We have made it to Facebook. Eversley Capital Mortgage has its own fan page. The official page is http://www.facebook.com/eversleycapital

As always we strive to offer Connecticut residents the best and lowest mortgage rates and fees. We offer conventional fixed and arm loans as well as jumbo, conventional jumbo, USDA and VA loans as well as second mortgages both fixed and adjustable. We are located at 3 Everlsey Ave in Norwalk CT.

For the remainder of 2010 if you are purchasing or refinancing and read this blog or come across Everley Capital via Facebook mention either this blog or become a fan on Facebook and at the closing of your loan we will credit you back the cost of your appraisal a value up to $500 dollars. So become a fan today!

Long gone are the days of stated income loans or no doc loans. In today’s market if you cannot document your income or assets you are just about out of luck. There are a handful and I really mean a handful of lenders that entertain no income or asset type loans. If you are able to find one it is because they are a portfolio lender. Aside from being lucky enough to find this type of lender do not expect the rate to be anything close to where conventional rates presently are. Expect close to or around double digit rates.

 

Here is what is left in the way of financing:

100% Financing

-Qualified VA loans

-Qualified USDA loans

 

90.01-97.5% Financing

 

-FHA or VA if you are a veteran is going to be your best bet for this type of loan

 

90.00% and under

 

-Fannie Mae or Freddie Mac these are your conventional loans and these are your bets choice

 

Jumbo Mortgages

 

Fannie, Freddie and FHA have programs that are referred to as “High Balance Conforming Loans”. It is not available to every person rather state specific counties that are designated “high cost living” areas. In CT this loan is available for Fairfield County only and the loan limit for a single family home is $511,750.

 

Anything above $511,750 and you are looking at a jumbo mortgage. You will be able to find financing with most lenders although not all up to $1.5 million. After that it is slim pickings. The jumbo mortgage market has really taken a setback amidst the financial crisis. There is basically no secondary market for banks to sell these loans which is why financing loans over $2 million has become more difficult.

Applying for and shopping mortgage rates is a click away www.EversleyCapital.com

There is a misconception surrounding biweekly payments that a lot of borrowers have. It is no doubt correct to say that biweekly payments can save you money. It pays your mortgage off quicker and helps build up equity faster. However often times lenders use intermediary companies to handle and set up the biweekly payments. These companies often charge upwards of $500 dollars to set up the biweekly account as well as charge a per transaction fee.

 

The misconception here is you really do not need to pay anybody to set this up. The whole notion behind the biweekly payment is by paying your mortgage every two weeks you are making 26 payments a year which equates out to 13 monthly payments per year or one extra payment. Why pay a third party upwards of $500 for this option as long as you are self disciplined enough to make an extra payment per year keep your set up fee and per transaction fee for yourself.

 

The bottom line here is the faster you pay off your mortgage the better. However there is no need to pay someone to help you facilitate this goal. With some simple self discipline you can save your money and achieve the same goal. And if you happen to find a lender that offers this service for free, great take advantage of it otherwise you can very easily do it yourself.

Applying for and shopping mortgage rates is a click away www.EversleyCapital.com

Just to refresh everyone. PMI or (principal mortgage insurance) is required when you are purchasing a home and are receiving conventional financing or FHA financing and your down payment is less than 20%. In fact if you are putting down more than 20% you should seek conventional financing as FHA requires PMI at any LTV or loan to value.

 

The same holds true for refinances as well. If you are refinancing and have less than 20% equity in your home you will have PMI. If you have more than 20% you will be looking for conventional financing and not FHA.

 

In past years PMI was never tax deductable, which is why a lot of people looked to “piggy back” mortgages to finance purchases or refinances that did not have a lot of equity. They would use a first mortgage at 80% loan to value and seek a second mortgage to make up the difference. Also they are referred to as 80/10/10’s or 80/15/5’s meaning an 80% first mortgage 10% second mortgage and 10% down payment or equity. Same scenario holds true for the 80/15/5.

 

Federal Law in recent years has changed that. They have allowed PMI to be tax deductable. In fact it was just extended through 2010 and has been in effect for transactions that closed from 2007-2010. Federal law allows borrowers who have up to $100,000 in adjusted gross income to deduct 100% of their PMI premium. Borrowers with adjusted gross income between $100,000 and $109,000, their deductions are allowed to be phased out in 10% increments.

 

Applying for and shopping mortgage rates is a click away www.EversleyCapital.com

 

 

 

Abstract   of title- A written history of all the transactions that bear on the title to a specific piece of land. An abstract of title covers the time from when the property was first sold to the present. Used by the title company to produce a title binder

Acceptance- A property seller’s formal, written approval of a buyer’s offer

Acre- A plot of land 180 by 242 feet is one acre.

Ad valorem tax- A tax based according to item value only, usually property tax based on the just or fair market value of the property.

