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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Adjustable Rate Mortgage (ARM): 

A mortgage in which the interest rate is adjusted periodically according to a pre-selected index/interest rate.

 Annual Percentage Rate (APR): 

The APR reflects the cost of your mortgage loan as a yearly rate. It will be higher than the interest rate stated on the note because it includes, the interest rate, loan discount points, fees and mortgage insurance.

Acceptance

A buyer’s or seller’s agreement to enter into a contract and be bound by the terms of the offer.

Affordability analysis

This will take into considerations, and analyze the borrower’s ability to afford the purchase of a home.  Consideration factors, includes;  income, liabilities and available funds, as well as the type of home loan, the likely taxes and insurance for the home and the estimated closing costs. 

Application fees

Nonrefundable fees paid when you apply for your loan. These fees may include charges for items such as, for example, a credit profile or a property appraisal.

Amortization

The gradual reduction in the principal amount owed on a debt.

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B

Balance Sheets

A dated financial statement (in table form) that shows your assets, liabilities and net worth.

Balloon loan

A loan that provides you with lower-than-usual monthly payments for a set period of time followed by a payment larger than usual at the end of your loan repayment period.

Bridge loan

A type of mortgage financing between the termination of one loan and the start of another loan

Borrower: 

A person who receives funds in the form of a loan with an obligation to repay principal with or without interest.

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C

Closing:

The closing includes the delivery of a deed, financial adjustments, the signing of notes, and the disbursement of funds necessary to complete the sale and loan transaction.

Closing Costs:

Money paid by the borrower, in connection with the closing of a mortgage loan. This generally involves an origination fee, discount points, appraisal, credit report, title insurance, attorney’s fees, survey, and pre-paid items such as tax and insurance escrow payments.

Clear title

Clear Titles means; that titles are free of liens or dispute. No legal questions as to the ownership of the property.

Collection

Is the steps taking to bring a delinquent loan current and, maybe followed by filing legal papers and notices to proceed with foreclosure.

Credit bureau

Those are the organizations that gather, records, updates and stores financial and public records of individuals and provides this information to lenders, so lenders can determine if an individual can approve for a loan.

The 3 major credit bureaus are Equifax, Experian and TransUnion.

Credit limit

Based on some factors, including, income, and (DTI) ratio, credit limit is The maximum amount you can borrow under a line of credit.

Credit report

A record of an individual’s credit profile, including, accounts opens, account closed, credit inquiries, debts and payment history. Lenders check your credit report to determine whether or not a potential borrower is a business risk.

Credit risk

The likelihood that a borrower will pay their obligations as agreed. Borrowers who pay as agreed pose less credit risk to lenders.

Credit score

A number that rates the quality of an individual’s credit. The number helps predict the relative likelihood that a person will repay a credit obligation, such as a mortgage loan. In general, the higher your credit score, the more likely you are to be approved for and to pay a lower interest rate on a loan.

Creditor

A person or business from whom you borrow or to whom you owe money.

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D

Debt-To-Income ratio (DTI)

The debt-to-income ratio (DTI) is a percentage of your total “minimum” monthly debt divided by your gross monthly income.

Deed

A legal document that transfers the ownership of a property.

Deed in Lieu of Foreclosure

It is an option for a borrower to avoid foreclosure by voluntarily transferring ownership of the property to the lender.

Disclosures

Government required documents that lenders must provide borrowers information about their loan.

Down Payment

A down payment is the initial payment made toward a real estate purchase.

Down Payment Grant

Local- or state-run programs, funded by the federal government, that subsidize part of the down payment for eligible buyers.

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E

Earnest money

Earnest money is a deposit made toward a down payment for a property as a sign of good faith.

Encumbrance

It is refer to any lien or liability attached to a property that affects or limits the title to that property.

Equal Credit Opportunity Act (ECOA)

It is a federal law that requires lenders and other creditors to make credit available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity

Is the difference between the market value, and outstanding mortgage balances and other liens.

