Mortgage Vocabulary

Question 1

Earnest Money Deposit

Answer 1

Deposit on property from buyer to seller given as part of the purchase price.

Question 2

Equity

Answer 2

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

Question 3

Escrow

Answer 3

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).

Question 4

Buy Down

Answer 4

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)

Question 5

Subsidized

Answer 5

Supported Financially

Question 6

PITI

Answer 6

Principal Interest Tax & Insurance

Question 7

Realtors

Answer 7

a person who acts as an agent for the sale and purchase of buildings and land; a real estate agent.

Question 8

Real Estate Agent

Answer 8

A real estate agent is a licensed professional who guides buyers and sellers through real estate transactions.

Question 9

Lock

Answer 9

A lenders guarantee that the mortgage rate quoted will be good for a specific number of days

Question 10

Impounds

Answer 10

Impound accounts hold funds to pay your property taxes, homeowners insurance, and perhaps other accounts like flood insurance or HOA dues.

Question 11

Installments

Answer 11

Monthly Payments

Question 12

Investor

Answer 12

A money source for a lender

Question 13

Firm Commitment

Answer 13

A promise by FHA to insure a mortgage loan for a specific property and borrower

Question 14

Hazard Insurance

Answer 14

A form of insurance

Question 15

Flood Insurance

Answer 15

Insurance for homes/ Condos in flood zone areas

Question 16

DSCR

Answer 16

Debt Service Coverage Ratio

The DSCR shows investors whether a company has enough income to pay its debts.

Question 17

ATR

Answer 17

Ability to repay

Question 18

DTI

Answer 18

Debt to Income

Question 19

NIV

Answer 19

No Income Verification

Question 20

Acceleration Clause

Answer 20

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.

Question 21

Amortization

Answer 21

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.

Question 22

BPO

Answer 22

Broker’s Priced Opinion

Question 23

AMC

Answer 23

Appraisal Management Company

Question 24

Appraisal

Answer 24

An estimate of the value of the property made by an “ appraiser “

Question 25

Annual Percentage Rate (APR)

Answer 25

Annual Percentage Rate (APR) is the interest charged for borrowing that represents the actual yearly cost of the loan expressed as a percentage.

Question 26

Balloon Mortgage

Answer 26

a mortgage in which a large portion of the borrowed principal is repaid in a single payment at the end of the loan period.

Question 27

Mortgage Title

Answer 27

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.

Question 28

Cash Flow

Answer 28

the total amount of money being transferred into and out of a business, especially as affecting liquidity.

Question 29

Liquidity

Answer 29

Liquidity refers to how easily an investment can be sold for cash.

Question 30

Closing Cost

Answer 30

Closing costs are processing fees you pay to your lender when you close on your loan.

Question 31

Wet Funding

Answer 31

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

Question 32

Dry Funding

Answer 32

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.