- LTV (Loan To Value) - a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.
- DTI (Debt To Income Ratio) - a comparison or ratio of gross income to housing and non-housing expenses
- PMI (Private Mortgage Insurance) - insurance purchased by a buyer to protect the lender in the event of default. The cost of mortgage insurance is usually added to the monthly payment.
- GFE (Good Faith Estimate) - an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.
- FHA (Federal Housing Administration) - established in 1934 to advance home-ownership opportunities for all Americans; assists home-buyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.
- FICO (Fair Isaac Corporation) - FICO is an abbreviation for Fair Isaac Corporation and refers to a person's credit score based on credit history. Lenders and credit card companies use the number to decide if the person is likely to pay his or her bills. A credit score is evaluated using information from the three major credit bureaus and is usually between 300 and 850.
- HUD1 (Settlement or Closing Statement) - it itemizes all closing costs; must be given to the borrower at or before closing. Items that appear on the statement include real estate commissions, loan fees, points, and escrow amounts.
- LOX (Letter of Explanation) - A letter of explanation is often times needed by the lender to help clarify and solidify an understanding of the issue in question.
- HELOC (Home Equity Line of Credit) - a mortgage loan, usually in second mortgage, allowing a borrower to obtain cash against the equity of a home, up to a predetermined amount.
- ARM (Adjustable Rate Mortgage) - a mortgage loan that does not have a fixed interest rate. During the life of the loan the interest rate will change based on the index rate.
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