MORTGAGE GLOSSARY

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Many people who may be looking to buy a home have no clue as to all the strange "lingo" that gets thrown around during the process. I have compiled some of the terms and definitions here for easy access. Please refer to them as often as needed. 


On my website I have made it available for you to look for homes without thinking you may get some weird  phones calls from some stranger, this is what happens to many folks who use the home locators on the internet. Some of these companies have 6,000 or more capture pages, all so they can sell your name. I won't ever do that, so use it and feel comfortable with it.

Amount Financed

Amount Financed is found on the Truth-In-Lending (TIL) disclosure. The amount financed will be less than your actual Loan Amount. It represents your Loan Amount less your Prepaid Finance Charge.

Appraisal

An appraisal is a comprehensive report compiled by an independent third party to evaluate your subject property or the collateral for your new mortgage. The appraisal report will determine the subject property's current market value and ensure your property meets the Federal, Fannie Mae, and Freddie Mac lending guidelines.

APR (Annual Percentage Rate)

APR is found in any mortgage rate advertisements and on the Truth-In-Lending (TIL) disclosure. APR represents your interest rate but also accounts for a marjority of the fees being paid to obtain that rate and your new mortgage. The APR is almost always slightly higher than the note rate being offered to you but does not determine your monthly mortgage payments are.

ARM (Adjustable Rate Mortgage)

A mortgage program in which the interest rate will adjust based on an index and a margin after a certain period of time. ARMs are popular because than start at lower rates the fixed rate mortgages making the payments lower.

Cash-Out Refinance

If a property is being refinanced and the new loan amount is significantly higher than the current primary mortgage balance the new mortgage is considered a cash-out refinance. If any other debt is being paid off at closing aside from the primary mortgage the loan is also considered a cash-out refinance. Cash-out refinances are popular for people looking to consolidate debt or use there home's equity for extra cash.

Commitment Fee

Our Lender Fee or Origination Charge is also referred to as a Commitment Fee. Our Commitment Fee covers our underwriting, processing, doc prep, flood and tax certification etc... The fee varies depending on the interest rate and mortgage program HFA is offering you. This charge is collected at closing only a can change with fluctuations in external market conditions.

Conventional Mortgage

A mortgage of less than $417,000 that conforms to Fannie Mae and Freddie Mac's lending guidelines.

Credit Score

A number is determined by each of the 3 the credit reporting bureaus. Your credit score gives an indication of your worthiness or how respondible you've been with their debt in the past. HFA requires a minimum credit score of 660. The score used to decide is the lowest of the middle scores of all borrowers on the loan.

Debt-to-Income (DTI) Ratio

The total amount of a borrower's documented pre-tax income divided by their total monthly debts.

Escrow Account (Impound Account)

An account established by a mortgage servicer to pay for the subject property's taxes and insurance. A borrower will pay a portion of the property tax and insurance bills with each mortgage payment to fund the account. At closing, a fully funded escrow account will have to be established.

Escrow Waiver

If a borrower opts to pay their property tax and homeowner's insurance bill on their own as they wish they will have to opt for an escrow waiver. If this is the case for you, be sure to let your Loan Originator know up front.

Fixed Rate Mortgage

A mortgage in which the interest rate and monthly payment does not change over the entire loan term.

Good Faith Estimate

A document designed by the U.S. Department of Housing and Urban Developement (HUD) that discloses the material terms of a mortgage offered by a lender.

Investment Property (Rental Property)

A property in which any rental income has been collected or in which rental income is intended to be collected at any time in the future.

LTV (Loan-to-Value) Ratio

The loan amount divided by the subject properties appraised value.

Mortgage Application (1003)

A comprehensive form used to display nearly all of the information a mortgage lender needs to know about a borrower(s) or potential borrower(s) in order to issue a mortgage.

Points (Discount Points, Origination Points)

Charges or fees assessed at closing that are based on a percentage of the Loan Amount. 0.25 PTS on a $100,000 mortgage is the equivilant of $250. HFA may assess points to offer a lower interest rate to a borrower or account for Risked Based Pricing Adjustments.

