"Customer for Life" service means explaining the terms 
                                           you will hear during the loan process . . .



Adjustment Date: The date on which the interest rate changes for an adjustable mortgage (ARM).

Amortization: The continuous regular payment of a set amount on a loan, which will reduce and payoff the principal in a given period of time.

Amortization Schedule: A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance.

Annual Percentage Rate (APR): The total cost of a mortgage stated as a yearly percentage of the loan amount; including such items as interest, private mortgage insurance, and discount points.

Appraisal: A professional written opinion of the market value of a property in comparison to other similar properties in the area by a licensed appraiser.

ARM Loan (Adjustable Rate Mortgage): A mortgage with an interest rate and payment that changes periodically over the life of the loan based on the change in the specific index.  Adjustable rate mortgages may have features that allow for the interest rate and payments to be fixed for an initial period (3 years, 5 years, 10 years) and thereafter adjusting periodically based on the specific index.

Assumable Mortgage: A mortgage that can be taken over ("assumed") by the buyer when a home is sold.

Assumption: The transfer of the sellers existing mortgage to the buyer.

Balloon Payment: Usually, a short term fixed rate loan that involves monthly payment for a certain period of time and one large payment at the end of the contract for the remaining balance.

Buy-Down: A loan that is bought down by any party (builder, lender, borrower, or seller) below its original interest rate and/or payment, often done to help buyers qualify.  A permanent buy-down will reduce the interest rate and payment for the life of the loan.  A temporary buy-down will reduce the payments on the loan only in the beginning years.

Cap: Provision of an ARM mortgage that limits how much the rate and payments can increase or decrease each year.

Cash-out Refinance: A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens.

Closing Costs: Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property.  Closing costs normally include an origination fee, discount points, an attorney's fee, taxes, title insurance, survey and any other costs assessed at settlement.  Also called "settlement costs."

Compensating Factor: A positive factor that can help to influence the loan approval.  Long term good credit, a large amount of assets, or increasing income are some examples.

Conforming Loan: In mortgage lending, a loan that conforms to the guidelines set forth by FNMA or FHLMC. 

Construction to Permanent: A mortgage loan which provides funds for the construction or renovation of a residential property.  During the construction/renovation phase, funds are disbursed based on completion of the construction.  The construction phase may be up to twelve months in duration and requires payment of interest only on the outstanding balance. Upon completion, the mortgage is modified to a fixed rate or adjustable rate mortgage amortized for 30 or 15 years.  A benefit of this product is that only one closing is required, therefore eliminating the cost of duplicate closings.

Conventional Loan: A mortgage loan that is not insured or guaranteed by the federal government. 

Credit Report: A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

Deed of Trust: A mortgage that secures the note by the real property and appoints a third party trustee to act in the lenders behalf, without having to go to court to proceed with foreclosure if/when the borrower defaults on the loan.

Discount Points: Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).

Down Payment: The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

Earnest Money A deposit 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 prohibits lenders from denying mortgages on the basis of the borrowers race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.

Escrow: Money held by the lender to pay future claims.  Taxes and insurance are normally added into the monthly payment and held in escrow until they are due to be paid.

Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac): Also known as Freddie Mac, government agency that acts as a secondary market investor to buy and sell mortgage loans.  It sets many of the underwriting guidelines for the approval and insurance of these loans.

Federal Housing Administration (FHA): A section of the US Department of Housing and Urban Development that insures loans by the full faith and credit of the US government.  It sets the guidelines for the approval and insurance for these loans.

FHA Mortgage: A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

Fixed Rate Mortgage (FRM): A mortgage with an interest rate that does not change or adjust.

Foreclosure: Legal action by the lender upon default to have the property sold to pay the securing mortgage.

Good Faith Estimate An estimate of charges which a borrower is likely to incur in connection with a settlement.

Government National Mortgage Association (GNMA or Ginnie Mae): A government agency that participates in the secondary market and is involved in buying, selling and guaranteeing government loans such as FHA and VA.

Graduated Payment Mortgage (GPM): A loan that starts out with a substantially lower payment and then increases the payments each year until a level payment is reached that will pay off the loan over the remaining amortization period.

Growing Equity Mortgage (GEM): A loan in which the normal payment is increased each year so that the amortization is accelerated, paying off the mortgage in a shorter period of time.

Hazard Insurance: That portion of the homeowners insurance that protects the property against fire and other forms of destruction.

HUD (Department of Housing and Urban Development): The government agency that governs FHA and other housing programs.

Index:  A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Some commonly used include the 1 Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI).

Interest Only Loan:  A mortgage is considered "interest only" if the monthly payment does not include any repayment of principal ? the mortgage payment covers only the interest & the actual loan balance remains unchanged. 

Jumbo Loan: Nonconforming loans that are higher than the loan amounts acceptable to FNMA and FHLMC.

Lien: A legal claim against a property that must be paid when the property is sold. 

Lifetime Cap: A provision of an ARM that limits the highest rate that can occur over the life of the loan.

Loan to Value Ratio (LTV): The ratio of the amount of your loan to the appraised value of the home. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.

Lock-in: The ability to have an interest rate and/or points guaranteed for a specific period of time.

Margin: The number of percentage points added to the index value to calculate the ARM interest rate at each adjustment period.

Mortgage: A legal instrument that makes real estate security for a loan.

Mortgage Banker:  A lender who deals regularly with the secondary market.  A mortgage banker originates, closes, services and sells the loans in their own name and lends their own money at the closing table.

Mortgage Broker:  A company that for a fee matches borrowers with lenders.  They do not offer in house services such as under writing and they lend the broker´s money and close in the broker´s name.

Mortgage Insurance Premium (MI or MIP): Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LTV of 80.01% or higher.

Mortgage Insurance: Insurance on a mortgage that protects the lender against losses due to default and/or foreclosure.

Mortgagee: The holder of a mortgage loan.

Mortgagor: The borrower of a mortgage loan.

Negative Amortization: This situation occurs when the borrowers are charged more interest than they are paying.  The unpaid interest is added into the principal amount of the loan.

Non-Conforming: Loans that do not conform to standard conventional loan guidelines set by Fannie Mae or Freddie Mac.  Jumbo loans are nonconforming.

Note: Legal instrument that shows the borrower is obligated to pay the loan.

Origination Fee: A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan

Payment Cap: A limit to the increase or decrease of the monthly principal and interest payments.

PITI: The basic house payment. P=Principal, I=Interest, T=Taxes, I=Hazard Insurance. Additional parts of the payment may be the following MI--Mortgage Insurance, HOA=Home Owners Association fees.

Points: A percentage of the loan amount.  1 Point equals 1% of the loan amount.

Power of Attorney: A legal document authorizing one person to act on behalf of another.

Prepaids: Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, hazard insurance, private mortgage insurance and special assessments.

Principal: The amount of the loan.

Rate Cap: A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

Real Estate Settlement Procedures Act (RESPA): A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Refinancing: The process of paying off one loan with the proceeds from a new loan secured by the same property.

Second Mortgage: Secondary financing behind or after the primary or first mortgage.

Servicing: The job of collecting the monthly house payments from a loan and marking sure that they are property credited.

Start Rate: The rate of interest for the initial period of an adjustable rate mortgage.

Survey: A measurement of land, prepared by a registers land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any building.

Title: A document that gives evidence of an individual's ownership of property.

Title Insurance: Insurance that insures against any defects in the title that would give less than clear title to the property.

Truth-in-Lending: A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other changes.

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.