See a full list of common FHA loan and mortgage-related terms defined below.
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A term of a mortgage loan where the lender can call for the borrower to pay back the entire amount of the loan immediately if the borrower defaults or stops making payments on the loan.
The type of interest that builds up because it is owed to the lender, but not being paid yet by the borrower. Some mortgage loans offer a no payment period where the borrower does not have to make payments for the first month or two, and during this time the interest that is adding up for the loan is just accrued, or added to the total amount owed for the loan.
A type of mortgage loan allowing the borrower to pay a lower interest rate for a set period of time, usually three years, and then once that fixed period is over the interest rate steadily increases over time. ARMs are good for people who do not plan to live in the home long or who plan to refinance before their fixed term is up.
The amount of time that is allowed from one increase in the mortgage loan interest rate to the next increase in interest rate. Many ARMs have terms that specify exactly how much the lender is allowed to raise the rate in a certain interval of time. The mortgage may state that they can only raise the interest rate 1/2% every six months, so six months is the adjustment interval.
The amount of money that is secured by the lender in an escrow account that is paid by the borrower at the closing of a loan. This money is a reserve for homeowners insurance and property taxes. Some mortgage lenders require this and some do not.
Also called a purchase agreement, the agreement of sale is a contract that the buyer and seller of a property sign listing the terms of the sale and the price the home to be purchased. At this time the buyer usually puts down an earnest money deposit, orders a home inspection and begins the process of appraisal.
Income verification that is done through paycheck stubs, bank statements, or W-2 forms rather than income tax returns.
A schedule showing the payments required to pay off the loan spanning the full term of the loan (i.e. monthly payments for 30 years). At the beginning of a loan borrowers are paying more interest and less principal, and at the end this is reversed.
Also called APR, this is the interest rate that includes the principal balance of your loan plus any closing costs, fees, finance charges, points, or mortgage insurance. If you finance any of these things into your loan then your APR is calculated including all of these costs.
The initial form a borrower must fill out to apply for a loan. Potential borrowers provide their personal and financial information to a lender to determine if they qualify for a home loan through the application process.
The fee associated with applying for a loan. Some lenders require this fee, and some lenders, like the VA and FHA do not allow a charge for applying for a loan.
The written estimate of market value price of a home. An appraisal compares a home with other homes that are of similar size and have similar attributes that have sold in the area recently. Then the appraisal is generated to estimate the value of the home.
A licensed professional that tours a home and collects information on the home and others in the area that are similar to generate the appraisal.
The transfer of property from one person to another. When property is transferred between owners the property is assigned to the new owner.
A fee paid to the county and the company that records the transfer of ownership of a property.
When a buyer takes over the existing loan on a home rather that applying for a new loan. This is done when the existing loan on the home has more favorable terms and a lower interest rate than the buyer can get with the current market rates. The terms of the existing loan must allow for assumption.
A reassurance for the seller that they have more than one offer. If the original buyer offer does not get their loan or pulls out of the deal, the seller knows there is a second offer waiting.
The amount that is due to pay off the loan. This is the original loan amount minus all principal payments and interest due to date.
A legal proceeding to relieve debt for companies or individuals who cannot pay their debt. Bankruptcy should be a last resort as it negatively affects a credit report and score for a full 10 years.
The total amount of the loan that includes any fees, closing costs, and other funds borrowed.
When property is gifted to a person from a will or estate.
When the borrower pays half of their mortgage payment every two weeks instead of one large payment once a month. This helps by not paying a full month of interest on the full amount owed which can lead to paying off a loan many years earlier.
A type of mortgage that covers more than one piece of property. If a borrower wants to purchase multiple properties they can all be financed into one “blanket” mortgage in order to avoid multiple closing costs and loan fees.
Also called the Mortgagor, this is the person who the lender gives money to for the purchase of a home.
