized over 30 years using a fixed interest rate.
- Adjustable Rate Mortgage (ARM)
A mortgage whose rate of interest is adjusted periodically to reflect market conditions.
To amortize is to pay money that is owed for something (such as a mortgage) by making regular payments over a set period of time.
An opinion of value for a given property based on the professional opinion of a licensed property appraiser. During the appraisal process the appraiser will visit and inspect the property being appraised and will formulate an opinion of value based on many criteria such as the area in which the property is located and the age and condition of the property.
- Case Number
A unique number issued to a mortgage loan by an automated underwriting engine such as DU or LP when the mortgage loan is first underwritten by the engine.
- Cash out refinance
A mortgage loan in which the new mortgage amount is greater than the amount of the mortgage being paid off which results in cash to the borrower.
- Chapter 13 Bankruptcy
Protection from creditors granted to individuals who legally file for bankruptcy, providing for repayment of debts by a court-approved plan.
- Chapter 7 Bankruptcy
Protection from creditors granted to individuals who legally file for bankruptcy, providing for liquidation of certain assets to pay debts.
- Closing Costs
Fees which are paid at the closing of a real estate transaction.
A form of housing where a specified part of the real estate is individually owned, and which provides use and access to common facilities such as hallways, HVAC systems, elevators, and exterior areas which are typically controlled and maintained by a homeowner’s association.
- Conventional mortgage loan
A mortgage loan which is not insured by any government program. Also known as “conforming” loans.
- Credit Score
A number assigned to a person that indicates to lenders their capacity to repay a loan. Also known as FICO score.
- Debt-to-Income Ratio (DTI)
A personal finance measure that compares an individual’s debt payments to the income he or she generates.
- Desktop Underwriter (DU)
The automated underwriting engine utilized by lenders to confirm that a given mortgage loan conforms to guidelines issued by Fannie Mae.
- Down Payment
An initial payment made up front by the buyer when something is bought on credit.
- Down Payment Assistance (DPA)
Funds which are provided by a third party which can be used to offset a portion of the borrower’s down payment.
A house divided into two separate living spaces, with a separate entrance for each.
- Escrow Accounts
An account that a mortgage lender may set up to pay certain recurring property-related expenses such as homeowner’s insurance and property taxes. Also known as impound accounts.
- Fannie Mae (FNMA)
The Federal National Mortgage Association (FNMA), also known as Fannie Mae, Operates under a congressional charter that directs Fannie Mae to channel its efforts into increasing the availability and affordability of homeownership for low-, moderate- and middle-income Americans
The Federal Housing Administration is a United States government agency created as a part of the National Housing Act of 1934. The FHA insures mortgage loans made by banks or other private lenders.
- FHA Case Number
A unique 10 digit number assigned to every FHA mortgage loan.
- FHA Mortgage loan
A mortgage loan issued by federally qualified lenders and insured by the Federal Housing Administration. FHA mortgage loans are designed for borrowers who are unable to make a large down payment and/or who have FICO scores which would not provide for qualification for a conventional mortgage loan.
A number assigned to a person that indicates to lenders their capacity to repay a loan. Also known as credit score.
The process of taking possession of a mortgage property as a result of the borrower’s failure to keep up on mortgage payments.
A house or single building divided into four separate living spaces, with a separate entrance for each.
- Freddie Mac (FHLMC)
Also known as the Federal Home Loan Mortgage Corporation or FHLMC, Freddie Mac is a stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle income Americans.
- Gift Funds
- Gross monthly income
The amount of income a borrower makes per month or per year before any taxes or other deductions.
- Housing Ratio
The percentage of a borrowers individual or household gross monthly income that is dedicated to a mortgage payment.
- Interest Rate
The rate at which interest is paid by a borrower for the use of money that they borrower from a lender.
- Investment Property
A real estate property that has been purchased or which is currently being used with the intention of earning income.
- Loan Prospector (LP)
The automated underwriting engine utilized by lenders to confirm that a given mortgage loan conforms to guidelines issued by Freddie Mac.
- Loan-To-Value (LTV)
A lending risk assessment ratio that mortgage lenders examine before approving a mortgage. The loan-to-value is calculated by dividing the loan amount by the lesser of either the sales price of the home or the current appraised value.
