Annual Percentage Rate (A.P.R.) - The actual interest rate for the projected life of a mortgage. This takes into account points showing the payment amount, interest, principal and unpaid balance for the entire term of the loan. It's found on TIL - Truth in Lending.
Appraisal - Estimate of a property's value as of a given date, determined by a qualified professional appraiser. The value may be based on replacement cost, the sales of comparable properties or the property's ability to produce income.
Closing Costs - Cost payable by both seller and buyer at the time of settlement, when the purchase of a property is finalized. These costs can be up to ten percent of the mortgage amount. (It is sometimes written out as "CC").
Commitment Fee - A fee charged when an agreement is reached between a lender and a borrower for a loan at a specific rate and points in which the lender guarantees to lock in that rate.
Conventional Loan - A mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA) or Rural Economic Community Development (RECD) (formerly known as Farmers Home Administration.)
Debt-to-Income-Ratio - The ratio between a borrower's monthly payment obligation divided by his or her net effective income (FHA or VA loans) or gross monthly income (conventional loans). (It is sometimes written out as "DTI").
Down Payment - The difference between the purchase price and mortgage amount. The down payment becomes the property equity. Typically is should be cash savings, but it can also be a gift that is not to be repaid or a borrowed amount secured by assets. This effects your Loan-to-Value / LTV.
Earnest Money - Deposit in the form of cash or a note, given to a seller by a buyer as good faith assurance that the buyer intends to go through with the purchase of a property.
Escrow - The holding of documents and money by a neutral third party prior to closing; an account held by a lender (or services) in which a homeowner pays money for taxes and insurance.
FHA (Federal Housing Administration) - An agency within the Department of Housing and Urban Development that sets standards for underwriting as well as insures residential mortgage loans made by private lenders.
Fixed-Rate Mortgage - A mortgage whose rate remains constant throughout the life of the mortgage.
Good Faith Estimate - An estimate on closing costs and monthly mortgage payments provided by the lender to the homebuyer within 3 days. It is sometimes called a "GFE".
Homeowners Insurance - A form of insurance that protects the insured property against loss from theft, liability and most common disasters. (It is sometimes written out as "HO Ins.")
Lock-In - The guarantee of a specific interest rate and/or points for a specific period of time. Some lenders will charge a fee for locking in an interest rate.
Mortgage Insurance Premium (MIP) - Money paid to insure the lender against loss due to foreclosure or loan default.
Origination Fee - A fee charged that a lender charges to originate and close a mortgage loan. Origination fees are usually expressed in points.
Pre Qualification - Tentative establishment of a borrower's qualification for a mortgage loan amount of a specific range, based on the borrower's assets, debts and income.
HUD-1 - Required as part of hte Real Estate Settlement Proceedures Act (RESPA), the final HUD-1 or HUD-1A allows the borrower to know specifically the costs of the loan and to whom the fees are being allotted.
Closing Table - An industry slang term referring to the actual place the residential mortgage closing takes place (in NC it's normally at a conference table at the attorneys office).
Title Insurance - A policy issued by a title insurance company insuring the purchaser against any error in the title search. The buyer, the seller or both may pay for the cost of the title insurance.
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