nnual Percentage Rate(APR)

A measure of the total cost of credit (interest as well as other recurrring charges) expressed as a yearly percentage rate. All lenders apply the same rules in calculating the annual percentage rate, giving consumers a good basis for comparing the cost of loans.

ppraised Value

An option of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.

ebt-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.

own payment

Cash to be paid by the buyer at closing to consummate a real estate transaction.

azard Insurance

A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.

omeowner's or Maintenance Fees

Payments made by property owner(s) of a condominium or a unit in PUD to the homeowners' association for expenses incurred in upkeep of the common areas.

ousing Expenses

These include the monthly principal and interest payments that are stipulated on the mortgage note. In addition, the monthly housing expenses include a monthly amount for the property taxes and hazard insurance (1/12 of the annual taxes and insurance). There may be other expenses, such as condominium fees, homeowners fees, special assessments, etc., that are included.

ncome to Debt Ratios

Primary Housing Expense(PHE)/Income Ratio(I): This ratio is the result of dividing the housing expenses for the proposed loan by the monthly income of the borrower(s).

Total Obligations(TO)/Income Ratio(I): This ratio is the result of dividing the housing expenses for the proposed loan plus the borrower(s) other monthly credit obligations by the monthly income of the borrower(s).

nitial Interest Rate

Typically one to three percentage points lower than that of most fixed-rate mortgages. Lower interest rates also make ARMs somewhat easier to qualify for. The initial interest rate is tied to certain economic indicators that dictate in part what the monthly payments will be.

nterest Rate

The percentage of an amount of money which is paid for its use for a specified time.

oan-to-Value Ratio

The ratio of the mortgage loan amount to the property's appraised value or selling price, whichever is less.

arket Value

The most likely price a given property will bring if widely exposed on the market, assuming fully informed buyer and seller.

inimum Payment

The minimum amount that you must pay (usually monthly) on your account. In some plans, the minimum payment may be "interest only." In other plans, the minimum payment may include principal and interest.

onthly Income

One of the most important components of the loan underwriting process is determining the borrower's monthly income. The income of all borrowers and co-borrowers is included in the calculation. The income can be derived from several sources, but it must be supported by historical documentation and have a high likelihood of continuation.

onthly Debt Obligations

These include monthly credit obligations, such as installment payments, revolving charge cards or other borrower obligations that will continue longer than 10 months. Usually, 5% of the current balance of a revolving charge account is used for the monthly payment.

ortgage

A lien or claim against real property given as security for a loan. It is a two party agreement as apposed to tri-party agreemenet of a deed of trust.

ortgagee

The lender of money or the receiver of the mortgage document.

ortgage Insurance

Insurance required for a loan-to-value ratio above 80.01%.

oints
Origination fees charged be the originating lender or broker and/or discount fees charge by lenders to increase the overall yield. A point is equal to one percent of the principal amount of your mortgage.

repaid interest

Prepaid interest is the interest charged to borrowers at loan closing to pay for the cost of borrowing for a partial month. For example, if a loan closes on the 15th of the month and the first payment is due 45 days later, the lender will charge 15 days of prepaid interest.

roperty Tax

A tax levied by the local municipality or county on real and personal property.

rincipal Loan Balance

Face amount of a loan evidencing the amount repayable, exclusive of interest, according to the terms of the note securing the obligation.

rincipal and Interest

The principal and interest is the monthly payment needed to repay the mortgage loan over a predetermined period. After deducting the monthly taxes, insurance, and debt from the Total Monthly Obligation, the mortgage payment is calculated based on a 30 year fully amortizing loan and the current 30 year mortgages rates of Guaranty Mortgage with a 1 point origination fee. You may input a new rate and term.

otal Monthly Debt Obligations

This combines the monthly housing expenses and monthly debt obligations.