Pre-Approval Letter

A document issued by a mortgage lender that indicates that a borrower is likely to qualify for a certain loan amount based on their mortgage application. This document is very helpful to buyers and sellers of real estate.

Prepaid Interest

Mortgage payments are made in in arears (they account for the previous month). When a mortgage closes, a certain amount of interest will always be owed to the new lender from the day of funding to the end of that month. Prepaid Interest accounts for money owed to the lender in the funding month. There will be no mortgage payment due on the 1st day of the following month after a mortgage funds.

Prepaid Finance Charge

Prepaid interest is found on the Truth-In-Lending (TIL) disclosure. It is a subtotal of certain loan fees that will determined the APR.

Primary Residence

A home that is occupied by a borrower for the majority of the year and commutes to and from work from on a regular basis.

Private Mortgage Insurance

Insurance that protects conventional mortgage lenders against default on loans with higher than normal LTV (Loan-to-Value) Ratios. Generally required when the ratio is above 80%.

Rate Lock Agreement

A document given by a lender that makes material terms of a mortgage available to a borrower for a specified period of time subject to certain conditions. Until this document is issued you are subject to pricing increases of external market conditions change.

Risked Base Pricing

Adjustments in the pricing of mortgage based on certain risk factors that have been determined to increase a lender's exposer to a borrower's likelihood of default. Typically, these adjustment are in the form of points and determined by federal regulators and secondary market investors.

Second Home (Vacation Home)

A home owned by a borrower for recreational use typically located in a resort area at a reasonable distance from the primary residence. A second home will have has no rental income generated or intentions of rental income collections in the future.

Secondary Mortgage Market

The way the mortgage industry is structured, nearly all individual mortgages are bundled together in packages then sold to various entities as investments and securities. This provides liquidity in the market, lowers a lender's risk, and allows lenders to offer lower rate. This concept is know as the Secondary Mortgagage Market.

Supporting Documentation

A set of documents to be included in a borrower's loan file before closing is able to occur. Supporting documentation guidelines are stipulated by the Federal Government, State Governments, Fannie Mae, Freddie Mac, Secondary Market Investors, and mortgagelenders themselves.

Subordination

The process by which a primary mortgage on a property is refinanced while another lien or mortgage is left standing. The secondary lien holder must agree to be placed in a secondary lien position behind the new primary mortgage holder.

Underwriting (Underwriter)

The process by which a borrower's mortgage file and supporting documentation is reviewed to ensure the loan meets federal and invstor guidelines before it closes. The member of a mortgage company responsible for this review is know as the underwriter.

Term

The amount of time if will take for a mortgage to fully amortize if the minimum monthly principal and interest payment is made each month.

Title Insurance

A type of insurance required for mortgages that ensures the lender that the borrower is the true legal owner of the home. Title history is reviewed, and title insurance is typically issued by a third party.


I hope this helps some of you, theres a lot of good information here, thanks for dropping in, and I certainly appreciate you taking your time to read my blog!

Historically Low Interest Rates and Lower Home Prices

Click here to visit my website, you can look for homes for free here with no weird people calling you afterwards.


If your thinking of buying a home, investing in rentals, or refinancing, now's the time. i wouldn't wait. True, homes MAY go down more, but will the interest rates? How does 2.625% sound? It's out there! I remember buying our first home, it was an FHA loan at about 12%, back in the 80's. Read on, this is important for those who are thinking along any of these lines.

Housing markets struggled through another tough quarter, this time during the spring buying season, the strongest time of year for home sellers.

Prices of existing homes fell 2.8% in the three months ended June 30 compared with the same period in 2010, according to a report issued Wednesday by the National Association of Realtors (NAR).

Prices have bounced around a bit the past two years but have wound up in about the same place. The median price for all existing homes sold during the quarter was $171,900, almost matching the price level of all of 2009 -- $172,100.

