Buyers Market Market conditions that favor buyers. With more sellers than buyers in the market, buyers have ample choice of properties and can negotiate lower prices.
Closing Costs Fees incurred in a real estate or mortgage transaction and paid by borrower and/or seller during the closing of the mortgage loan. These fees typically include a loan origination fee, discount points, attorney’s fees, title insurance, appraisal, survey, and any items which must be prepaid, including taxes and insurance escrow payments.
Credit Report A financial report detailing the credit history of a prospective borrower, used to help determine creditworthiness.
Credit Risk The possibility that the borrower may default on financial obligations to the investor.
Debt-to-Income Ratio The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her gross monthly income.
Equity Loan A loan based on the borrower’s equity in his or her home.
Escrow Account Account held by lender containing funds collected as part of mortgage payments for annual expenses such as taxes and insurance, so that the homeowner does not have to collect a large sum when these fall due.
Escrow Waiver When a buyer borrows less than 80% of the cost of the house, he may pay a one-time fee and elect not to open an escrow account, but to pay the hazard insurance and property taxes himself.
Fixed Rate An interest rate, which is fixed for the term of the loan.
Fixed-Rate Mortgage A mortgage whose interest rate does not change for the life of the loan. Payments are also fixed.
Interest Fee paid for borrowing money, calculated as a percentage of the amount borrowed.
Interest Rate The periodic charge, expressed as a percentage, for use of credit.
Lender The bank, mortgage company, or mortgage broker offering the loan.
Loan Application Document required by lenders prior to loan approval containing detailed information about the borrower and property.
Loan Application Fee Fee paid by prospective buyer to lender when applying for a mortgage.
Loan Origination Fee Fee charged by a lender for processing a mortgage, usually expressed as a percentage of the loan (or points), which pays for the work in evaluating and processing the loan.
Loan Servicing The collection of mortgage payments from borrowers and related responsibilities (such as handling escrows for property tax and insurance, foreclosing on defaulted loans and remitting payments to investors).
Net Amount or value after a deduction, usually after taxes.
Power of Attorney A Legal document authorizing one person to act on behalf of another.
Primary Mortgage Market Includes banks, savings and loans, credit unions, and mortgage bankers who make mortgage loans directly to borrowers. These lenders sometimes sell their mortgages to lenders like FNMA in the secondary mortgage market.
Prime Rate The lowest commercial interest rate charged by a bank on short-term loans.
Principal The amount of debt, not counting interest, left on a loan.
Refinancing The process of paying off one loan with the proceeds from a new loan secured by the same property.
Tax Lien Claim against a property for unpaid taxes.
Tax Sale Public sale of property by a government authority as a result of non-payment of taxes.
Term The number of years it will take to pay off a loan.
Title A document which gives evidence of ownership of a property as well as the rights of ownership and possession of that property.
Title Company A company that insures title to property.
Title Insurance Insurance which protects the lender (lender’s policy) or the buyer (owner’s policy) against loss due to disputes over ownership of a property.
Underwriting The process of verifying data and evaluating a loan for approval. The underwriter gives the final loan approval.
Waiver Voluntary relinquishment or surrender of some right or privilege.
“Mortgage lending is our business, customer service is our passion.”
NMLS 65495
