FHA Is BACK!!!
More and more people are inquiring about government financing! The rates are actually better for a FHA loan than a conventional loan!
The government is back i ...
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Mortgage and Lending |
RAINER 1,930 |
| Matt Govan | ||
| location_on Princeton, NJ — Matthew Govan | ||
| web Matt's Blog | ||
Get to Know Matt Govan
A little about me!
I reside in Montgomery Twp with my wife and 2 children. We enjoy our small farm and spend most of our time together running to the various activities in which our children participate. The most important aspect in my life is FAMILY!
My passion is helping my clients obtain their most important tangible asset, their home. Whether my clients are refinancing their current home, buying a second home or a first time homebuyer they are all equally important as their goals are my goals. I have been assisting clients for over 12 years and have been both a broker and mortgage banker.
We have the POWER to SAY YES in HOUSE and do not send our client's file's to a processing center that is usually in another part of the country. Your file stays in the office where it is originated! We process, underwrite and close the file in our name and take the guess work out of the home loan process. Our staff has over 500 years of home lending industry experience and is ready to serve you!
We are growing!!! We are currently seeking self motivated, professional individuals to cover Mercer County and surrounding areas! Call Me for more information. 609-575-1000
A Little about The Company .:
With a corporate philosophy of providing outstanding service and developing long lasting relationships, the management and staff takes pride in providing all our clients the utmost in customer support and satisfaction. Looking for the house of your dreams or to consolidate your debt? WE can make your DREAMS A REALITY!! With over 75 years of combined management expertise, we have the keen ability to identify the needs of all our borrowers, and tailor the loan that best fits their particular situation. From the time you sit down with one of our knowledgeable mortgage consultants, until you sign the settlement sheet, we strive to make the entire loan process a positive experience.
Certifications
My area of expertise is well diversified in that my 12 plus years of home lending experience has enabled me to learn various financing options for my clients.
Along with other options, I can custom design a plan for homeownership as well as help choose the right loan program for a refinance transaction.
The most important among my services is customer satisfaction! Without it, I would not still be in business today. Everyday I strive to improve and sharpen my skillset and continue to educate myself on industry news and current events.
Our office is billingually staffed and here to help.
In this current market, call on someone with experience, integrity and sincerity.
I look forward to the opportunity to serve all of your home loan needs.
-Matt
609-575-1000
Some of the types of loans we offer:
Conventional, FHA, VA Mortgages 100% Investor Purchases 95% No Income Verification Loans Renovation Loans- 203K and investment property rehab. LLC Financing Available 1-4 Unit Homes Commercial Loans Mixed Use Loans Land Loans Construction Loans Sub Prime Loans Second Mortgages 100% Financing No Documentation Loans FHA Direct Endorsement Purchase money mortgages Refinances Debt consolidation loans Renovation loans No doc residential and commercial mortgages VA Automatic Commercial financing Multi-family financing Construction mortgages SBA loans Hard to place residential and commercial mortgages The Process: Getting Started There are many things to consider and steps to take when purchasing a home. We has taken some of the mystery out of the financial decision-making process to help guide you as you look for your new home. Should I buy a house? Need help in determining if buying a house is a better choice over renting? Use these calculators to explore various costs and the long-term implications associated with each. Should I buy or rent? What home can I afford? How much would I qualify for? Your Credit An important part of the mortgage equation is your ability to repay the loan. Your credit history is taken into account in the mortgage approval process as it is an indicator of your financial responsibility. Prior to applying for a loan, make sure you are in the best possible credit standing. Here are some tips for improving your credit. Check your credit report. We offer a free credit check so you can check your credit report for accuracy. Be sure any mistake, such as payment that was listed as late or missed, is corrected. Changes to your credit report can take anywhere from 30 days to 3 months, so it's best to check your credit report when you begin your search for a new home. Note, however, that you do not want to have your credit report checked too often; doing so may suggest problems with your credit. Pay your bills on time. Recent late or missed payments will likely lower your credit score more so than late a payment that happened years ago. Be sure to pay bills by their due date, not during the grace period. In credit scoring, making a payment during the grace period counts as a late payment. Reduce your credit card balances. How much you owe on your credit cards compared to your total credit limit, is one of the heavily weighted factors in your credit score. A good guideline to follow is to keep your balances around 25% of your credit card limit. Pay off debt rather than transferring balances. It's best to pay off as much debt as you can, rather than transferring balances of several credit cards to one or two cards and eliminating those accounts. Remember, a key factor in your credit reporting is the ratio of your credit card balance to the card limit. Combining balances may create a higher debt to limit ratio. Own