Mortgage in basic:

1- Mortgage Approval: 

– To get approval for a mortgage requires certain conditions established by a lender, which may be different depending on the program provided .

-In addition to personal qualifying factors, a property must also meet certain standards set by lenders before a borrower can obtain a mortgage loan secured by real estate.

  1. Monthly Payments
    A fixed 30 or 15 years loan which include principal and interest is a traditional loan. There are interest only loans as well if you are interested.
  2. Mortgage Programs
    Mortgage Programs come in many different types  depending on the down payment and type of the loan like CONVENTIONAL ,FHA,VA or NO DOC.
    There are also federally insured mortgages, such as FHA or VA loans, which have more flexible qualifying guidelines.
  3. Closing Costs / Fees
    Fees are mostly different depending on the full doc or no doc program .There are other fees like  Appraisal, pre-paid property taxes, insurance and interest, HOA dues if applicable and inspections are a few additional expenses you should be ready for.
  4. Mortgage Rates
    Mortgage interest rates may change till they are locked in an escrow, so the rate that you get is approximate when you apply for a loan till it’s locked.

Below is a glossary of commonly used vocabulary in finance:

  • Construction Loan

    A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he or she progresses.

  • Contract Sale or Deed

    A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

  • Conventional Loan

    A mortgage not insured by FHA or guaranteed by VA.

  • FHA Loan

    A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the country.

  • FHA Mortgage Insurance

    Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.

  • Jumbo Loan

    A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

  • VA Loan

    A long term, low-or-no down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.

  • NO DOC LOAN

    Alternative ways for qualifying rather than traditional methods, for more detail talk to one of our specialists

  • Mortgage Insurance

    Money paid to insure the mortgage when the down payment is less than 20 percent. See private mortgage insurance, FHA mortgage insurance.

  • Qualifying Ratios

    Calculations used to determine if a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

  • Credit Report

    A report documenting the credit history and current status of a borrower’s credit standing.

  • Credit Risk Score

    A credit risk score is a statistical summary of the information contained in a consumer’s credit report. The most well known type of credit risk score is the Fair Isaac or FICO score. This form of credit scoring is a mathematical summary calculation that assigns numerical values to various pieces of information in the credit report. The overall credit risk score is highly relative in the credit underwriting process for a mortgage loan.

  • 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. See housing expenses-to-income ratio.

  • Verification of Deposit

    (VOD) A document signed by the borrower’s financial institution verifying the status and balance of his/her financial accounts.

  • Verification of Employment

    (VOE) A document signed by the borrower’s employer verifying his/her position and salary.

  • Deed of Trust

    In many states, this document is used in place of a mortgage to secure the payment of a note.

  • Default

    Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

  • Deferred Interest

    When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization.

  • Delinquency

    Failure to make payments on time. This can lead to foreclosure.

  • Discount Point

    One point means %1 of the loan and it is a fee charged on some loans.

  • Earnest Money

    Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

  • Equal Credit Opportunity Act

    (ECOA) A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

  • Equity

    The difference between the fair market value and current indebtedness, also referred to as the owner’s interest. The value an owner has in real estate over and above the obligation against the property.