- Maximum Loan Amount
The maximum dollar amount that a mortgage lender will lend on a given loan program.
Credit scores are issued by three credit reporting agencies, TransUnion, Equifax, and Experian. These scores can vary from agency to agency. Of the three scores on a borrower’s credit report, the middle score is referred to as the mid-FICO.
- Monthly Mortgage Insurance Premium (MIP)
The monthly mortgage insurance premium which is included on all FHA loans and calculated using an annual charge of .85% of the loan amount. This annual charge is then divided by the 12 months of the year and is paid along with the borrower’s mortgage payment.
- Mortgage Insurance (MI)
An insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. This is required on FHA loans, and on any conventional loan with a starting loan-to-value of 80% or more.
- Mortgage Loan
A loan secured by real property through the use of a mortgage note which proves existence of the loan and the encumbrance of that realty through the granting of a mortgage or deed of trust which secures the loan.
- Non-Occupant Co-Borrower
A co-borrower used for qualifying purposes which will appear on title to a property which they will not be living in.
Lender specific underwriting requirements which are above and beyond the minimum guidelines required by Fannie Mae and Freddy Mac.
- Pre-payment Penalty
A provision within a contract (such as a mortgage or deed of trust) which states that a monetary penalty would be due to the lender in the event that the loan is prepaid early, or prior to a specified date.
he process in which a lender discusses a borrowers mortgage needs along with credit, and income in order to issue a letter showing a maximum loan amount for which the borrower can qualify.
- Pre-qualification Form
A form completed by a mortgage lender and provided to a potential home buyer and their real estate agent which shows the estimated amount that the buyer can afford to borrow.
- Primary Residence
A property in which the owner lives for the majority of the year.
- Principal Interest Taxes & Insurance (PITI)
A term used to describe a mortgage payment amount which includes the mortgage payment plus any items being paid through escrow accounts such as property taxes and homeowners insurance.
- Private Mortgage Insurance (PMI)
A policy issued by private mortgage insurers to protect lenders against loss if a borrower defaults.
- Restoration of Entitlement
If a veteran has previously used their VA benefit to obtain a VA mortgage loan, they will need to have their entitlement restored before applying for another VA mortgage loan.
- Seasoning Period
Most commonly used to refer to the number of years that a buyer must wait in order to buy a property after a major credit event such as a bankruptcy, short-sale, or foreclosure. Can also be used to refer to number of months that a homeowner must wait after purchasing a property before doing a cash-out refinance.
- Second Home
A home which is occupied by the owner for some portion of the year. Typically to be considered a second home it must be a reasonable distance away from the property that the owner considers their primary residence.
- Short Sale
A sale of real estate in which the proceeds from selling the property will fall short of the balance of the debts secured by lien’s against the property, and the property owner cannot pay the lien’s full amounts, and where the lien holders agree to release their lien and accept less than the amount owed.
- Single Family Residence
A detached home, usually with a front and back yard, driveway, and attached carport or garage.
A house divided into three separate living spaces, with a separate entrance for each.
An individual working for a mortgage lender who determines whether or not a borrower’s loan is approved.
- Up-Front Mortgage Insurance Premium (UPMIP)
A premium which is required to be paid by any borrower who takes out an FHA loan. This can be either paid up front at closing or financed into the mortgage loan itself. To calculate the UPMIP amount, simply multiply the loan amount by .0175.
- VA Certificate of Eligibility
A document issued by the federal governement certifying a veteran’s eligibility for a VA mortgage loan.
- VA Entitlement
The basic amount which the Department of Veterans Affairs will insure or guarantee against default on a VA mortgage loan.
- VA Funding Fee
An up front fee which is charged by the Departement of Veteran’s Affairs to help sustain the VA mortgage loan program. The rate of the fee can vary on several factors and can be determined using an ‘entitlement code’ which can be found on the VA certificate of eligibility. Only veteran’s receiving VA disability are exempt from paying this fee.
- VA Mortgage Loan
A mortgage loan which is guaranteed by the U.S. Department of Veteran’s Affairs.