Sales volume was off 5.4% compared with a quarter earlier to an annualized rate of 4.86 million units, and was down 12.7% from the second quarter of 2010.

The sales volume decline came despite some of the best buying conditions ever. 

Just when it seemed mortgage rates weren't going to get any lower, they started testing new lows.

In the tumultuous days following Standard & Poor's debt downgrades, rates on 30-year fixed mortgages fell to 4.32%, down from 4.39% last week and closed in on a record low of 4.17% set last November, according to Freddie Mac's Primary Mortgage Market Survey

Rates on 15-year fixed mortgages set a new record for the second week in a row, falling to 3.5%, down from 3.54% last week.

The savings for borrowers who lock in rock-bottom rates over the length of a mortgage loan can be sizable. Take, for example, a borrower with a $200,000, 30-year loan. If their mortgage carries a 4.32% rate their monthly payment is just $992 and they make total interest payments of $157,153. However, if the rate on their 30-year fixed mortgage is 5% (ordinarily considered a low rate), they'd pay $1,074 a month and $29,357 more in interest over the 30-year period.

The low rates are sparking a rash of refinancing activity, according to the Mortgage Bankers Association. Last week, total mortgage borrowing, most of it refinancings, jumped nearly 22%. This week's activity could be even higher, according to Greg McBride, chief economist for Bankrate.com.

"Rates have been below 5.5% for two years," he said. "For most people who have refinanced or purchased since then, there's little benefit to refinancing. But when rates drop below 4.5%, then it's worth looking into."

Rates could go even lower

While mortgage rates do not move in lockstep with Treasury yields, they are closely correlated. The yield on the 10-year bond plunged to 2.24% Thursday from 2.56% at the end of last week.

The difference between the 30-year fixed mortgage rate and the 10-year Treasury yield is usually about 1.6 to 1.7 percentage points, so a bond rate of 2.24% should mean that mortgage rates should be at 3.84% to 3.94%.

I have a team of experts waiting to help you how ever you choose to respond, but I would act now, there's no telling what things will be like in a few weeks or months from now. 

Click here to contact me directly.

The ad's on this page are some direct links to some Mortgage Lenders, click a few to see for yourself, the rates are amazing!

Loan Modification and Loss Mitigation - The Real Story

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Just what is Loss Mitigation and what can it do for me? This is an understandable question, probably being asked by many Homeowners during these difficult times. I am going to explain what it is and how the Homeowner can benefit from it, plus how they may qualify for this benefit.

First, I think it's important to explain, that a Home, especially a primary residence, is the biggest and most valuable investment we make in our lifetimes. It's important to turn to the right source, and employ the experience of the right professionals to represent you to your lender, this may be an outside source or the lender themselves.

Loss Mitigation allows for negotiations with your Lender, to achieve the most affordable solutions possible on your existing loan. This is not a new loan, and it won't change your home title. It's the process of engineering a viable solution for both the Homeowner and the Lender, backed with decades of Lending, Legal, and Financial Planning experience. Such a process is made possible by a deep understanding of Lending guidelines, Lender protocol and procedures, knowledge of State and Federal laws and regulations, as well as the savvy and strategy of financial planning. The goal is to secure more affordable terms for the Homeowner while managing the risk and losses of their Lender, and in doing so bridging the gap between Homeowner and Lender.

There's a desperate need for a solution for the struggling Homeowners who can no longer afford their mortgage payment and are unable to qualify for a refinance. A Loan Modification may be the answer to their prayers. Many are afraid that they won't qualify, many have the courage but are afraid that they aren't a good candidate for the program but there's no credit check, no minimum credit score required. There's no appraisal needed, zero equity qualification. Late payments on their mortgage are OK, unstable job history or income is OK; being upside down on their home is OK.

Homeowners are more than just a "score" and it's about time that they were treated as such. They need someone who will take the time to find out more about them, their lives, and their families, someone who will find out about the real picture, and care about all the elements of their lives, someone who believes that this is the ONLY way to offer them a real and viable solution for their future, someone who can guide them through the process and together discover the most suitable course of action for their personal situation, someone is committed to doing their part to help families in the community.