Add on Interest-  Interest that is computed at the beginning of the loan, then added to the principal, so that all must be repaid, even if the loan is paid off early.

Addendum- Any change made to a contract

Additional principal payment- Extra money included with a loan payment to pay off the amount owed faster. Over time, this practice reduces the amount of interest paid.

Adjustable gross income- All the income you received over the course of the year such as wages, interest, dividends and capital gains minus things such as business expenses, contributions to a qualified IRA, moving expenses, alimony and capital losses. The adjusted gross income is used to calculate federal income tax.

Adjustable rate mortgage (ARM)- Home loan in which the interest rate is changed periodically based on a standard financial index. Most ARMs have caps on how much an interest rate may increase.

Adjustment period- The time between changes in the interest rate in an adjustable-rate mortgage.

Agency closing- The use of a title company to supervise the meeting where the property is transferred and mortgage is settled. As opposed to having an attorney conduct the closing

Agreement of Sale- A document in which a property’s buyer and seller approve the price and other terms of the transfer of title.

Alternative mortgage- A mortgage that is not a conventional type loan

Amortization- The payment of a debt in installments over an agreed-upon period, during which principal and interest are paid off.

Amortization schedule- A detailed table showing the amortization of a loan which includes the beginning principal amount, period payments, the interest portion of each payment, the principal reduction portion each payment, and the ending balance.

Amortization term- The time required to amortize (repay) a mortgage loan. The amortization term is usually expressed in months. A 30-year fixed-rate mortgage, for example, has an amortization term of 360 months.

Amount Financed- The amount of the original money borrowed

Annual percentage rate (APR)- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing.

Application fee- Fee charged for processing a loan application

Appraisal-  An estimate of market value placed on all real property, based upon like comparables. For example a colonial is compared to a colonial

Appraisal fee- The cost of having an appraiser determine the value of the property

Appraised value- The actual market value determined by the appraiser

Appreciation- An increase in the value of a property

APR- A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing.

As is condition- A stipulation that a property or item is sold in its current physical state, with no warranties.

Asking price- The amount of money the seller requests for the property

 Assessed value- A state or local government’s determination of a property’s worth for tax purposes.

Assessment-  A state or local government’s determination of a property’s worth for tax purposes. Also a levy placed on a property, in addition to property tax, to pay for improvements such as sidewalks or street lighting.

Assignor- A person who transfers property to another.

Assumable mortgage- A home loan that can be transferred to another borrower under the existing terms

Assumption clause- A provision in a mortgage contract that allows a buyer to take responsibility for the loan from the seller.

Assumption fee- A lender’s charge for updating records when a buyer takes responsibility for a mortgage from the seller.

Back end ratio- The sum of the house payment and all other monthly debt like credit cards, car payments, student loans and the like that are divided by before-tax income.

Backup offer- A second offer for a property if the existing one that is first falls through

Balloon mortgage- A loan that has regular monthly payments which amortize over a stated term but call for a final lump sum (balloon payment) at the end of a specified term, or maturity date, such as 10 years.

Bank- An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers. A bank must be chartered and meet certain criteria. Chartering is done by the Comptroller of the Currency for national banks, by the Federal Reserve System for state member banks, by the Federal Deposit Insurance Corporation (FDIC) for insured banks, and by state regulatory agencies. Also referred to as a commercial bank.

Bargain sale- Transfer of a property for less than market value

Basis point- One one-hundredth of a percentage point. The difference between 4.13 percent and 4.14 percent is one basis point.

Bidding war- Multiple, competing offers for a piece of property or item that escalate the price.

Bilateral contract- A legal agreement in which both parties promise to give each other something. A purchase agreement in which the buyer promises to give money and the seller promises to transfer property is a bilateral contract.

Binder- A temporary insurance contract that provides proof of coverage until a permanent policy can be issued.

Biweekly mortgage- A mortgage that schedules payments every two weeks instead of the standard monthly payment. The 26 biweekly payments are each equal to one-half of the monthly payment. The result for the borrower is a substantial reduction in interest payments because the mortgage is paid off sooner.

Blanket mortgage- A loan secured by more than one property. Usually refers to commercial property.

Borrower- The person who is applying for the mortgage

Boundary- The line dividing adjacent properties.

Breach of contract- Failure to abide by terms of a legal agreement

Breach of covenant- Violation of a promise made in a contract or property deed.

Break even point- In home finance, the break-even point often refers to the time it takes to recoup the costs of refinancing a loan or paying discount points.

Bridge loan- A loan that “bridges” the gap between the purchase of a new home and the sale of the borrower’s current home. The borrower’s current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home’s first mortgage at the bridge loan’s closing, while others pile the new debt on top of the old. They usually run for a term of six months.

Broker premium- Sum paid to a mortgage broker as the “middleman” in the mortgage process between the lender and the borrower. Lenders offer brokers wholesale rates; brokers add a surcharge to cover the cost of underwriting to arrive at the rates charged to borrowers.