The person who takes loan information from a borrower and shops around to multiple mortgage lenders to find the best deal for the borrower. Brokers are typically paid commissions and they may not show the borrower the best deal in all cases. Also, the borrower pays their fee at mortgage loan closing time.
The amount of money a person can afford to pay for living expenses and other needs based on a person's debt and their income. Budgets are important when a person is trying to determine how much of a monthly mortgage payment they can afford.
For adjustable rate mortgages, the cap marks the highest interest rate allowable for the term of the loan. There is also a payment cap, which is the highest a monthly mortgage payment can go. When a mortgage contract is signed the borrower should note the cap values, so they know the highest amount their monthly mortgage payment can be based on the interest rate and payment cap.
A repair or remodel of a property's structure or area that adds life to the property or value to the property.
A refinancing option for property owners allowing them to refinance their mortgage in order to take cash out of the built up equity in the home. Depending on the refinancing lender this cash may be used for home improvements, personal investments, purchases, education, or any other allowable expenses.
For veterans this certifies their eligibility to use the VA Home Loan Guarantee Program. A Certificate of Eligibility can be obtained by going to a VA approved lender and giving the veteran's personal information through the ACE system on the internet which will only take a few minutes. A Certificate can also be obtained by going to the VA's website and filling it out on-line or by mail.
A document from a title company certifying that the property is owned by the seller.
The title to the property is free of all liens and encumbrances and is ready for sale to the buyer without any claim by another party to ownership.
The meeting at the end of a property sale where the buyer signs all of the purchasing and mortgage paperwork and the seller signs all of the property sale paperwork in order to transfer the property to the new owner and legally ensure the transfer of funds and terms of payment for the new borrower's mortgage.
The fees and costs of the sale of a property. These fees and costs include the loan origination fee, appraisal fee, title fees, recording fees, lender fees, points, and any other necessary fees or costs like mortgage insurance premiums and broker fees.
Also referred to as a co-maker, this is the person who agrees to the same conditions of the sale and mortgage as the primary borrower. If for any reason the primary borrower fails to pay the mortgage, the co-borrower agrees to take full responsibility for payment of the mortgage loan. If there is derogatory action on the credit or in court proceedings, both the primary borrower and co-borrower are held equally liable.
Some type of asset guaranteeing the payment of a loan. For home loans, the lender holds a lien on the title of the property as collateral. This lien is not released until the loan is paid in full. In the case the home is sold, the lien holder will be paid what they are owed first and then the remainder of the sale proceeds would go to the seller.
The steps that a mortgage lender must take to make sure their loan is repaid in the case a borrower defaults on the mortgage contract. In some cases the lender makes arrangements to collect the past monies due and allows the borrower to continue making payments as usual and keep the home. When this is not possible then the collection may call for foreclosure proceedings.
The fee a borrower pays to a mortgage broker for finding and facilitating their mortgage loan. It is also a fee that is paid by the seller to a real estate agent for finding a buyer for their home.
A letter given as an offer to purchase a home. Usually this letter contains a price and terms or purchase offer.
A loan used for the purpose of constructing a new home. A construction loan can include the cost of the land, the home, and all amenities and landscaping for the home. The mortgage company will appraise the future value of the home to determine the amount that can be borrowed to build. They will also be in contact with the building company and release the money for the home directly to the builder in increments on a fee schedule as the home is being built.
Also called credit bureaus, the three largest consumer reporting agencies are Equifax, Experian, and Transunion. They keep track of positive and negative credit reports from lenders so that other lender can use the credit history to determine the creditworthiness of a borrower.
A condition of sale for a property. The buyer and seller may agree on a price, but this may be contingent on the appraisal or the home inspection.
A written or oral agreement that binds two parties to do what is agreed upon.
A mortgage loan that is funded through a mortgage company on traditional terms and not guaranteed by the government through the VA or FHA.