two to four credit cards. Guidelines suggest that fewer credit cards, or more credit cards, may have a negative effect on your credit rating. Also, be sure to have a checking and savings account. If you have neither, points will be deducted from your score. Contact creditors if there is a problem. Many creditors are willing to work with their customers to develop an affordable payment solution in difficult financial situations. It's best to try to correct any outstanding issues prior to, or early in, the application process. Income and Debt In addition to your credit score, two other factors in the mortgage equation are your income and outstanding debt. To qualify you for a loan and determine how much you can borrow, lenders compare your income to your outstanding debt and monthly expenses. Generally speaking, your monthly debt and housing expenses should not exceed 36% of your gross monthly income. When purchasing a home, try to reduce your existing debt as much as possible and avoid incurring any new debt in the months preceding the purchase. Even if your monthly debts and expenses exceed 36% of your income, that doesn't have to mean you can't get a mortgage. We offer financing programs help make homeownership affordable for people from a variety of financial backgrounds. How much would I qualify for? What home can I afford? Which loan should I choose? Rates, Points & APR Interest RatesThe interest rate of your loan affects your monthly payment; the higher the interest rate, the higher your monthly payment, the lower the interest rate, the lower your monthly payment. Use this calculator to compare two or three mortgage packages. Points A point, also known as a loan's "origination fee", is equal to 1% of loan amount. For example, a loan equal to $100,000, one point would equal $1,000; two points would equal $2,000 and so on. Points are paid to the lender at the time of closing and are used as a way to save money on interest over the life of a loan and, in turn, lower your monthly payments. APRThe APR expresses the annual cost of a loan as a percentage, factoring in its rate, points and other charges over the life of the loan.The following costs are generally included in the APR: Points - both discount points and origination points Pre-paid interest - the interest paid from the date the loan closes to the end of the month. Most mortgage companies assume 15 days of interest in their calculations, however others may use any number between 1 and 30. Loan-processing fee Underwriting fee Document-preparation fee Private mortgage-insurance The following costs are sometimes included in the APR: Loan-application fee Credit life insurance (insurance that pays off the mortgage in the event of a borrowers death) The Truth-in-Lending Act requires that all advertisements for home loan credit terms include the APR. The APR is intended to enable you to compare terms of loan products from different lenders. Note however, that not all lenders calculate APR the same way. The best way to make an accurate comparison, is to compare loans with the same terms, interest rates and other fees. Choosing a Loan It's important to understand your options so you can determine the type of loan which best fits your needs and which loan term offers the ideal repayment schedule. Loan Types There are two general categories for home loans: fixed-rate mortgages and adjustable-rate mortgages (ARMs). Fixed-Rate MortgagesFixed-rate mortgages offer interest rates that stay the same throughout the life of the loan so you can have predictable monthly payments. You won't have to worry about rising interest rates and can take comfort in knowing your loan payments will never increase. Fixed-rate loans may be appropriate for buyers who plan to live in the property more than 10 years and like total payment stability. Consider paying points if you want to lower the rate and consider shorter term loans if you want to build equity faster, Adjustable-Rate Mortgages (ARM)Adjustable-rate mortgages have interest rates that adjust periodically based on market conditions. The initial rate is fixed for a period of time (dependant on the loan you select), and then adjusts annually based on the current market index; it can not go above a pre-determined cap. The initial interest rate for adjustable rate mortgages is generally lower than current fixed-rate mortgages, making them appropriate for buyers who want to take advantage of the lowest rate possible, are willing to accept payment changes, or cannot qualify for higher rate programs. Adjustable rate mortgages may also be appropriate for people with growing incomes, who will refinance in a few years or who be able to afford a larger payment in a few years if interest rates rise. Mortgage ProgramsWe strive to offer borrowers the most innovative and competitive loan programs available in the mortgage industry. We provide not only conventional loans but offer FHA and VA loans as well as alternative financing options to borrowers who have past or current credit issues and/or difficult to verify income. Federal Housing Administration (FHA) LoansFHA loans are insured by the federal government to help first-time homebuyers with low to moderate income and those who can't afford a large down payment purchase a home. Loan qualification is typically easier than conventional loans and closing costs can often be included as part of the loan amount. FHA loans can be either fixed- or adjustable-rate; maximum loan amounts vary by state. Veterans Affairs (VA) LoansVA loans are insured by the federal government to help veterans of the armed services, active-duty personnel, reservists and their spouses purchase a home. VA loans offer a set interest rate for the entire length of the loan. Qualified borrowers may be eligible for no down payment loans and for mortgage payments up to 41% of their income (depending on other debt). Jumbo LoansJumbo loans, also known as non-conforming