Broom clean- Ready to be cleaned and painted. The term does not mean immaculate or spotless or even necessarily clean.

Buy down mortgage- A home loan in which the lender charges below-market interest in exchange for discount points.

Buydown- The process of trading money for a lower mortgage rate. The borrower “buys down” the interest rate on a mortgage by paying discount points up front.

Buyer broker- One who earns a commission from the buyer of a property in exchange for finding a seller and assisting in negotiation.

Buyers Agent- In real estate deals, it is an agent who represents and owes allegiance and fiduciary obligations to the buyer.

Buyers Market- The condition when sellers significantly outnumber buyers, driving prices down.

Buyers remorse- A buyer’s second thoughts after closing on a house

Bylaws- The written rules governing an organization such as a homeowners association.

Cancellation Clause- A provision in a lease or other contract that spells out under what conditions the parties can call off the deal.

Cap- The top limit on the amount the interest rate can increase during a single time period of an adjustable-rate mortgage. Every ARM has two caps: a periodic cap, which limits the periodic changes to the interest allowed in the loan agreement, and a lifetime cap, which governs the total increase that can be imposed during the life of the loan.

Cash flow- The money an investment produces after subtracting cash expenses from income. It is typically used in commercial real estate

Cash out refinance- The taking out of a new mortgage on the same property in which the amount borrowed is greater than the amount of the previous mortgage. The difference is taken out in cash.

Central bank- Regulates monetary policy for a nation, such as the Federal Reserve Bank does in the United States, or a group of nations, such as the European Central Bank. Typical functions include issuing currency, adjusting interest rates to control the supply of credit, regulating banks, and ensuring smooth functioning of financial markets.

Certification of deposit index- A table of interest rates paid on certificates of deposit that is used to determine interest-rate changes for adjustable-rate mortgages.

Certificate of eligibility- A document that verifies that the bearer is eligible for a loan guaranteed by the Veterans Administration.

Certificate of occupancy- Authorization by a local government giving permission for someone to live in or use a building that has just been constructed or renovated.

Chain of title- Legal records that trace ownership of a property from the most recent owner to the original owner.

Charge off- An unpaid portion of a bill that a lender has accepted will never be paid and has recorded on the books as a bad debt. It is a serious negative item on a credit report.

Clear title- Ownership of property that is free of all claims or disputed interests

Closing- The meeting at which a sale is completed. It is also where the signing of a refinance will take place

Closing costs- Expenses incurred by buyers and sellers when transferring ownership of property. Closing costs include lender fees, title charges, government recording fees, escrow and pre-paid items. There are also closing costs associated with a refinance as well

Closing statement- A standard form that discloses costs at completion of the sale of real estate, including discount and origination points, settlement fees, title insurance, brokers’ fees and commissions and money set aside in escrow. Typically called a HUD-1 statement.

CLTV- The total amount of all mortgages on a property. For example if a borrower has a 100k first mortgage and a 30k second mortgage they owe 130k. If the property is worth 200k the CLTV would be 65 percent

Collateral- Property pledged as security to a debt. If the borrower fails to repay the loan, the lender may gain ownership of the collateral and sell it to recover the money.

Combined loan to value ratio- Also called the CLTV, the total amount of all mortgages on a property. For example if a borrower has a 100k first mortgage and a 30k second mortgage they owe 130k. If the property is worth 200k the CLTV would be 65 percent

Commercial property- A property that is zoned for business use and not residential.

Commitment- An agreement, often written, in which a lender promises to lend money on certain terms for a specified period.

Commitment fee- A sum paid by a borrower to a lender in exchange for a promise to lend money on certain terms for a specified period.

Comparables or comps- Used in real estate appraisals. Using like properties. For example a colonial is compared to a similar colonial with the same amenities, square footage etc.

Comparative market analysis- A method of estimating a property’s value by comparing the sales prices of similar properties that have sold recently. This is typically done by a Real Estate agent who is looking to list a sellers property for sale

Conditional commitment- A promise by a lender to make a loan if the borrower meets certain requirements.

Condominium- A type of property in which owners hold title to the space they occupy in a multi-unit dwelling. The property is divided between living units and common areas such as parking lots, driveways, elevators, and recreation areas such as playgrounds and swimming pools. Common areas are collectively owned by all owners.

Conforming mortgage- A conforming mortgage is one that meets the requirements to be eligible for purchase or securitization by one of the government-sponsored enterprises such as Fannie Mae or Freddie Mac

Construction loan- A short-term, interim loan to pay for building a house. The lender pays out the money in stages, called draws, as work progresses.

Construction to permanent loan- A loan that pays first for construction, then for a long-term, traditional mortgage, as distinct from a construction loan followed by a separate mortgage loan.

Contingency- A condition that must be met for the property sale to go through, such as a satisfactory home inspection or approval for a mortgage.

