Mortgage Vocabulary Flashcards
Earnest Money Deposit
Deposit on property from buyer to seller given as part of the purchase price.
Equity
Equity is the difference between what you owe on your mortgage and what your home is currently worth.
ex. market value : 200,000
equity : 50,000
what is owed : 150,000
Escrow
Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met (such as the fulfillment of a purchase agreement).
Buy Down
A buy down is a way for a borrower to obtain a lower interest rate by paying discount points at closing.
(Although the payments will be initially low they will increase when the subsidized expires)
Subsidized
Supported Financially
PITI
Principal Interest Tax & Insurance
Realtors
a person who acts as an agent for the sale and purchase of buildings and land; a real estate agent.
Real Estate Agent
A real estate agent is a licensed professional who guides buyers and sellers through real estate transactions.
Lock
A lenders guarantee that the mortgage rate quoted will be good for a specific number of days
Impounds
Impound accounts hold funds to pay your property taxes, homeowners insurance, and perhaps other accounts like flood insurance or HOA dues.
Installments
Monthly Payments
Investor
A money source for a lender
Firm Commitment
A promise by FHA to insure a mortgage loan for a specific property and borrower
Hazard Insurance
A form of insurance
Flood Insurance
Insurance for homes/ Condos in flood zone areas
DSCR
Debt Service Coverage Ratio
The DSCR shows investors whether a company has enough income to pay its debts.
ATR
Ability to repay
DTI
Debt to Income
NIV
No Income Verification
Acceleration Clause
An acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if certain requirements are not met.
Amortization
Amortization is a way to pay off debt in installments that include varying amounts of interest and principal payments over the life of the loan.
BPO
Broker’s Priced Opinion
AMC
Appraisal Management Company
Appraisal
An estimate of the value of the property made by an “ appraiser “
Annual Percentage Rate (APR)
Annual Percentage Rate (APR) is the interest charged for borrowing that represents the actual yearly cost of the loan expressed as a percentage.
Balloon Mortgage
a mortgage in which a large portion of the borrowed principal is repaid in a single payment at the end of the loan period.
Mortgage Title
A house title is the ownership record of a property. The title shows who’s owned the property in the past, contains a physical description of the property and shows any liens on it. If you just bought the home, your mortgage will be on the title as a lien.
Cash Flow
the total amount of money being transferred into and out of a business, especially as affecting liquidity.
Liquidity
Liquidity refers to how easily an investment can be sold for cash.
Closing Cost
Closing costs are processing fees you pay to your lender when you close on your loan.
Wet Funding
Wet Funding is a mortgage loan origination where closing and funds are supplied once loan documents have been signed by the borrower(s).
*Funds released immediately
Dry Funding
In effect, a dry closing is a form of real estate closing in which all requirements are met except for the actual disbursement of funds.