For adjustable rate mortgages, there may be an option to convert to a fixed rate mortgage in the contract. This way a total refinance would not be necessary. The borrower could convert the ARM into a fixed rate mortgage without paying all of the fees associated with a total refinance. However, there may be a fee associated with the conversion.
When a person agrees to take an item or service based on their future intentions to pay for the item or services.
The past records of a how a person pays their credit and who has extended them credit for what items.
The records for each particular person from the credit reporting agencies that show all of their past and current creditors, balances owed, payment history, credit inquiries, and more.
The amount of money that is owed by a particular person to creditors.
A document that shows who is the owner of title to property which must be legally recorded by the county in which the property is located.
The deed is given to the mortgage company in lieu of the loan amount borrowed in order to satisfy the mortgage debt owed. Borrowers may do this to avoid foreclosure in the case that they have fallen onto circumstances that make it impossible to continue paying their current mortgage amount.
When a borrower does not make their monthly mortgage payment they go into default with the lender, which means that they are not keeping up with the mortgage contract as agreed.
When a borrower does not make their monthly mortgage payment by the date due.
This is also called earnest money. This is when a buyer will put down money on a home in order to keep the seller from selling the home to another buyer while they go through the process of closing their mortgage loan and purchasing the home.
The value of property declines. Depreciation is tax deductible.
The amount of money a borrower intends to pay up front for the property they are purchasing. The higher the down payment, the more likely the borrower will get the loan with better terms and a lower monthly mortgage payment.
A provision in a mortgage contract allowing the lender to take back the full amount due on the mortgage lien at the time the home is sold.
This is a specific amount of money that a buyer will give to a seller to hold a house with the intent of purchasing the home as long as the appraisal and home inspection are good.
The part of a property that may be given access to for the city or county the property resides in. This is for electric poles and lines, gas lines, sewer lines, tree removal that may damage these utilities, and other reasons.
This is the amount of income a person receives that includes overtime pay, holiday pay, tips, and wages. This takes into account the total income of the mortgage loan applicant which includes multiple jobs and self employment income sources.
Any right to or dispute over a property that makes it difficult to transfer a property free and clear of liens or debts. For instance, a mortgage lien is an encumbrance, but a neighbor's fence on your property is also an encumbrance, because there is a property division problem in this case.
The person who signs over the interest in ownership of a property to a new owner.
For VA Home Loans, a veteran must prove they are entitled to this benefit in order to use it. The veteran must obtain a Certificate of Eligibility as proof.
Also known as ECOA. This is a law established by the Federal Government requiring lenders to equally offer credit to all borrowers only based on their income and credit eligibility. All people will receive the same chances regardless of race, age, sex, sexual orientation, religion, ethnicity, marital status, color, or other factors.
The amount of value a property has minus what is still owed on the mortgage loan. For instance, if the property would sell right now for $100,000 and the balance of the mortgage loan is only $75,000 then the owner owns 25% of the home and has $25,000 built in equity.
Where a third party, usually a law firm or title company, plays the middle entity by making sure a fair trade is made between the interested parties. In the case of a home loan, the escrow company would take the money from the mortgage lender and keep it safe until the borrower gave the escrow company their down payment, closing costs, and signed the closing paperwork. Once everything is legally in place the seller will get their money and the buyer will get their home. Escrow accounts are also used to hold money for property taxes, mortgage insurance, and homeowners insurance when necessary.
When the escrow company occasionally reviews the account to see if the funds charged for the homeowner's expenses are the right sum. Sometimes the amount paid to escrow will increase or decrease depending on this review.
The total amount of all assets a person has at the time of his or her death.
When a title company reports on the results from searching public records of a property title for sale.
A Federal Law protecting consumers from fraud and incorrect information damaging their credit history, credit score, and credit report. It also established certain procedures for credit reporting agencies for garnishing information for inquiring companies and individuals.
The amount a home could be sold for at the current market value based on the real estate market, the amount other similar homes in the area have sold for recently, and the price the buyer and seller agree on.
