Mortgage Glossary

Terms

Amortization: the process of gradually paying off a mortgage loan over a specified period of time through regular payments, which includes both principal and interest.
Annual Percentage Rate (APR): the total cost of borrowing monies, expressed an an annual interest rate, including both the interest rate and certain fees or charges.
Appraisal: an evaluation of the value of a property that is conducted by a licensed appraiser to determine its market value.
Adjustable Rate Mortgage (ARM): a mortgage loan with an interest rate that can be changed periodically, usually after an initial fixed-rate period.
Amount Financed: the actual amount of credit provided to the borrower, which represents the principal loan amount minus any prepaid finance charges or fees.
Closing Costs: expenses incurred during the mortgage transaction, such as loan origination fees, appraisal fees, title fees, and other fees.
Debt-to-Income Ratio (DTI): a calculation that compares a borrower's monthly debt obligations to their gross monthly income and used to assess their ability-to-repay a loan.
Down Payment: the initial payment made by the buyer when purchasing a property, usually expressed as a percentage of the total purchase price.
Equity: the difference between the market value of the property and the outstanding balance of any mortgage or loan secured by the property. Equity refers to the portion that you truly own.
Escrow: an account where funds are held by a third party to cover taxes, insurance, and other related expenses.
Finance Charge: the total cost of credit expressed in dollars, including interest and any other fees or charges associated with obtaining a mortgage loan.
Fixed-Rate Mortgage: a mortgage loan with an interest rate that remains constant throughout the entire loan term.
Foreclosure: the legal process in which a lender takes possession of a property when borrowers fail to make mortgage payments as agreed.
Loan-to-Value Ratio (LTV): the ratio of the loan amount to the appraised value or purchase price of the property, expressed as a percentage.
Per-Diem: the daily rate used to calculate interest charges on a loan during the period between the closing date and the start of regular monthly payments.
Preapproval: a preliminary evaluation by a lender to determine the maximum amount that a borrower can borrower. The evaluation is based on creditworthiness, income, and other factors.
Private Mortgage Insurance (PMI): insurance purchased by a borrower to protect the lender in case of a default, typically required when the LTV is greater than 80%.
Principal: the original amount of money borrowed, excluding interest and other charges.
Prorations: the division or allocation of certain expenses, such as property taxes or homeowners association fees, between a buyer and seller based on the portion of time each party owns the property during the billing period.
Refinance: the act of replacing an existing mortgage loan with a new loan, often to obtain better loan terms, interest rates, or monthly payments.
Title: a legal document that establishes ownership of a property.
Title Insurance: protects both homebuyers and lenders against any financial loss or legal issues that may arise due to problems with the property's title or ownership rights.

Acronyms

APR: Annual Percentage Rate
ARM: Adjustable Rate Mortgage
ATR: Ability-to-Repay
CNV: Conventional
DTI: Debt-to-Income Ratio
FHA: Federal Housing Administration
HELOC: Home Equity Line of Credit
HUD: U.S. Dept of Housing and Urban Development
LTV: Loan-to-Value Ratio
PMI: Private Mortgage Insurance
PUD: Planned Unit Development
SFR: Single Family Residence
USDA: U.S. Department of Agriculture
VA: U.S. Department of Veterans Affairs

LO NMLS# 2401903 | CA DRE# 02179024

C2 Financial Corporation

C2 NMLS# 135622 | CA DRE#0181025

http://www.nmlsconsumeraccess.org/

This licensee is performing acts for which a real estate license is required. C2 Financial Corporation is licensed by the California Department of Real Estate, Broker # 01821025; NMLS# 135622. Loan approval is not guaranteed and is subject to lender review of information. All loan approvals are conditional and all conditions must be met by borrower. Loan is only approved when lender has issued approval in writing and is subject to the Lender conditions. Specified rates may not be available for all borrowers. Rate subject to change with market conditions. C2 Financial Corporation is an Equal Opportunity Mortgage Broker/Lender. The services referred to herein are not available to persons located outside the state of California.

C2 Financial Corporation has the ability to broker VA loans based on their relationship with VA approved lenders. C2 Financial Corporation is not acting on behalf of or at the direction of HUD/FHA or the VA.

Mortgage Glossary

Terms

Acronyms

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