Here are some of the solutions that Loss Mitigation can help the Homeowner with, Loan Modification, Forbearance, Term Extension, Rate Reduction, Repayment Plans, Principle Reduction, Deed in Lieu, and Short Sale. However, the Homeowner must be willing to take the first step and contact a quality professional.

It's important to know that each Homeowner has a team of professionals working for them and on their behalf, and with their best interest at heart. Each case will undergo a process of quality control, underwriting, financial analysis, and negotiations; each department working alongside the other to produce a comprehensive and cohesive solution.

Location, Location, Location

lIn real Estate, location can be critical. Sometimes it depends on how close you are to the elementary school, or shopping. There's a lot of reasons, everyone has their own and that's for sure. Today i thought i would talk about location of things to do or places to go from Corona, and why Corona is a great spot to live if you care about location.


Corona is 45 minutes to Newport Beach, nice......about the same to Wrightwood. There's not a lot of places you can live and go snow skiing in the morning and then surfing in the afternoon, and do it as easily as you can from Corona. Corona is located about 60 miles east from downtown Los Angeles, and about 35 minutes east of Disneyland/Knotts Berry Farm. I suppose that would be enough for some but it's also about an hour from the Hollywood scene, and hour and a half from Magic Mountain, or is it called 6 Flags now...I forget, lol.


But today, I want to talk about a get away that's close, but puts you at the base of Alpine mountains along with a lake for fishing and boating, water skiing and camping. And it's about 45 minutes from Corona, nice huh?

Lake Silverwood

Lake Silverwood is north on the 15 out of Corona and is close enough for day use, and far enough away to feel like your away for the day or even for a few days like we did a couple of weeks back. We had decided to do a family camping trip, with kids, dogs, girl friends, and all. We had a blast. The camp ground itself was clean, with showers and toilets that flush, this was big for the women in our group, they loved having the showers. 18 of us packed up on a Friday and headed out to the "wilderness" for an adventure, not really knowing how well this "family " idea would work out. 

We arrived around 2 ish and found our two connect campsites, right where we reserved them I might add...at the end of the campground as we knew we would be up late having fun and we also knew we would be noisy. We're always noisy! 18 people are GOING to be noisy! We set up tents, got things arranged and I have to say, for several different families we did a great job of working together for the common goal....to get it all done and have a beer!

All set up and ready for anything the kids played, the dogs enjoyed sniffing around and we humans of the older variety had a few drinks and started working on getting the dogs and burgers ready for dinner. We had a great dinner, a very fun night around the camp fire and we all settled into a peaceful slumber in our tents around 1 in the morning.

Saturday was our one and only play day this trip so we all made and ate bacon and eggs and I'm telling you right now, bacon and eggs tastes sooo good when your camping, way better than at home. After getting things cleaned back up, we all got our swimming stuff together and headed for the lake. Now I guess for some you could call it walking distance, but we took cars and it's a couple of miles to the swim beaches so we really did do the right thing, lol. The day was hot, the water was cool, and felt sooo good. Most of spent most of the day floating on our floaties in the lake.

That night we BBQed steaks and baked potatoes on the camp fire, did the whole smores things with the kids and had a great time...up until about 3am. That's when it started to rain. My tent enjoyed it, the sound of the rain drops on the tent, we were dry and cozy and slept like babies thru the night. The morning was wet, it never stopped, lol, but we made the best of it. A couple of tents had leaked and those people packed up and left pretty early, not mad or angry, just wet. The rest of us figured it would stop soon so we fried bacon in the rain and had a great time packing up and we all left around noon, the sites check out time. A total successs I guess, we didn't even let the rain get to us.

Our home away from home

The entire crew at the lake

Ahhh, camp life, the best!

Well, enough for now, stay tuned for another trip close to Corona, a get away that can be done because of the  location of this great town! I hope you enjoyed reading this half as much as we enjoyed out little camping trip!