Contract- In real estate parlance, the contract is the legal document by which buyer and seller make offers and counteroffers. The real estate contract describes the property, includes or excludes items in the property, names the price, apportions the closing costs between the parties and sets forth a closing date. When buyer and seller agree on terms and sign the same document, the property is said to be “under contract.” More formally known as agreement for sale, purchase agreement or earnest money contract.

Contract for deed- An agreement for sale of property in which the buyer takes possession while making payments, but the seller holds title until full payment is made. Also called a land contract.

Contract for purchase- A document in which a property’s buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract or a sale contract.

Conventional mortgage- Usually refers to a fixed-rate, 30-year mortgage that is not insured by the FHA or Veterans Administration. It is a Fannie Mae or Freddie Mac mortgage.

Convertible mortgage- An adjustable-rate home loan which the borrower has the option at specified times of changing into a fixed-rate loan.

Convertible arm- An adjustable-rate home loan which the borrower has the option at specified times of changing into a fixed-rate loan.

Conveyance tax- A tax on the transfer of real property.

CODI- A table of interest rates paid on certificates of deposit that is used to determine interest-rate changes for adjustable-rate mortgages.

COFI- A yield index based upon the cost of funds to savings & loan institutions in the San Francisco Federal Home Loan Bank District. It is one of the indexes commonly used to set the rate of adjustable rate mortgages

Credit - Money that a lender gives to a borrower on condition of repayment over a certain period.

Credit Bureau - A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and TransUnion. Often called credit reporting agency.

Credit history- A history of a borrowers repayment over time.

Credit rating- A judgment of someone’s ability to repay debts, based on current and projected income and history of payment of past debts. Sometimes expressed as a number called a credit score.

Credit report- The collected data of your past repayment history. It is used to determine if you are able to qualify for any new debt based on your past history

Credit reporting agency- A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information. The three major national credit bureaus are Equifax, Experian (formerly TRW) and TransUnion. Often called credit reporting agency.

Credit score- The rating number of your credit history.

Credit repair agency- A company that sometimes for a fee will help in cleaning up a persons credit report. Fixing any errors or having negative information removed

Creditor- Is any person or company to whom you owe money to

Debt consolidation- The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. It’s also called a consolidation loan.

Debt to income ratio- The percentage of before-tax earnings that are spent to pay off loans for obligations such as auto loans, student loans and credit card balances. Lenders look at two ratios. The front-end ratio is the percentage of monthly before-tax earnings that are spent on house payments (including principal, interest, taxes and insurance). In the back-end ratio, the borrower’s other debts are factored in.

Deed- A document that provides title to property and is filed with a country recorder.

Deed in lieu of foreclosure- A deed in lieu of foreclosure is a real estate transaction in which the owner is behind on the payments, and relinquishes all ownership rights to the mortgage lender. The lender, in many cases, forgives the outstanding debt. In essence, the owner hands the keys to the lender and walks away.

Deed of trust- A legal agreement that allows the lender to ask a title or escrow company to begin foreclosure proceedings on a property if the borrower stops paying the loan.

Default- Failing to fulfill your obligation of the loan. For example falling behind on payments

Delinquent mortgage- A home loan in which the borrower has failed to make payments on time, as specified in the loan agreement.

Depreciation- The gradual loss of value of a building or other property because of age or natural wear. Automobiles in particular depreciate steeply in their first few years. In taxes, this is the deduction you are allowed for the wearing away and expensing over time of such items as office equipment, vehicles, buildings and furniture. For tax purposes, the IRS determines the amount of time such material is expected to last, and you depreciate, or spread the cost of, the asset over its estimated useful life rather than deducting the entire cost in the year you got it.

Disclosed dual agency- Disclosed to all parties involved

Discount point- A sum a borrower pays to a lender to decrease the interest rate of a mortgage. A point equals 1 percent of the loan amount.

Discount rate- The interest rate at which financial institutions that are members of the Federal Reserve System (Fed) may borrow on a short-term basis directly to cover temporary deficiencies in the bank’s reserves. Banks borrow from the Fed as a last resort because frequent borrowing would raise concern by bank regulators.

Distressed property- Property that is in poor condition, or whose owner is in poor financial condition.

Down payment- An initial, partial payment on a purchase.

Draw- A payment, made periodically, to a construction contractor or subcontractor as work progresses. A draw is part of a construction loan.

Draw period- On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. Once the draw period expires, borrowers may be able to renew the credit line or may be required to pay the outstanding balance in full, or over time.