A company chartered by the U.S. Government offering the most funds for home mortgages.
An organization offering home loans to farmers who cannot get conventional loans based on income, employment, and other qualifications.
Also known as the FHA, this entity is part of the U.S. Department of Housing and Urban Development and offers home loan guarantee programs to buyers. People who are interested in an FHA home loan need to apply with an FHA approved lender and follow FHA guidelines. The FHA will guarantee a portion of the loan so it’s easier to qualify for a loan for the borrower.
A fee paid to a mortgage broker for the service of their finding a mortgage for a borrower.
When the first interest rate increase occurs on adjustable rate mortgage loans.
The primary or first lien holder on a property. The first mortgage lien holder always takes precedence over all other liens on the property when it is sold or foreclosed.
The most widely used type of mortgage, because it allows for the borrower to keep a constant and steady payment for the life of their home loan. Fixed rate mortgages have a fixed interest rate for the entire term of the loan.
Most average homeowners insurance does not cover floods. This type of insurance covers flood damage to a property and is required by lenders if your home is located in a Federal flood area of the country.
Action taken by the lender when a borrower stops making their home loan payments and does not contact or is not willing to receive communications from their lender. Foreclosures are court proceedings that strip the borrower of their rights to the property as a result of breaking the legally binding mortgage loan contract.
A company commissioned by the Federal Government to purchase conventional mortgage loans from lenders in order to provide a secondary market for home loans.
A type of mortgage where the payments start out low, then gradually increase over time to a specific point where they level off and stay the same again. At the beginning of this loan the payments are so low that negative amortization occurs and that amount of interest is added on to the total principal of the loan to be paid later when the payment amounts increase. These types of loans are becoming less common because of new mortgage regulations.
A promise to fulfill an obligation for another party in the case that party does not fulfill the obligation on their own. For instance, the FHA and VA offer home loan mortgage guarantees that offer a warranty to the lender in the event the borrower does not fulfill their obligation to pay, which will give a specified amount of that loan back to the lender.
Also called homeowners insurance, this is insurance protecting against damage to a property from natural disasters, vandalism, fire, weather damage, and more. The amount and extent of insurance coverage depends on the specific policy.
A credit line from a bank or credit union allowing a homeowner to tap into the equity of their home when they need it. The amount of the credit line and interest rate is established and then used like a credit card. The property owner can use the money, pay it back, and the credit line stays open for future needs.
A type of loan that puts a second lien on the home, so the homeowner can take cash out of the equity they have built in the home.
When a professional inspector comes to the property for sale and looks over all major systems and structural components of the home to make sure there are no problems or large expenses that need fixed.
A contract offering additional coverage and protection for home buyers. It usually covers the cost of repairs or replacement for large expense home items such as appliances, mechanical systems, roofs, and other areas that may have problems missed by the home inspector.
The equation used to determine the amount a buyer can afford to pay for a home. It is the total of all of the housing payments including the property taxes, homeowners insurance, mortgage payment, and mortgage insurance if needed. This total is divided by the monthly income to get the ratio.
Also known as the Department of Housing and Urban Development, the HUD has programs for low interest rate mortgages and homes for sale.
Also called homeowners insurance, this insurance protects against damage to a property from natural disasters, vandalism, fire, weather damage, and more. The amount and extent of insurance coverage depends on the specific policy.
An interest rate published that helps to determine the current market rate for adjustable rate mortgages.
When a specific amount of money is paid annually or monthly as a premium to protect against damage or loss.
A type of loan financing new construction and is typically replaced by a normal mortgage loan once the construction is completed.
A home, condominium, apartment building, duplex, commercial property, or any other type of property used for the purpose of accruing equity or income through collecting rent money.
A person, company, or entity that puts money or assets into an investment to yield returns.
A legal claim granted by a judge through the court system allowing a creditor or lender to hold a lien on a property.
