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Whats is ARM?

Adjustable Rate Mortgage. A mortgage with an interest rate that changes periodically, up or down, based on an interest rate index.

Whats is Caps?

A provision in an ARM that limits how much the interest rate or mortgage payment may increase, both at each adjustment period and over the life of the loan.

Whats is Conventional Mortgage?

Any loan being underwritten to meet FNMA or FHLMC guidelines.

Whats is FANNIE MAE (FNMA)?

Chartered by the Federal Government, but is owned by stockholders. FNMA establishes the guidelines for underwriting and servicing conventional loans.

Whats is FHA?

The Federal Housing Administration. This government entity insures loans to protect lenders with certain standards of qualification for both the buyer and the property.

Whats is FREDDIE MAC (FHLMC)?

Chartered by the Federal Government, but is owned by stockholders. FHLMC establishes the guidelines for underwriting and servicing conventional loans.

Whats is LTV or Loan To Value Ratio?

A percentage which reflects the amount of the loan as a portion of the value of the home. The loan amount and the lesser of the appraised value or the sales price are used to calculate LTV.

Whats is Non-conforming (Jumbo) Loan?

A conventional mortgage greater than the FNMA/FHLMC lending limit.

Whats is Non-qualifying Properties?

A residential property which does not qualify for one of the traditional mortgage plans, but may be appropriate for a specialized loan program.

Whats is Non-owner Occupied?

Refers to a property which the borrower does not intend to occupy as his/her permanent, year round residence and generally is purchased for the express purpose of creating income through rent or resale, I.E., and investment property.

Whats is PITI?

Principal, Interest, Taxes, and Insurance - used to indicate what is included in a monthly payment on real property. PITI are the four major components of a usual monthly payment.

Whats is PMI?

Private Mortgage Insurance: Insurance provided by non-government insurers that protect lenders against loss if a borrower defaults. Usually, there is an initial monthly or annual premium paid by the borrower at closing. This insurance is usually required if the loan is more than 80% of the sales price or appraised value of the property.

Whats is Points?

Sometimes called discount points. Each point is equal to 1 percent of the loan amount and allows you to buy down the interest rate. (One point on a $50,000 mortgage would be $500.) Points are paid as a one-time expense at closing and are considered prepaid interest.

Whats is Second Home?

A property that is owned for recreational or retirement purposes and which is not the borrower’s year-round permanent residence. Second homes cannot be subject to rental or time-share programs.

Whats is Servicing?

Sometimes called Loan Servicing or Loan Administration. Refers to the monthly collection of principal, interest, taxes, and insurance on behalf of the note holder or investor.

Whats is Survey?

A drawing showing the legal boundaries of the property and all its improvements. It should reflect that there are no encroachments, protrusions, or easements which affect the livability of the property.

Whats is Title?

A legal document establishing the right of ownership.

Whats is Title Policy?

An insurance policy, purchased at the closing of the loan, that protects the buyer and/or the lender against loss arising from disputes over ownership of a property. Lenders require a mortgagee’s policy. Buyers should strongly consider an owner’s policy.

Whats is VA?

The Department of Veterans Affairs, formally know as the Veteran’s Administration. Allows qualified veterans to borrow at a very high loan to value percentage. VA charges the veteran a fee for this privilege.