80/20 Mortgage
A 100% financing program which uses a first mortgage to pay 80% of the purchase
price and a second mortgage to pay the remaining 20%. This program requires
a good credit score. It can also eliminate the need for PMI (for PMI see below).
Appraisal The assessment of a property's value by a licensed professional.
APR The "Annual Percentage Rate" is the total cost of the loan expressed
as a percentage per year. It takes into account closing costs and the note rate.
Back Ratio The term for your total monthly debt.
ARM - "Adjustable Rate Mortgage". A mortgage loan which starts with a
note rate lower than prevailing rates, but goes up at prescribed intervals with
specified limits. Typically used to maximize pre-qualifying.
Balloon A mortgage type which has a large, or "balloon" payment, due
at the end of the loan to satisfy the total debt.
Closing The process which finalizes the loan package and the sale of
the property in the case of a purchase.
Conforming Mortgages Loans which "conform" to Fannie Mae or Freddie Mac
guidelines (for Fannie Mae and Freddie Mac see below).
Debt Ratio The borrower's total debt compared to their total income,
expressed as a percentage. The debt ratio is one criteria used to when qualifying
for your mortgage loan.
DTI "Debt to Income" is the total amount of debt a person has expressed
as a percentage of their income. Also known as the "Back Ratio" (for Debt Ratio
see above).
Down Payment The portion of the properties purchase price which is paid
for at closing.
Escrow Accounts In order to get most lenders best note rate, it is usually
necessary to pay 1/12th of both the property taxes and hazard insurance. These
funds are put into an "Escrow Account" (or "Escrow"). The lender then pays the
taxes and insurance at the appropriate times from this Escrow Account.
Down Payment The portion of the property's purchase price which is paid
for at closing.
Equity The portion of a properties value that exceeds what you owe the
lender, or the portion of the property you own.
Fannie Mae Federal National Mortgage Association (FNMA, a.k.a. FaNnie
MAe), is a private, shareholder-owned company that works to assure that mortgage
money is readily available for existing and potential homeowners in the United
States. Fannie Mae does not directly lend money to homebuyers, but works with
lenders to make sure that there is no shortage of funds available for mortgage
loans. The method in which Fannie Mae accomplishes this is by purchasing mortgages
from a variety of institutions that make up the primary mortgage market.
FHA The "Federal Housing Authority" guarantees mortgage loans, making
it easier for buyers to qualify. This is very useful for first time buyers,
as they tend to benefit most from the qualifying criteria being relaxed.
FICO Scoring The term for your credit score. Your credit score is a calculation
derived from the timeliness of your payments, amount of available credit currently
in use, number of credit inquiries, number of open accounts, history of bankruptcies,
judgments and collections.
First Mortgage A mortgage loan that has priority over all other financial
interests in the property.
Fixed Rate Mortgage A mortgage loan which has a note rate that is the
same for the entire life of the loan. These are usually a person's best deal.
Freddie Mac Federal Home Loan Mortgage Corporation (FHLMC, a.k.a. Freddie
MaC), is a shareholder-owned corporation that was established by Congress in
1970 to support home ownership and rental housing. Freddie Mac purchases single-family
and multifamily residential mortgages and mortgage-related securities, which
it finances primarily by issuing mortgage pass through securities and debt instruments
in the capital markets. Freddie Mac guarantees these securities and mortgage
lenders sell their loans to Freddie Mac and use the proceeds to fund new mortgages,
which in turn increases the money supply to homebuyers. The Company does not
make loans directly to homebuyers, but puts private investor capital to work
for homebuyers in general.
HUD The "Department of Housing and Urban Development" is an office of
the Federal Government that helps make affordable housing more available. They
also monitor and regulate the legal process of housing transactions.
Interest The charge for using the lender's money.
Non-Conforming Mortgages Loans which do not meet Fannie Mae or Freddie
Mac guidelines (for Fannie Mae and Freddie Mac see above).
Note Rate The actual interest rate charged by the lender on the principle
of your loan.
LTV "Loan to Value" is a ratio of the loan amount to the value of the
property expressed as a percentage. It is the inverse of your equity.
PMI "Private Mortgage Insurance" is insurance to protect the lender from
financial loss in the event the lender defaults on the loan. You usually will
pay this if you have less than 20% equity in the property. Rates vary with the
risk of the loan. While you pay the premiums there is no benefit to the borrower.
Pre Approval A mortgage loan which is approved at a specified amount
pending the satisfactory appraisal of the property.
Pre Qualifying The process of determining how much a person can potentially
borrow based on income, credit score, liabilities and assets, prior to actually
having chosen a property to purchase.
Principle The unpaid balance of your mortgage loan.
Underwriting The assessment of a loans risk which determines whether
it gains approval.
VA Loans "Veterans Administration" loans, which are available only to
active and Honorably Discharged members of the military. These loans require
little or no down payment, and they are insured by the Veterans Administration.
Why do we
offer this report free of charge?
The ideas contained in this report took us years to learn and formulate. We
are offering this free of charge because we want to be your mortgage advisor.
We offer more than simply a loan, we'll personally advise you on how to use
and apply the principles contained in this report. Worried that you can't remember
all of what is contained here or do you have more questions? Call us and we'll
provide you with the highest level of service. We want to earn your business.
Premier Lending Group L.L.C.
approved@premierlend.net
1.866.501.LEND (5363)