A loan exceeding the conforming loan limit set by Fannie Mae. Any loan higher than the Fannie Mae loan limit is considered jumbo and usually has a higher interest rate as a result.
An arrangement between a seller and a buyer where the buyer is allowed to rent the home for a specific period of time before they purchase. This is usually done to give the buyer time to save a larger down payment or clear up derogatory credit issues.
The company, like a credit union, bank, or mortgage lender offering loans to borrowers.
A claim put on a property for a certain amount or value owed to a creditor or lender. These types of claims can be agreements between the property owner and lien holder, such as a mortgage loan, or court orders such as a debt.
The highest interest rate a borrower with an adjustable rate mortgage loan can be charged. The interest rate may vary, but it can never go higher than the cap.
Also known as LTV, this is the amount of the fair market appraised value of the home compared to the amount of the mortgage loan on the property. For example, if the home is currently appraised at $100,000 and the borrower owes $60,000 on the mortgage loan, then it is a 60% loan. Lenders like to see higher owner equity which leads to more favorable terms and interest rates during refinancing because there is less risk of default and foreclosure when an owner is more financially invested in a home.
The period of time in which a borrower can get a mortgage loan for a specific interest rate. A lender will lock an interest rate for a borrower in order to give them time to find a home they want to purchase after pre-qualifying, or to get the paperwork they need to finalize the loan.
A written agreement between a buyer and a lender locking in a specified interest rate and loan terms as long as the loan is closed by a certain date.
The percentage amount a lender will add to the index interest rate in order to determine what interest rate will be charged on adjustable rate mortgage loans.
The property value at a current rate of sale. If the real estate market is growing in an area the market value could increase daily. This value represents what a buyer would pay for a property in a certain area, and what the seller would sell it for.
A legal contract between a lender and a borrower where the lender offers a specified amount of money to the borrower providing that the borrower agrees to the terms of the loan and a lien is held on the property until the debt has been fully paid.
A person or company assisting a borrower in obtaining a mortgage in exchange for a fee or commission.
An insurance policy for homeowners allowing their mortgage to be paid if they become sick or disabled.
An insurance policy required by some lenders for borrowers who have under a 20% down payment. The insurance guarantees the recovery of the loan if the borrower defaults and foreclosure occurs.
Also known as MIP, this is the amount of money a borrower must pay at the closing of the loan, and as part of the monthly mortgage payment until they have reached a minimum of 20% equity in the home.
When a mortgage lender is willing to refinance or extend the term of a loan in order to lower the monthly payments so a borrower will not have to face foreclosure.
The lender or company that has a lien on the title of a property in return for lending money to the buyer at specified terms.
Borrower of a mortgage loan who agrees to the terms of the loan.
When the amount of money a borrower pays for their monthly mortgage payment does not pay the full amount of interest due that month. The extra interest is added to the principal of the loan making the principal of the loan increase instead of decrease like a traditional loan. This can take place with interest-only loans and adjustable rate mortgages that have a monthly payment cap, but the interest rate allows for the extra left over because of the monthly payment cap to be added to the principal of the loan.
The borrower's annual income after they pay taxes.
Part of the terms of a mortgage loan contract stating the borrower cannot allow another person to assume the mortgage loan without the approval of the mortgage lender.
Also known as stated income, these are programs offered by mortgage lenders where the borrower does not have to prove or verify their income in order to get a loan. Usually there is a credit score minimum for people seeking no income verification loans.
Also known as a jumbo loan, these types of loans are higher than the limit set by Fannie Mae, which means they will not purchase the loan in the secondary market. Because of this, the interest rate on the loan is usually higher and the terms are less favorable for the borrower.
A contract agreement stating a borrower will pay a lender a specified amount of money by a certain date.
When a buyer shows their interest in purchasing a home by negotiating a price for the home and putting it in writing. When an offer is made the buyer usually offers a small down payment or earnest money in order to hold the home.