loans, are for buyers that need to borrow a larger loan amount. With a Jumbo Fixed Rate option, you'll have the peace of mind in knowing your principal and interest payment will remain the same throughout the loan term. If you'll most likely be moving again within the next 5 to 10 years, a Jumbo ARM may work best for you. These loans have a lower interest rate than fixed rate mortgages and may allow you to qualify for a larger loan amount. Jumbo programs are required if you need a loan amount greater than $330,700. Balloon MortgagesBalloon mortgages have a fixed interest rate and fixed monthly payment for the term of the balloon loan, which is generally 5-7 years. At the end of balloon term the loan is due in full. The borrower may then refinance into new loan at current interest rates. Balloon mortgages are appropriate for buyers who plan to live in the property more than 5 years and are willing to refinance at the end of the balloon term if loan is not paid in full. Alternative FinancingWe are proud to offer loan options that can help you move past financial difficulties including credit issues, high debt ratios, lack of savings and no credit history to help you achieve homeownership. Fixed- and adjustable-rates loan options are available. What would my loan payments be at a fixed rate? What would my loan payments be at an adjustable rate? See if a balloon mortgage is right for you. Get pre-approved for free! Contact an Infinity Home Mortgage Company, Inc. Advisor Lock, Cap or Float? Lock a Rate Locking a rate means that the lender will honor a rate for a specified period of time while your application is being processed. In a volatile interest rate market, locking a rate will protect you from rising interest rates and will give you the security of knowing what your interest rate will be at the time of closing. Be sure you know the lock-in period and that it allows enough time for your loan application to be processed. Float a RateBy floating a rate, you are subject to market fluctuations during the float period. If you think interest rates might drop before your loan is processed, you can "float" instead of lock. You can keep an eye on interest rates and lock in at any time until five business days before your closing. Cap a Rate You can place a ceiling on the interest rate without locking it by capping it. With a cap, interest rates can fall, but cannot rise above the ceiling for a fixed period of time. Note however, that the initial capped rate is slightly higher than daily market rate. In a volatile interest rate market, you'll have to decide if you should cap a rate or lock it. Get pre-approved for free. Pre-Qualification and Pre-Approval Pre-QualificationThe first step in the purchasing process is understanding how much you can afford to pay for a home. With pre-qualification, you can do just that. Based on the information you provide, such as your income and estimated debt, we can let you know roughly how much you can afford and what you would likely qualify instantly. Pre-qualifying doesn't require a credit check, so a loan commitment can not be made. Pre-ApprovalA pre-approval is an easy way of obtaining assurance that you meet the necessary requirements for a specific loan, even if you haven't found the perfect home yet. Wewill provide you with a commitment letter stating that we will lend you a certain amount of money to buy a home, subject to a property appraisal and other stated conditions. You'll be able to look for a home with the security of knowing exactly how much you can borrow, and show sellers that you have the financing you need to buy a home. Apply online for your free pre-approval and get a response within 1 business day. With our online application process, you can apply for pre-qualification or pre-approval for free. It's an easy, convenient and secure way to give us your information, so we can provide you with the answers you need. Get pre-qualified instantly for free! Get pre-approved within 1 business day for free! Pre-Closing The following steps need to take place before a closing to transfer the property from the seller to you. With our Total Care services, We can assist you with obtaining all the necessary documentation including: Title search and report. An examination of public records including land records, court records, past deeds, wills and other documents to verify that there are no liens, delinquent taxes or other claims against the property and that the seller has a clear, marketable title to transfer to you. Title insurance binder. States the result of the title search and assures the lender the title to the property qualifies for a title insurance policy. Survey confirms the property boundaries are as described in the purchase and sale agreement. (A survey is not required in all states.) Termite, well, sewer or septic certificate. Certifies that the property is free from termites and/or other wood destroying insects. Also verifies that the sewage and water supply work properly. The sales contract will state whether you or the seller is responsible for these inspections and certificates. Title insurance. Protects you and your lender against losses that may be incurred if the title to the property is not as the policy states it to be. It provides protection against risks such as a forgery, a recording error, claims of undisclosed or unknown spouses or heirs, etc., that did not appear in the public records when the title search was done. Hazard insurance. Also referred to as a "homeowner's policy". Provides protection for you and your lender against certain risks such as storms, fires, floods or other hazards that may damage or destroy the home. You must obtain hazard insurance prior to closing and provide proof of insurance to your lender. Several other documents must be prepared by the lender before the closing: HUD 1 settlement statement. The HUD-1 is a form used by the settlement agent to itemize