Lending Language

Those crazy bankers and lenders. Tossing out words that you may not know what it means. Well, here is a little cheat sheet of terms and their definitions.

If you’re thinking of obtaining a mortgage, whether for a new purchase or a refinance, it’s a great idea to do some exploration beforehand to familiarize yourself with the process and what you can expect during your loan application, approval and closing. To help you better understand your options and make an informed decision when it comes to selecting your new home financing, we’ve gathered some of the most frequently used mortgage industry terms together for you to keep as a handy reference guide. If you have further questions about any of these terms or any other parts of the home loan process, please feel free to give me a call!

student start up loan ato Annual percentage rate (APR): this is the actual interest rate you pay to borrow money. The APR includes the base interest rate, points, and any other add-on loan fees and costs. All lenders must follow the same rules to ensure the accuracy of the APR, so it provides consumers with a good basis for comparing the cost of loans from different lenders.

running a payday loan business Automated Underwriting: we run your loan application through a computer system that evaluates certain numbers and information to determine if the loan appears to meet program guidelines.

http://acf.ch/wp/?m=can-i-use-tsp-loan-for-closing-costs Cash-out Refinance: a refinance where you borrow more than you need to pay off the original loan to get cash in hand. It’s an alternative to a home equity loan.

payday loans no direct deposit Closing costs: these fees are typically not part of the actual mortgage, and include such costs as title search, origination fees, discount points, prepayment of taxes and insurance, and real estate transfer taxes.

http://electrodomesticosam.com/?q=icici-home-loan-insurance-policy Disclosures: within three days of my receiving your fully completed loan application, you will receive these legal documents that explain your rights as a borrower on a mortgage loan. Disclosures will also show you the details of your loan amount, costs, monthly payments and payback terms.

assume loan definition Discount points: you can pay points at closing as a type of buydown in order to lower your overall interest rate and mortgage payment. One point equals 1% of the home loan value.

bdo loans for business Good Faith Estimate: this is a federally regulated estimate of all the fees associated with your closing coats, including pre-paids, escrow items and lender charges.

payday loans antioch il Home price index: this is an industry tool that provides historical data on residential home prices in various regions.

http://condadotravel.com/?q=lone-star-title-loans-austin-tx HUD-1 statement: this document itemizes all of your closing costs and shows the fees you paid, such as real estate commissions, loan fees, points and escrow amounts. Also known as the settlement sheet or closing statement.

Loan modification: your lender may be able to modify the terms of your loan to make it easier for you to continue making payments and avoid foreclosure, without refinancing the loan. Generally it involves reducing the interest rate and thus the amount of your monthly payment for a fixed period of time.

Loan origination fee: the fee you pay for the lender’s services in administering your loan. A loan origination fee of 1 to 2 percent of the mortgage amount is common.

Loan-to-value (LTV) ratio: your lender will divide the amount of the loan by the asking price of the home and come up with a percentage. A high LTV, such as 90%, means you only have to come up with 10% cash as a down payment, while a lower LTV, such as 70%, means you need to come up with more cash to put down, but you may avoid the need for private mortgage insurance.

Mortgage insurance: when buyers take out a mortgage with less than 20% in cash to put down, lenders require them to pay mortgage insurance, a monthly premium that is added to the mortgage. This protects the lender should a buyer default on the home loan.

Mortgage Qualifying Ratios: these are the front-end and back-end ratios, which we use to calculate how much of your income is spent on your bills and how much will go toward your mortgage.

PITI: principal, interest, taxes and insurance: the four elements of a monthly mortgage payment. Payments of principal and interest go toward repaying the loan, while the payment for taxes and insurance goes into an escrow account to cover those fees when they are due.

Processing fees: lender fees associated with creating the loan or mortgage, usually part of closing costs.

Rate lock: this guarantees your interest rate for a set period of time while you complete the purchase of your home. Rates locks do expire but they can be extended, generally for an additional fee.

Secondary mortgage market: when we originate loans, we often sell them on the secondary market in order to raise more capital for more loans. Investors purchase our residential mortgages as a financial tool.

Truth-in-lending disclosure (TIL): this document discloses your interest rate, loan amount, the amount you will have paid upon the loan’s maturity and other relative financial information.

Underwriting: this is where your loan application is analyzed to ensure you will be able to repay the loan.

Walmart sells everything…including houses

Good ol’ “wallyworld” is taking a new spin. Walmart is now dipping its toe into the Real Estate world. For those who did not already know this. It’s true. Walmart now has in store real estate teams to help you shop for a home while shopping for your groceries.

There was a pole recently done to which consumers say the would consider getting a mortgage from Walmart. Folks even said they would consider even something like PayPal!

It will be interesting to see where the finance world will head and what the future for big banks hold.

 

If you want to read the article check it out HERE!

Metro Denver home prices up for 9th month from previous year

Denver-Aurora-Broomfield metro area increased 9.2%

Woo Hoo!

If you want to read the full article check it out HERE!

What is FHA?

 

In 1934, the federal government established the Federal Housing Authority (FHA). The FHA was not created to actually lend money; rather, it was created to insure the loans made by approved lenders, such as W.J. Bradley, and to protect the lenders against defaults on the loans.

If a borrower obtains an FHA loan and then defaults on it, the lender is compensated by FHA, and thus the lender will not lose as much money and is therefore more willing to lend according to FHA guidelines.

Inviting Terms
Originally considered a program mainly for first-time buyers, FHA loans are now one of the most popular types of loans for all types of borrowers due to a variety of attractive features:

  • Low down payment. FHA loans let new buyers put down as little as 3.5 percent of the home’s purchase price. Gift funds may be used for the down payment, which means you may not need to come up with any cash at all.
  • Market-appropriate loan limits. For many years, FHA loans had very low maximum loan limits. But in 2007 the FHA raised its loan limits to equal the median home price in your market.
  • Lower credit requirements. While there are no set credit requirements, it’s best to contact me to determine if your credit history along with other factors will qualify you for an FHA loan.
  • Low up-front mortgage insurance rate. The FHA requires mortgage insurance to protect itself from loan defaults, but premiums are only 1 percent of the loan amount. The premium can be paid directly by the borrower or rolled into the loan amount.

In the past FHA loans were considered “risky” or too much trouble for lenders, with strict regulations and requirements that had to be met before an FHA loan would be approved. Borrowers who applied for an FHA loan were also sometimes considered high-risk, because usually they would not qualify for conventional funding. Relaxed guidelines combined with the state of the market have taken the stigma off of these loans and made them a great choice for nearly any borrower.

Other Considerations
While FHA loans offer less stringent terms than you would find with conventional loan requirements, they are also designed to ensure responsible homeownership. FHA loans impose ratios on borrowers’ debts in relation to their income. The FHA also requires you to pay 1% of the loan amount as an upfront mortgage insurance premium. In addition, annual mortgage insurance payments are also required, divided into monthly payments of 1.10% to 1.15% for 30-year loans, according to the loan-to-value ratio.

If you’re looking to purchase a new home or refinance a current mortgage, but are worried you don’t have enough for a down payment or that your credit is too low, remember that FHA loans may present a perfect option.