APR- Annual Percentage Rate
The annual cost of a loan to a borrower. Like an interest rate, the APR is expressed as a percentage. Different from an interest rate- it includes other charges or fees (such as mortgage insurance, closing costs, discount points and loan origination fees) to reflect the total cost of the loan.
Appraisal
An informed estimate of the value of a property. A certified professional appraiser usually performs the appraisal and delivers a report detailing the features of the home and how it compares to other property in the market. Not to be confused with a property inspection.
BPMI- Borrower Paid Mortgage Insurance
This is typically a lump-sum (or 1-time) mortgage insurance that is paid by the borrower. This typically is instead of the monthly mortgage insurance.
CLTV- CombineD loan to value
A ratio used to show the total principal loan amount of all mortgage loans relative to the market value of the property. For example, a property value is $100,000 and the total loan amounts equal $80,000; then the CLTV would be 80%.
Cash to closing
The amount a homebuyer needs in cash at the closing of the loan. This amount includes down payment and closing costs together.
Closing Disclosure
A closing document which provides key information such as interest rate, monthly payments, and costs to close the loan. Consumers are required to receive this form no later than 3 business days before they close on the loan.
Discount Points/Buy-down
Found in a transactions closing costs, it is an additional cost to purchase a lower interest rate. 1 “point” = 1% of the loan amount. For example, 1 point on a $200,000 loan amount would be a cast of $2,000
Down Payment
The amount of cash you pay toward the purchase of your home to make up the difference between the purchase price and your mortgage loan. Down payments often range between 3% and 20% of the sales price.
Earnest Money
A deposit made toward a down payment as a sign of good faith. The deposit is typically made when a purchase agreement is signed
Escrow impound account (or escrow 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.
Hazard Insurance
Also known as “Homeowners Insurance” It’s an insurance policy required by lenders that protects a homeowner and lender against the costs of damage from fire, vandalism, smoke and other causes. When you take out a mortgage, the lender will require you to take out hazard insurance to protect the property.
Inspection
An informed reporting of the condition of the property. A certified professional will perform and deliver the report that will include conditions and functionality of the major syastems of the property. This can include the roofing system, sewer/septic system, water/well systems, appliances, HVAC, Plumbing, Electrical, foundation, etc...
Interest rate
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding. This is used to calculate your monthly payments
LPMI –Lender Paid Mortgage Insurance
This is a lump-sum mortgage insurance that is paid by the lender and rolled into the APR. This is instead of the monthly mortgage insurance.
LTV- Loan-to-Value
A ratio used to express the principal loan amount relative to the market value of the property.
Origination fee
A cost charged by a lender to cover processing and/or underwriting expenses in connection with making a mortgage loan. Usually a percentage of the amount loaned (often 1%). The origination fee is stated in the form of points
Processing fee
A fee charged by a lender to cover the costs for any processing expenses to obtain a mortgage loan. May also be housed under origination fees.
Property taxes
Taxes levied on real estate by governments, typically on the state, county and local level. When you purchase a home, you'll need to factor in property taxes as an ongoing cost.
Reserves
A source of liquid assets that is not needed immediately, but is available if required. (an example would be the ability to withdraw from an account to make the mortgage payments if the need came about).
Seasoning
A period of time that funds have been deposited in a bank account. Funds on deposit need to meet a ‘seasoning’ requirement to use for the transaction. The term can also defined as a period of time that a homeowner has owned their existing property.
Title Insurance
Title insurance protects property buyers, homeowners, and mortgage lenders from financial loss sustained from errors on a title to a property.
Under Contract
A binding agreement that exists between a buyer and a seller involving a property. The contract will have defined parameters that all parties must meet to complete the contract and ultimately finalize the transaction
Underwriting fee
A fee charged by a lender to cover the costs for underwriting expenses to obtain a mortgage loan. May also be housed under origination fees.