The process undertaken by the mortgage lender where they prepare a loan application to be processed and evaluated for consideration of funding and includes an appraisal of the property to be purchased, a credit history and score check of the potential borrower, and income verification.
Also called a loan origination fee, this is the cost a lender charges a borrower to do the paperwork for their loan.
When the current owner of the property finances it for the buyer. This usually occurs when the buyer can't get a mortgage loan due to credit issues and the seller allows the buyer time to fix these issues and get a loan in the future while still purchasing the home. Sellers may also want to do this, because it can be a good investment. Buyers who have credit issues but high stable income may be willing to pay a much larger interest rate than a seller can get in the investment market.
When a borrower is late with mortgage payments, so they take out a loan from HUD in order to get caught up on their mortgage payments and keep their home.
The highest amount an interest rate or mortgage payment can increase in a specified period of time for adjustable rate mortgages.
Also called an end loan, this is a loan for a term of more than 10 years.
An abbreviation for the principal, interest, taxes and insurance that are all part of the monthly mortgage payment.
A savings account the borrower opens where the money in the account plus the interest from that money is used to pay off the principal of the mortgage loan.
One point is usually worth 1% of the mortgage loan. Points are paid up front when a mortgage loan agreement is made and are used to get a lower interest rate or more favorable terms. If a borrower does not want to pay any points, the interest rate will be higher.
A legal document giving someone legal rights of law to speak and sign documents for someone else. Usually parents will award their children power of attorney when they are too old to make sound decisions for themselves.
The process of getting approved by a mortgage lender for a specified amount of money based on verifying personal information, so the borrower can look for a home within the amount for which they have been preapproved. After the borrower makes an offer on a property, the final approval is made.
When a property owner sells their home while they are in default to satisfy their mortgage lender and avoid foreclosure.
Costs associated with a home that have been paid in advance by the current owner and are paid back upon the sale of the home by the new owner.
A mortgage lender will consider the income of a potential borrower and let them know the amount they may qualify for based on the verification of their information.
A specific amount of money paid insuring an interest in something in the case of loss or damage.
The pay off of a mortgage in advance of its schedule.
A fee charged to the borrower by the lender if they try to pay off their mortgage ahead of time. Lenders like to impose these terms for a specified amount of time on a mortgage to guarantee they get a certain return on their investment.
The initial mortgage lender where borrowers get their mortgage loans. This includes credit unions, banks, and mortgage companies.
The amount of money owed to a lender by a borrower at a specific point in time. This does not include the interest that is owed on the mortgage.
Also called PMI, this is insurance protection by a private company insuring mortgage lenders will get back a certain amount of money in case the insured borrower defaults on the loan.
A ratio used to establish how much a borrower is eligible to get a loan determined by comparing the gross monthly income to the fixed monthly expenses.
A gas found in some homes that may cause health problems for the occupants. This often tested for in the home before a sale is completed.
The annual interest rate on a mortgage loan.
The maximum interest rate that can be charged on a mortgage loan.
An agreement between a lender and a borrower for a specific interest rate as long as the loan closes within a certain amount of time.
A professional who helps buyers find a home they want, negotiate the offer for the price of the home, and finalize the details of the sale. For sellers they help with the same process, but the sellers of the home pay a commission for this service.
Fees paid by the borrower so the new record of ownership and title are recorded by the county in which the property is located.
A mortgage loan allowing for part of the loan to be used to fix the home.
When a current mortgage loan holder gets a new mortgage loan to replace their existing loan. Borrowers want to refinance when their current loan conditions are not as favorable as they can get with a new loan, or if they need to take cash out of the equity in their home.
When a contract is cancelled by the borrower typically because they change their mind about taking the mortgage loan. When refinancing a mortgage, borrowers get a 3 day cooling off period after they sign closing paperwork in order to change their mind.