 

 

 

 Early occupancy- When the seller allows the buyer to move in before the sale is closed

Earnest money deposit- Money given by a buyer when making a formal offer to demonstrate that the buyer is serious. Also called a deposit

End loan- The final mortgage on a property, as opposed to a construction or other interim loan

Equal credit opportunity act- Also referred to as ECOA. A federal law that prohibits discrimination in credit transactions on the basis of race, color, religion, national origin, sex, marital status, age, source of income or the exercise of any right under the Consumer Credit Protection Act

Equifax- One of the three largest credit bureaus, along with Experian and TransUnion

Equity- The value of a homeowner’s unencumbered interest in real estate. Equity is the difference between the home’s fair market value and the unpaid principal balance of the mortgage and any liens. Equity increases as the mortgage is paid down and as the property appreciates in value

Escrow- An account in which a neutral third party holds the documents and money in a real-estate transfer until all conditions of a sale are met. Also, an account in which money for property taxes and insurance is held until paid; money is added to the account every time a mortgage payment is made

Escrow account- An account in which a neutral third party holds the documents and money in a real-estate transfer until all conditions of a sale are met. Also, an account in which money for property taxes and insurance is held until paid; money is added to the account every time a mortgage payment is made

Experian- One of the three largest credit bureaus, along with Equifax and TransUnion

Fixed- Does not change. Rate is the same for the life of the loan

Fair credit reporting act- A federal law that governs what credit bureaus can report and for how long. It outlines procedures for correcting errors in credit reports. It requires credit bureaus to furnish copies of consumers’ credit reports at their request

Fair market value- The value that your home would be worth given it is in good condition. It is also a value where similar or like properties are used to determine price

Fannie Mae- The largest mortgage investor, a government-sponsored enterprise that buys mortgages from lenders, bundles them into investments and sells them on the secondary mortgage market. Also referred to as a GSE (government sponsored entity)

Federal housing administration- Or FHA. An agency within the federal Department of Housing and Urban Development that provides mortgage insurance and sets construction and underwriting standards. The loans are backed by the Federal Government

FHA- An agency within the federal Department of Housing and Urban Development that provides mortgage insurance and sets construction and underwriting standards. The loans are backed by the Federal Government

Fee simple- Outright ownership of real estate, free of any liens or other claims against title

 

FICO scores- The most commonly used credit score. The name comes from the Fair Isaac Corporation, which developed the scoring model. They are used to predict the likelihood that a person will pay his or her debts. The scores use only information from credit reports

Firm commitment- A lender’s promise to lend money to a specific borrower on specified terms at a certain time

First lien- A loan that is recorded first on a title. If there was a second mortgage it would be recorded behind the first lien or in second position

Fixed rate mortgage- The rate remains the same for the life of the loan. It never changes

Flood insurance- A policy that pays the homeowner for damage caused by rising water. It does not reimburse the owner for falling water, such as rain falling through a hole in the roof, but pays for damage stemming from flooding.

Forbearance- An agreement entered into with your lender to allow a certain amount of payments over a certain amount of time to bring a delinquent mortgage current. It is a process that lenders will sometimes use to avoid foreclosure

Foreclosure- The legal process by which a homeowner in default on a mortgage is deprived of interest in the property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt

Freddie Mac- The second largest mortgage investor, a government-sponsored enterprise that buys mortgages from lenders, bundles them into investments and sells them on the secondary mortgage market. Also referred to as a GSE (government sponsored entity)

Front end ratio- the calculation of your consumer debt, for example credit card payments, car or student loans etc. and divided by your gross monthly income

Full market value- In real estate to receive full market value is also referred to as the asking price. It is paying or receiving the full price of the home.

GFE- Good faith estimate. Provided by lender to detail closing cost and any fees associated with your transaction. It will also define the terms of your loan, payment, interest rate etc.

Good faith estimate- GFE. Provided by lender to detail closing cost and any fees associated with your transaction. It will also define the terms of your loan, payment, interest rate etc.

Hazard insurance- Also referred to as homeowners insurance. It is the insurance that you would get to protect your home from fire, theft, damage etc.

HELOC- Home equity line of credit. It is a second mortgage that is a revolving line of credit sort of like a credit card except that is secured as a lien on your property

Home equity- The part of a home’s value that the mortgage borrower owns outright; the difference between the fair market value of the home and the principal balances of all mortgage loans

Home equity line of credit- Home equity line of credit. It is a second mortgage that is a revolving line of credit sort of like a credit card except that is secured as a lien on your property

Homeowners association- An elected group that governs a subdivision or planned community. It collects fees from owners to maintain common areas and enforce covenants, conditions and restrictions set by the developer and the association itself. Typically condominiums will have these associations

HUD 1 statement- The line itemized form of your transaction. All expenses, credits and costs are itemized

Impounds- Associated with a properties taxes and insurance. It is the money collected that will be held in an escrow account.

Initial interest rate- The starting rate in an adjustable mortgage. For example a 5/1 arm is fixed for 5 years. That initial rate for the first 5 years is the initial interest rate

Insurance binder- Written statement that warrants that an insurance policy will be issued on a property when title is transferred

Interest rate- The amount charged per month for money borrowed. The monthly payment is based upon the interest rate

Interest rate cap- A limit on how much a borrower’s percentage rate can increase or decrease at rate adjustment periods and over the life of the loan.