all charges for a real estate transaction, based on the contract, for both you and the seller. Loan documents. Final loan documents that grant your lender a lien against the property in order to secure the repayment of your loan. These documents include a promissory note, which is your legal promise to repay the loan; and a deed of trust/mortgage, the instrument that is recorded in the public records. The deed. Transfers ownership of the property to you. The deed must contain a legal and accurate description of the property. Mortgage insurance. A contract that insures the lender against loss caused by a borrower's default on a government mortgage or conventional mortgage. Mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA) or the Veterans Administration (VA). Get pre-approved for , Inc. Advisorfree. Closing The closing is the final phase of the home buying and mortgage process. Ownership of the property will be transferred from the seller to you, and you will sign documents that acknowledge your rights to the property you have purchased, your agreement to repay the money you have borrowed, and the lender's right to the property if you default on the loan. Make sure you review all your settlement documents and resolve any questions prior to signing them. Also consider asking your attorney to review the documents prior to closing. In addition to your down payment, you will need to pay costs for processing your loan and transferring the property ownership from the seller to you. Closing costs generally range from 3% - 5% of your loan amount, and are based on where you live, the loan you choose and your closing date. You may be able to include your closing costs in your mortgage loan, check with your. Loan Officer. When you apply for a loan, We will give you an estimate of closing costs. Closing costs include: Costs to process your loan (including property survey and appraisal); known as origination fees. City/county property taxes, insurance premiums paid in advance, including first-year mortgage insurance, first-year hazard insurance and first-year flood or earthquake insurance, if required. Title insurance charges Recording and transfer charges Attorney's fees You'll need to bring certified or cashier's checks for any remaining down payment and closing costs. Get pre-approved for free. Why Refinance? There are a variety of reasons you may choose to refinance your home. Here are some of the most common reasons: Refinancing to Lower Monthly Payments. There are two ways refinancing can allow you to reduce your monthly payment. One way is to refinance at a lower interest rate. A rate that is just a half or three quarters of a percentage lower than what your current loan is, can make a change in your monthly payment. It is important however, to evaluate application, closing and other costs to determine your breakeven point (or how long you will have to make payments at the lower rate before the cost of refinancing has paid off) and if /when refinancing makes sense. Use this calculator to determine your breakeven point. Another way to lower your monthly payments is to change the term of your loan. Changing the term from 15 years to 30 years, for example, would yield a lower monthly payment. Note however, refinancing to a longer term may mean paying more in interest over the life of the loan. Refinancing to Save on Interest Obviously, a lower mortgage rate means you won't pay as much interest for any given loan, but another way to save on interest is by reducing the term of your loan. Refinancing to change the term from 30 years to 15 years can save a significant amount in interest over the life of the loan. Note however, your monthly payments could increase if you choose a shorter term loan. Refinancing to Convert An Adjustable Rate Mortgage (ARM) to a Fixed-Rate or Vice Versa If interest rates are favorable, you may want to consider converting an adjustable rate mortgage (ARM) to a fixed rate mortgage before the ARM term ends and the rate becomes fixed. Or, you might consider refinancing to another ARM if you feel interest rates are in your favor to do so. If you are planning on staying in your house for only another 5-7 years, you might want to consider refinancing to an ARM. Interest rates on adjustable rate mortgages are generally lower than current fixed-rate mortgages, thereby making monthly payments lower. Since you won't be in the same house when the ARM converts to a fixed rate, you won't have to worry about what the fixed rate will be. Refinancing to Get Cash or Pay off Debt Known as "cash out refinance", you can refinance to get a loan that is greater than the amount you owe on your current mortgage, based upon the equity in your home. This can help you pay for any large expenses you see coming in the near future, such as home improvements or college tuition, or help you pay off credit card charges or other debt that has a high interest rate. Not only can you save money with a lower interest rate, you can get a tax benefit - interest paid in mortgages is most likely tax deductible. Be sure to check with a tax advisor or attorney before you begin. Apply for a Debt Consolidation/Cash Out Refinance Loan. Calculate if You're Better of Refinancing. Determine if you should consolidate your loans and credit card debt. Refinance now! Choosing a Loan It's important to understand your options so you can determine the type of loan which best fits your needs and which loan term offers the ideal repayment schedule. Loan TypesThere are two general categories for home loans: fixed-rate mortgages and adjustable-rate mortgages (ARMs). Fixed-Rate MortgagesFixed-rate mortgages offer interest rates that stay the same throughout the life of the loan so you can have predictable monthly payments. You won't have to worry about rising interest rates and can take comfort in knowing your loan payments will never increase. Fixed-rate loans may be appropriate for buyers