A mortgage loan for senior citizens who already own their home or only owe a little. This mortgage gives money out of the equity of the home to the homeowners. In exchange the principal loan plus interest is paid back to the lender once the owner moves out of the home, or the property is sold.
When a borrower takes another mortgage on their home rather than refinancing their current mortgage. Sometimes this happens, when the borrower has great terms on their first mortgage and doesn’t want to refinance those terms. The borrower may want to get some cash out of the equity of the home to do home improvements or pay for a large expense, so they get another small mortgage to accomplish their goal. The small mortgage may have a higher interest rate, but it is potentially better to pay a high rate on a smaller loan than to refinance the entire mortgage to a higher rate and lose a large amount of money over time in interest payments.
The market that exists to purchase mortgages from lenders for investment purposes. Freddie Mac is a secondary mortgage buyer that was established by the U.S. Government, so it would be easier for people to get mortgage loans as the lender has the option of selling the loan rather than servicing it for the full term of the loan.
When the current owner of the property offers financing to the buyer in an agreement where the buyer usually assumes the mortgage loan after a period of time.
The process of keeping the loan in good order by collecting mortgage payments, homeowners insurance, mortgage insurance, and property taxes from the borrower.
An alternative name for the closing of a loan.
An alternative name for closing costs.
Basic flat rate interest charged on the principal balance of a loan.
Used by lenders when borrowers have special circumstances during which the lender agrees to suspend or reduce monthly mortgage payments for a certain length of time. This allows the borrower to catch up financially, so they don’t go into default and lose their home to foreclosure.
Something in a lesser position than something else. For mortgages, the second mortgage loan is subordinate to the first mortgage loan in title to the property.
A document created to show the property boundaries and measurements of a parcel of land. This is done in order to make sure there are no encumbrances on the property.
When people build equity in their home through do-it-yourself improvements on the building or property. These improvements make the property more valuable and add equity to the home.
When two or more people have an interest in a property.
The duration of a mortgage loan is expected to be paid in full including interest. There are various terms for different mortgages and can be up to 40 years in length.
The recorded proof a property legally belongs to a specific person or entity.
The program through the FHA allowing borrowers to get a loan for necessary home improvements.
The insurance guaranteeing a buyer and their lender are protected from loss due to unexpected or overlooked liens or encumbrances on the title of a property.
What a title company performs in order to determine what liens and encumbrances are on a property so it can be paid and cleared for sale to a new owner.
The ratio resulting from taking a borrower's monthly debt amount including house payment, and dividing this amount by their total monthly income.
Known as a Premier mortgage, this is a type of mortgage where the lender gets a low interest rate for a specified period of time, and the interest rate is adjusted to current market rates or called in for full payment.
The process by which the lender determines if the borrower is worthy of the loan. They look at all of the information from the borrower including employment, income, debt, credit, and more, and weigh these outcomes with the risk of non-payment.
Interest charged that goes above the rate allowable by law.
Also known as the VA, this government agency offers benefits to military veterans and their families.
Part of the VA benefits including a Home Loan Mortgage Guarantee Program in which veterans can get home loans at low interest rates, with zero down payment and low closing costs. They can also get loans to remodel their home, for energy efficient home improvements, for disability home renovations, and more. Veterans must go through a process to apply for these loans and qualify just like with traditional loans.
When a veteran gets a loan from the VA, they have to pay a one time per loan funding fee to cover the costs of the loan. This funding fee is a percentage of the loan and is charged for each VA loan that is guaranteed by the VA.
The VA Home Loan Guarantee Program has loan limits that vary depending on the area of the country a loan is being procured in and the circumstances of the loan.
Also known as an adjustable rate mortgage loan, this loan starts out at a low interest rate for a set amount of years. Then the rate becomes variable and changes over the rest of the mortgage term.
A document from the bank, credit union, or financial institution of the borrower serving as verification of their financial accounts.
A letter from the employer of the borrower verifying their salary and position at the company they work for.