Interest rate ceiling- Specified in the loan agreement, the highest percentage a lender can charge for an adjustable-rate mortgage

Interest only loan- No principal reduction is required in the monthly payment. You are simply paying the interest that is due each month while not reducing the original balance of money owed

Introductory rate - The low rate charged by a lender for an initial period to entice borrowers to accept the credit terms. After the introductory period is over, the rate charged increases to the indexed rate or the stated interest rate. Often called a teaser rate.

Investment property- A property purchased solely for investment purposes. No intent is to live there. The intent is to rent or fix up and sell as an investment.

 

 

 

 

 

Jumbo mortgage- A mortgage where the loan amount is higher than that of the present conforming loan limit which is set by both Fannie Mae and Freddie Mac. The limits are 417,000 for a single family home, 533,850 for two family home, 645,300 for a three family home and 801,950 for a four family home.

Late charge- A fee imposed on a borrower for not paying on time

Lease- A written agreement in which the property owner allows a tenant to use property in exchange for rent, and for a specified period. Or, a written agreement in which a car dealer allows a consumer to use a vehicle in exchange for payments for a specified period

Leasehold estate- A tenant’s right to use a property for a fixed period

Legal description- A way of identifying a piece of property in writing that is acceptable to a court

Liabilities- What you owe to creditors. For example your credit cards are a liability. It is the loans that you have outstanding that are considered your liabilities

LIBOR rate- LIBOR stands for London Interbank Offered Rate. It’s the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London. It is a standard financial index used in U.S. capital markets and can be found in the Wall Street Journal. In general, its changes have been smaller than changes in the prime rate. It’s an index that is used to set the cost of various variable-rate loans, including credit cards and adjustable-rate mortgages

Lien- A legal claim against property for payment of a debt or for services rendered. One who holds a lien has the right to sell the property to obtain the money, or to recover the money when the property is sold

Life cap- The highest rate that your loan could adjust to over the life of the loan

Line of credit- An approved amount given to a borrower. It is usually referred to as home equity lines of credit or HELOC’s

Lis pendens- A pending lawsuit; in real estate, the constructive notice filed in public records that a legal dispute exists over a piece of property. It is typically filed once a property has gone into foreclosure. It also freezes the property’s title

 Listing- The public offering of your home for sale

Loan application- A document in which a prospective borrower details his or her financial situation to qualify for a loan

Loan application fee- A fee charged upfront by some lenders to process a loan application

Loan Classroom- A web site that teaches and informs on the mortgage market, real estate market, financial market, the mortgage process and has great blogs by matt isleib

Loan commitment- A lender’s promise to lend funds for a loan

 Loan origination fee- A charge levied by a lender for underwriting a loan. The fee often is expressed in points. A point is 1 percent of the loan amount

Loan processing fee- A charge levied by a lender for accepting a loan application and gathering the supporting paperwork

Loan term- The time frame of your loan. For example a 30 or 15 year term

LTV- Loan to value ratio. The outstanding amount you owe divided by the current value of your home. For example you owe 200,000 and your home is worth 300,000, your ltv would be 66%

Lock - A lender guarantees delivery of a said rate for a specific period of time

Locked and Floated- A lender guarantees delivery of a said rate for a specific period of time and during that time if rates improve they will get a better interest rate

Market conditions- Factors that affect the sales of homes in an area, such as interest rates, the unemployment rate, home appreciation, weather and time of year

Market value- The price at which a given property or product sells between a willing, unpressured buyer and seller who know all the pertinent facts about the property or product

 Median price- In a given area, the amount paid for a house in which half of the houses in that area sell for less and half sell for more.

 Minimum payment- The least possible amount that you are required to pay

MLS- A shared compilation of detailed information on properties for sale in a certain area. This allows agents to show and sell listings held by offices other than the one they’re associated with. The MLS is usually available only to Realtors

Modification- A change to the original terms of the loan agreement. Typically if a borrower runs into financial difficulty they can attempt to work out a loan modification with the lender

Mortgage- A legal agreement that uses property as collateral to secure payment of a debt. The legal agreement means that when a mortgage is on a house, the lender can take possession of the house if the borrower stops making payments

Mortgage banker- One who originates home loans, sells them to investors, services monthly payments and handles escrow. Some mortgage bankers sell their loans on the secondary market

Mortgage broker- One who finds lenders for prospective borrowers who meet the lenders’ criteria. A mortgage broker does not make the loan, but receives payment for services

Mortgage insurance- Also known as MI or PMI (for private mortgage insurance). A policy that protects the lender by paying the costs of foreclosing on a house if the borrower stops paying the loan. Although mortgage insurance protects the lender, it is paid monthly by the borrower. Mortgage insurance usually is required if the down payment is less than 20 percent of the sale price

Mortgagee- One who lends for the purchase of property, using the property as collateral to assure payment

 Multifamily property- Either a two, three or four family property 

 Negative amortization- A gradual increase in mortgage debt that happens when the monthly payment does not cover the entire principal and interest due. The shortfall is added to the remaining balance to create “negative” amortization

 No cash out refinance- A refinance where either the monthly paymnet is lowered or the term reduced.

