Adjustable-Rate Mortgage (ARM)
A type of mortgage where the interest rate is subject to change (or adjust) throughout the life of the loan based on the market's interest rates.
Paying off debt in equal payments over time. Part of each payment goes toward paying down the loan principle and part pays interest.
Detailed report of exactly how much of your monthly payments go towards the principal and interest over the loan term.
Annual Percentage Rate (APR)
Shows you how much interest you are paying on an annual basis calculated as a percentage of your total loan balance.
Written estimate of a property's value based on comparable sales in the area, and in in-person inspections of a home typically required for purchase and refinancing transactions.
Debt-to-Income Ratio (DTI)
Calculated by dividing your monthly debt obligations by your gross monthly income.
Fees paid to the lender at closing to reduce the interest rates on the loan; often referred to as "buying down the loan".
A legal arrangement in which a third party holds on to money or property until specified conditions have been meet.
A mortgage with an interest rate that does not change during the term of the loan
Fannie Mae (FNMA)
The Federal National Mortgage Association (FNMA), Fannie Mae is a government-sponsored entity that supports the secondary mortgage market by trading in mortgage contracts, primarily from larger, commercial banks, thereby freeing up money for financial institutions to provide more lending.
Freddie Mac (FHLMC)
The Federal Home Loan Mortgage Corporation (FHLMC), Freddie Mac is a government-sponsored entity that supports the secondary mortgage market by trading in mortgage contracts, primarily from smaller banks, thereby freeing up money for financial institutions to provide more lending.
Loan to Value Ratio (LTV)
The ratio of the total loan amount divided by the value of the property.
Mortgage Payo Statement
A document provided by the lender detailing how much the borrower needs to pay off on the loan on a given date.
Conditional commitment to lend a specific amount based on consumer data such as a credit check.
Initial assessment by the lender on how much they would likely lend a borrower based on information provided by the borrower.
Principal, Interest, Taxes, and Insurance (PITI)
PITI are the four main components that make up your monthly mortgage payments, excluding any other service fees such as escrow.
Private Mortgage Insurance (PMI)
Insurance required for conventional loan borrowers who put less than 20% in down payment.
The step in the loan process where the lender verifies income, assets, employment, debt, and property details to determine if a borrower qualifies for a specific loan.