Escrow

Funds deposited with a third party, to be held until a specific date is reached and/or a specific condition is met.

Escrow impound account

Typically refers to an account set up by a lender in which funds to pay for real estate taxes and homeowners insurance are deposited as part of the borrower’s monthly mortgage payment, then disbursed as tax and insurance payments come due.

Escrow analysis

The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance and other bills when due.

 

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F

Fair Credit Reporting Act (FCRA)

It gives borrowers certain rights when dealing with consumer reporting agencies, and credit bureaus. It is a law passed by Congress.

Fair market value

The fair market value is usually determined by an appraisal, and it is likely selling price of a home.

Fannie Mae

Federal National Mortgage Association, a government-sponsored enterprise that buys and securitizes mortgages for resale in the secondary market

Federal Housing Administration (FHA)

An agency of the Department of Housing and Urban Development. The FHA provides mortgage insurance for certain residential mortgages. It also sets standards for underwriting these mortgages and for construction of homes secured by these mortgages. FHA

Fee Simple

Clear and absolute ownership of a piece of property.

FHA home loan

A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government loan. FHA mortgage insurance protects the lender (not the borrower) if a borrower defaults on the FHA loan. This insurance enables a lender to provide loan options and benefits often not available through conventional financing.

FICO®

An acronym for Fair Isaac Corporation, which develops the mathematical formulas used to produce credit scores for assessing credit risk. FICO scores fall between a low of 300 and a high of 850. The higher the FICO score, the lower credit risk a consumer presents.

 

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G

Good faith estimate (GFE)

An itemized, detailed list of certain estimated costs associated with a home loan that the lender is required to provide to the borrower within 3 business days of the application.

Government loan

A loan that is insured by the Federal Housing Administration (FHA), guaranteed by the Department of Veterans Affairs (VA) or guaranteed by the Rural Housing Service (RHS).

Government National Mortgage Association (GNMA or Ginnie Mae)

A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA assumed responsibility for the special assistance loan programs formerly administered by Fannie Mae

 

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H

Home equity line of credit (HELOC)

A line of credit secured by the borrower’s residence.

Homeowners insurance

Insurance to protect your home against damage from fire, hurricanes and other catastrophes.

HUD

HUD IS an acronym for the U.S. Department of Housing and Urban Development. HUD is a government agency responsible for the implementation and administration of housing and urban development programs.

 

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I

Impounding

The collection and placement of monies by a lender into an account in order to pay the borrower’s property taxes and insurance premiums when they become due.

Income

Regular income from earnings, commissions, investments, rental payments or other sources.

Income property

Real estate developed or improved to produce income.

Index

A financial index is the measurement used to decide how much the annual percentage rate will change at the beginning of each adjustment period.

Inflation rate

The increase in price of consumer goods, usually expressed as a percentage over a specific period of time.

Initial advance

The process of obtaining an advance against available credit under your line of credit.

Initial draw amount

The proceeds of the home equity line of credit or construction loan up to an amount the borrower is allowed to request at closing.

Initial rate

The starting interest rate.

Inquiry

A request for your credit report, made by you or a company considering you for an offer of credit.

Installment loan

A loan that is repaid in equal payments, known as installments.

Insurance

A contract that provides compensation for specific losses in exchange for a periodic payment.

Insurance binder

A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

Insured mortgage

A mortgage that is protected by an insurer in case of default. The insurance protects the lender (not the borrower) if a borrower defaults on the loan.

Interest accrual rate

The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.

Interest-only loan

A loan for which you pay only the interest due for a portion of the loan term. This lowers your periodic payment but does not decrease your principal balance on the loan.

Interest rate

The annual cost of a loan to a borrower, usually expressed as a percentage. The interest rate does not include fees charged for the loan.

 

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J

Judgment

A decree by a court of law that one person is indebted to another for a specified amount. In some states, the court may place a lien against the debtor’s real property as collateral for payment of the judgment to the creditor.