Non assumption clause- A provision of a home loan that prohibits the transfer of the mortgage to another borrower without the lender’s permission

Non recurring closing costs- One-time fees paid at a real-estate settlement, including origination, appraisal, points, title insurance and credit report

Nonrecourse loan- A loan that is secured by collateral, such as real estate, for which the borrower is not personally liable

Note- A promise to pay a debt

Note rate- The interest rate at which you repay your promised debt

Notice of default- A step in the foreclosure process in which the lender formally tells a court that the borrower is in arrears

Open house- A selling tool in which a real-estate agent advertises a property for sale and invites people to visit without making an appointment.

Origination fee- A fee that the lender or mortgage broker charges to process the loan

Owner financing- Financing that is all or partly arranged by the seller and not by a lender or bank

Option ARM mortgage- A potentially negatively amortizing mortgage that is adjustable and offers several payment options. Typically a principal and interest 30 or 15 year payment, an interest only payment and a minimum payment that is less than interest only and negatively amortizes the loan. 

Per Diem interest- Daily interest amount based on your note rate and the amount of your loan

Piggyback loan- A first and second mortgage taken out simultaneously. In most instances it would be done to avoid mortgage insurance or to stay at a conforming loan limit

PITI- Principal,interest,taxes and insurance

PITI reserves- Monthly reserves in either a bank or investment account to cover the  principal,interest,taxes and insurance of a property

Points- 1 percent of the loan amount. It can be “origination” points that are charged to process a loan or “discount” points that are charged to buy down the interest rate

Portfolio lender- A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.

Pre approved- Your credit has been pulled and based upon your said income and assets you have an approved loan through an investor pending sending in the supporting documentation like pay stubs, assets etc.

Prequalification- Another term used for pre approved except it may be based solely on a credit report and not actually looked at by an investor

Preapproval letter- A letter given by investor to real estate agent confirming that they can qualify to purchase a home. It is typically a requirement to have one to even place an offer on a home

Prepayment penalty- A penalty that is enforced if you pre pay a large amount of the outstanding principal balance or refinance within a certain time frame. The penalty can sometimes be as much as 5 percent of the loan amount

Prepaids- Are referring to your odd days interest, taxes and insurance

Prime rate- A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate. The rate given to consumers on their loans is often determined as the prime rate plus a certain percentage, which represents the lender’s assessment of the risk in lending, plus its profit margin.

Principal- The balance of your loan outstanding excluding any interest or charges

Private mortgage insurance- A policy that protects the lender by paying the costs of foreclosing on a house if the borrower stops paying the loan. Although PMI protects the lender, it is paid monthly by the borrower. Private mortgage insurance usually is required if the down payment is less than 20 percent of the sale price.

Probate sale- Sale of property after the death of the owner, supervised by a court, with proceeds divided among creditors and heirs

Promissory note- A written promise to repay a loan by a specified time

Property taxes- Taxes figured on the value of property you own

Property values- The given market value or worth of one’s property

Purchase agreement- A document in which a property’s buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract or a sale contract

Purchase contract- A document in which a property’s buyer and seller approve the price and other terms of the transfer of title. Also known as an agreement of sale, a purchase contract or a sale contract

Qualifying ratios- As calculated by lenders, the percentage of income that is spent on housing debt and combined household debt. The first qualifying ratio, called the front ratio, is the percentage of monthly before-tax income that goes toward a house payment. The back ratio is the sum of the house payment and all other monthly debt — credit cards, car payments, student loans and the like — divided by before-tax income

Quitclaim deed- A document that transfers the grantor’s interest in a title to property and is filed with a county recorder. It often is used among family members and can be used to clear up a gap in the chain of title

Rate lock-  A guarantee by the lender or mortgage broker that the agreed upon interest rate will remain for a said period of time.

Real estate agent- An individual who is licensed to assist a buyer or seller in purchasing or selling real estate

Real estate attorney- An attorney that specializes mainly in the transfer of property as well as housing, tax or land disputes. They may also specialize in foreclosure protection as well as any judgments or liens involved with a property or piece of land

Real estate broker- A person who is licensed to represent a buyer or seller of land and the buildings and other improvements on it and collect commissions for the work. Most brokers have agents working for them and collect a portion of their commissions in exchange for providing office space, marketing and other overhead

Real property- Permanent, non movable property, such as land and buildings

Recording fee- cost incurred by buyers and sellers of real estate. It is usually referring to the recording of the transaction at their town or city

Refinancing - Taking a new mortgage to pay off an existing one. One would refinance to lower their payment, the term of the loan or to take cash out or consolidate debt

