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"We
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Mortgage
Glossary - Mortgage and Real Estate Terms Sorted Alphabetically:
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L - lender buy-down mortgage, liability insurance, LIBOR, loan application…more
LENDER BUY-DOWN MORTGAGE - a convertible mortgage offering a discounted
interest rate at the beginning of the loan that gradually increases to an
agreed-upon fixed-rate over the first few years of the loan. It provides lower
initial payments and a stable final monthly rate, but the final rate may be
somewhat higher than on a standard fixed-rate mortgage.
LIABILITY INSURANCE - insurance covering the risks related to the property, and
personal liability claims of other parties against the insured party.
LIBOR - see London Interbank Offered Rate below. Many popular adjustable rate
mortgage products such as
5 year adjustable rate mortgages and
3/1 ARMs use this index.
LOAN APPLICATION - typically a combination of standardized government forms and
forms provided by the lender – a 1003 form being the most common.
LOAN ORIGINATION FEE - the fee charged by a lender/loan agent (sometimes called
"points") to make the funds available to you, an off-set of its marketing and
overhead expenses.
LOAN PROCEEDS - part of the money you borrow.
LOAN-TO-VALUE RATIO - the relationship between the amount of the consumer’s
residential real estate mortgage loan and the appraised value of the property
expressed as a percentage. In some cases, we fund loans at LTV's in excess of
100%. Check out our
100% mortgage financing section for more information.
LOAN TYPES: Conforming - Conforming loans refer to a residential
real estate loan in amounts that conform to CONSERVATIVE government lending
standards as determined by Fannie Mae & Freddie Mac (the original government
agencies, set up in the early 1940's, established to help people finance new
homes). Conforming loans (on single family homes) range in amounts up to
$417,000. Although conforming loans are serviced by these government agencies,
the mortgage industry has adopted the term to express loan quality standards
and amounts in this range. These generally are "quoted" as the
lowest mortgage rates you see around (to get your attention). Normally
utilized for purchasing a home with a 5-20% down payment, full documentation,
and decent credit is often required. The quoted low rates are wonderful
sounding "BAIT", but not everyone is "CONFORMING".
Jumbo - Jumbo loans refer to those loan amounts outside of the
"conforming" range or, above $417,001 (ask an AAXA Loan Advisor for state by
state exceptions).
Non-Conforming - Can be an applicant with a 'conforming' type
high quality credit history, but someone looking for a mortgage loan with more
lenient standards, then the conservative 'conforming' guidelines. Also applies
to customers with credit scores that are below the 'conforming' range.
'Non-conforming' lenders help over 60% of all loan applicants, however the
rates will be higher.
No Documentation (No Doc) or Low Documentation Loans - In certain
situations it is either difficult or impossible for potential borrowers to show
a lender their "taxable" income on paper. In these instances any of the above
described programs can be used, but under circumstances called NIV or No Income
Verification. All of the other program parameters must be met, however, in the
case of income, a borrower may only be required to show a operating license or
business license and/or limited income information. With this type of
financing, rates & fees offered tend to be slightly higher. This type of
financing is recommended for self-employed borrowers or borrowers who have
difficulty showing their income on paper, for one reason or another.
Cash-Out Refinances - Favorable only under low or dropping
interest rate markets. This is a substitute for home equity (second mortgage)
lending; usually more costly as well. Occasionally, when refinancing a first
trust deed mortgage.
LONDON INTERBANK OFFERED RATE (LIBOR) - the rate at which banks in the foreign
market lend dollars to one another. LIBOR varies by deposit maturity. This
moving standard, is a common interest rate index, it's one of the most valid
barometers of the international cost of money. A guide used by many lender
funding sources for ARM loans.
LOSS PAYABLE CLAUSE - an insurance policy provision for payment of a claim to
someone, other than the insured, who holds an insurable interest in the insured
property.
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A
- adjustable rate mortgage, adjustment interval, amortization, annual
percentage rate (APR)…more
B – balloon mortgage, bankruptcy, basis point, beneficiary…more
C - caps, cash flow, cash out (second mortgage), cash out refinance…more
D - debt consolidation, debt service, debt reduction plan, debt-to-income
ratio…more
E - earned and unearned income, earnest money, easement, economic life…more
F - Fair Credit Reporting Act, fair market value, Fannie Mae…more
G - good faith estimate, grace period, gradual payment mortgage (GPM),
grantee…more
H - home equity, home improvement loan, Home Mortgage Disclosure Act
(HMDA)…more
I - index, in file credit report, inflation, initial interest rate, ingress and
egress…more
M - manufactured home, market value, maximum loan amount, mechanic’s lien…more
N - negative amortized (Neg/AM), Neg AM Loans, negative cash flow, net
worth…more
O - obsolescence, off-site improvements, on-site improvements, ordinary
income…more
P – par, partial payment, partnership, party wall, payment shock…more
Q – quality control, quit claim deed, quote…more
R – rate shopper, real property, real estate loans, reconciliation…more
S – sales contract, satisfaction or mortgage, seasoned mortgage, second
mortgage…more
T – tax lien, tenancy in common, tenant, term, title, title insurance…more
U – underwriting, unencumbered property, uniform commercial code (UCC)…more
V – VA (Department of Veterans Affairs) Mortgage, vacancy rate, VA funding
fee…more
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