Jumbo loan

Also known as a nonconforming loan. The amount of the loan exceeds standards that would make it eligible for sale to Fannie Mae and Freddie Mac. Certain geographical areas have temporary conforming loan limits higher than typical conforming limits. Lenders may charge additional fees and place certain restrictions due to the large loan amounts.

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K

No entries for this letter.

 

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L

Liabilities

A person’s debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.

Lien

The legal claim of a creditor on a borrower’s property, to be used as security for a debt.

Lien holder

An individual or entity that has placed a lien on real property.

Lifetime adjustment cap

A limit on how much the variable interest rate can increase during the term of a loan.

Line of credit

An agreement by a lender to extend credit up to a maximum amount for a specified time. In a home equity line of credit, the line of credit is secured by the borrower’s home.

 

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M

Mortgage

A legal document giving a lender a lien on real estate to secure repayment of a loan.

Mortgage insurance

For conventional loans, insurance that protects the lender if you default on your loan. If your down payment is less than 20%, most lenders will require you to pay mortgage insurance. Also called private mortgage insurance (PMI).

 

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N

Negative amortization

The result when monthly payments don’t cover all the interest due on the loan.

New line amount

The sum of the existing credit line and the amount of additional credit requested.

No closing cost loan

A loan in which the borrower is not required to pay cash out-of-pocket at closing for the normal closing costs. The lender typically includes the closing costs in the principal.

 

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O

Owner financing

A property purchase transaction in which the property seller provides all or part of the financing.

Owner-occupied

A property that the owner occupies as a principal residence.

Option ARM

A type of adjustable-rate mortgage (ARM) that offers the borrower a choice of 4 monthly payment options to help provide financial flexibility to manage payments in rising rate markets and take advantage of falling interest rates.

 

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P

Payoff

Payment of the outstanding balance of a loan in full.

PITI

An acronym for Principal, Interest, Taxes and Insurance. Also referred to as the monthly housing expense.

Preapproval

A lender’s conditional agreement to lend a specific amount of money to a homebuyer under a specified set of terms.

Prequalification

The process of providing financial and other information (such as employment history and proposed collateral) by a prospective borrower in order for the lender to preliminarily estimate how much the borrower may obtain for the purchase of a home. A prequalification is not a commitment to lend.

Prepayment

An amount paid to reduce the principal balance of a loan before the principal is due.

Prepayment

An amount paid to reduce the principal balance of a loan before the principal is due.

 

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Q

Qualifying ratios

Calculations that are used to determine whether a borrower can qualify for a mortgage.

 

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R

Rate

The amount of interest on a loan, expressed as a percentage.

Refinance

Paying off your existing loan with the proceeds from a new loan, generally using the same property as collateral, in order to take advantage of lower monthly payments, lower interest rates or save on financing costs.

Repayment period

The time you have to fully repay your outstanding balance, according to your payment terms. In a home equity line of credit.

Right of first refusal

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

 

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S

Secured loans

Loans for which the borrower gives the lender a lien on property such as an automobile, boat, other personal property or real estate that will serve as collateral for the loan.

Short sale

A commonly used alternative to a foreclosure. In a short sale, the lender agrees to accept an amount less than is actually owed on the loan, based on a showing of financial hardship.

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T

Title

Written evidence of ownership in property.

Title Company

The agency that will investigate a property’s title (or deed) for discrepancies or undiscovered liens and that will issue title insurance to the lender after the title is deemed clear.

Title insurance

Insurance that protects an interested party, either the owner or the lender, against issues that would affect legal ownership of the property.

Title search

An examination of records used to determine the legal ownership of property and all liens and encumbrances on it.

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U

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

 

Get approved for mortgage on reacasa.

V

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

 

Get approved for mortgage on reacasa.

W

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

 

Get approved for mortgage on reacasa.

X

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

 

Get approved for mortgage on reacasa.

Y

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

 

Get approved for mortgage on reacasa.

Z

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you.

 

Get approved for mortgage on reacasa.

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