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Jumbo
Loan
Loan
with an initial balance greater
than $300,700.
Jumbo
Pricing
Refers
to the fact that rates are generally
slightly higher on jumbo loans.
Loan-to-Value
(LTV)
Ratio
of liens versus value of property
or sales price. Ex. 80,000 owed
on a property worth 100,000 equals
an 80% LTV
Lock-in
Period
Time
period that a rate is protected
for during the loan process
Locking
in
Choosing
to protect a particular rate and
program for a specific period
of time
Mortgage
Insurance (MI)
Insurance
which protects the LENDER against
default. Generally the higher
the loan-to-value the higher the
monthly premium.
Mortgage -- Document. This document signed at closing is the collateralization
of the property to the note or loan.
Note
Document.
This document signed at closing
is the promise by the signers
to repay the loan.
Origination
Fee
1%
of the loan amount. Can be avoided
by paying a higher rate; typically
is tax deductible.
Odd
Days Interest/Per Diem Interest
Collected
at closing, it is money collected/refunded
to borrower to synchronize the
closing to the monthly payments
Paying
Points
Money
paid upfront to lower the interest
rate. Rule of thumb - breakeven
point is (where monthly savings
meets/exceeds money paid upfront)
usually around 60 payments or
5 years. This means that in many
cases paying points will pay off
as long as you do not sell or
refinance your loan before the
breakeven point. (actual breakeven
point may vary, please talk to
us about your exact situation)
Some niche programs and products
may require points to be paid.
Piggy
Back
A
second mortgage closed at the
same time as a first mortgage.
Usually purpose is to avoid mortgage
insurance, jumbo pricing, or for
future needs.
PITI
Monthly
payment. Stands for Principal,
Interest, Tax escrow, Insurance
(both hazard and mortgage)
escrow
Pre-Approval
Based
on documented income, assets,
and credit.
Pre-paids
Group
of items paid at closing including
monies to set up the escrow
account and to pay prepaid
or odd days interest.
Pre-Qualification
Based
on stated income, assets and
debt. Information not verified,
not as useful or informative
as a Pre-Approval.
Pre
Payment Penalty
An
option on certain loan types.
A benefit in that the rate is
lower on these products compared
to other similar products.
Property
Taxes
Amount
of tax due on a property. Usually
is collected as part of the escrow
portion of the monthly payment,
with the lender being responsible
to forward the escrowed money
as the bills come due on May 15
and Oct 15.
Purchase
Agreement
Contract
between buyer and seller outlining
the terms of the agreement. |