Regulation Z- A rule, enforced by the Federal Reserve Board and implementing the Truth-in-Lending Act, that requires lenders to disclose all credit-related costs including the annual percentage rate

Rehabilitation loan- Financing obtained to cover any costs or building expenses to take a dilapidated property and fix it up

Relocation company- A business that specializes in providing help to employees who move for their employer. Typically the help is the sale and purchase of their existing and new homes

Remaining balance- The amount that is left to pay your loan off in full

Remaining term- The amount of time that is left on your loan

Rent loss insurance- Hazard insurance that pays for a loss in rental value or rental income if damage causes the property to become unfit for habitat

 

 

 

 

 

RESPA- Real Estate Settlement Procedures Act. Known as RESPA. A consumer protection law that requires lenders to give homebuyers advance notice of closing costs, which are payable at the closing or settlement meeting. It outlaws kickbacks and illegal markups in costs

Reverse mortgage- A special type of mortgage, sometimes called a reverse mortgage, that enables older homeowners to convert the equity in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans or mortgages, a borrower does not qualify on the basis of income but on the value of the home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property

Right of first refusal- An agreement by an owner to give another party an opportunity to buy the property before it is offered to anyone else

Right of rescission- The time period that a borrower has to rescind or decide not to go through with their refinance. That time period is three days after the initial closing date of a refinance

Sale contract- A written agreement between buyer and seller that details price and other terms and conditions of sale

Second mortgage- A loan taken on a property that is in addition to their first mortgage. Typically HELOC’s or home equity lines of credit are the most common examples of second mortgages

 

 

 

Sellers market- A real estate market where there are more buyers than sellers of real estate. Usually during this period the top asking price is the accepted offer taken on a sale 

Servicer- An organization that collects monthly mortgage principal and interest payments from homeowners and manages escrow accounts for paying taxes and homeowners’ insurance premiums. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market

Settlement statement- A document that details who has paid how much to whom

Short sale- A short sale, in real estate terms, is a sale of a house in which the sale price is less than what the owner still owes on the mortgage. It is a procedure sometimes agreed to by lenders, who would often would rather take a small loss than go through the lengthy and costly foreclosure process

Simple interest- Interest computed only by the principal balance. Not taking any principal payments into the equation

Spec or speculation home-  A home built as an investment. One that is built with no buyer in mind and just as an investment to hopefully profit from. It can be extremely speculative and risky

Starter home- A home that is usually lower in price and purchased by a first time home buyer.

Subordinate loan-  A mortgage whose priority is below that of another mortgage, for example a second or third mortgage or a home equity loan

Subprime mortgage- A mortgage granted to a borrower considered subprime, that is, a person with a less-than-perfect credit report. Subprime borrowers have either missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default

 

Tenants in common- Ownership by two or more people in which each person owns an undivided interest in the entire property and all have equal rights to use the property. When one tenant in common dies, that person’s interest may be sold, mortgaged or transferred to another in a will

Term- the length of time of your loan. For example a 30 year or 15 year term

 

Title - Ownership of real property to the exclusion of anyone else’s right to claim the property. Evidence of title is recorded in a deed and held in a county recorder’s office. The terms “title” and “deed” often are used interchangeably; strictly speaking, the deed is the document and the title is the ownership right that is recorded in the deed

 

Company that checks a property’s title for liens and other obstacles to sale, fixes any clouds to title, supervises the closing transaction, and makes sure that money transfers in a purchase are processed correctly

Title insurance- A policy that guarantees that an owner properly has title to a property and can legally transfer title to someone else. Should a problem arise, the title insurer pays any legal damages

Title search- The actual search of a property title and its chain of owners at city or town hall of records

Total expense ratio- The percentage of monthly debt payments compared to total before-tax income

Trade line- An account listed on a credit report. Each separate account is a different trade line

Transfer tax- A levy by a state or local government on the change of ownership of real estate

TransUnion- One of the three major credit-reporting agencies, along with Experian and Equifax

Truth in lending act- A federal law that requires lenders to provide certain information so borrowers can compare one loan to another. The most important facts lenders must provide are: finance charges in dollars and as an annual percentage rate (APR); the credit issuer or company providing the credit line and the size of the credit line; length of grace period, if any, before payment must be made; minimum payment required; any annual fees; and fees for credit insurance, if any

 

 

Underwater- your property is worth less than what you owe on your mortgage.

Underwriting- the investors review of the loan application for final approval or denial

 

Variable Interest rate- a rate that changes periodically based upon a certain index and the certain terms of the note                                                                                                                 

Verification of employment- a written or verbal verification from borrower’s employer

VA Loan- mortgage  given to qualified veterans and backed by the government

Walk through- final inspection of home being purchased usually done with your realtor

Zoning- classification that the local government gives to a piece of property to determine residential or commercial etc.