who plan to live in the property more than 10 years and like total payment stability. Consider paying points if you want to lower the rate and consider shorter term loans if you want to build equity faster, Adjustable-Rate Mortgages (ARM)Adjustable-rate mortgages have interest rates that adjust periodically based on market conditions. The initial rate is fixed for a period of time (dependant on the loan you select), and then adjusts annually based on the current market index; it can not go above a pre-determined cap. The initial interest rate for adjustable rate mortgages is generally lower than current fixed-rate mortgages, making them appropriate for buyers who want to take advantage of the lowest rate possible, are willing to accept payment changes, or cannot qualify for higher rate programs. Adjustable rate mortgages may also be appropriate for people with growing incomes, who will refinance in a few years or who be able to afford a larger payment in a few years if interest rates rise. Compare several loan packages at once. See if a balloon mortgage is right for you. Refinance now! Mortgage ProgramsWe strive to offer borrowers the most innovative and competitive loan programs available in the mortgage industry. We provide not only conventional loans but offer FHA and VA loans as well as alternative financing options to borrowers who have past or current credit issues and/or difficult to verify income. Federal Housing Administration (FHA) LoansFHA loans are insured by the federal government to help first-time homebuyers with low to moderate income and those who can't afford a large down payment purchase a home. Loan qualification is typically easier than conventional loans and closing costs can often be included as part of the loan amount. FHA loans can be either fixed- or adjustable-rate; maximum loan amounts vary by state. Veterans Affairs (VA) LoansVA loans are insured by the federal government to help veterans of the armed services, active-duty personnel, reservists and their spouses purchase a home. VA loans offer a set interest rate for the entire length of the loan. Qualified borrowers may be eligible for no down payment loans and for mortgage payments up to 41% of their income (depending on other debt). Jumbo LoansJumbo loans, also known as non-conforming loans, are for buyers that need to borrow a larger loan amount. With a Jumbo Fixed Rate option, you'll have the peace of mind in knowing your principal and interest payment will remain the same throughout the loan term. If you'll most likely be moving again within the next 5 to 10 years, a Jumbo ARM may work best for you. These loans have a lower interest rate than fixed rate mortgages and may allow you to qualify for a larger loan amount. Jumbo programs are required if you need a loan amount greater than $330,700. Balloon MortgagesBalloon mortgages have a fixed interest rate and fixed monthly payment for the term of the balloon loan, which is generally 5-7 years. At the end of balloon term the loan is due in full. The borrower may then refinance into new loan at current interest rates. Balloon mortgages are appropriate for buyers who plan to live in the property more than 5 years and are willing to refinance at the end of the balloon term if loan is not paid in full. Alternative FinancingWe are proud to offer loan options that can help you move past financial difficulties including credit issues, high debt ratios, lack of savings and no credit history to help you achieve homeownership. Fixed- and adjustable-rates loan options are available. Glossary of Terms: Acceleration (back to the mortgage terms) The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause. Adjustable rate mortgage (ARM) (back to the mortgage terms) Is a mortgage in which the interest rate is adjusted periodically based on a preselected index. Also sometimes known as the re negotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage. Adjustment interval (back to the mortgage terms) On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index. Amortization (back to the mortgage terms) Means loan payment by equal periodic payment calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance. Annual percentage rate (A.P.R.) (back to the mortgage terms) Is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit cost. The APR allows homebuyers to compare different types of mortgages based on the annual cost for each loan. Appraisal (back to the mortgage terms) An estimate of the value of property, made by a qualified professional called an "appraiser". Assessment (back to the mortgage terms) A local tax levied against a property for a specific purpose, such as a sewer or streetlights. Assumption (back to the mortgage terms) The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply. Balloon (payment) mortgage (back to the mortgage terms) Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract. Blanket Mortgage (back to the mortgage terms) A mortgage covering at least two pieces of real estate as security for the same mortgage. Borrower (Mortgagor) (back to the mortgage terms) One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full Broker (back to the mortgage terms) An individual in the business of assisting in arranging funding or negotiating contracts for a client buy who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services. Buy-down (back to the mortgage terms) When the lender and/or the homebuilder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires. Cash Flow (back to the mortgage terms) The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.) Caps (interest) (back to the mortgage terms) Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan. Caps (payment) (back to the mortgage terms) Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change. Certificate of Eligibility (back to the mortgage terms) The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility) Certificate of Reasonable Value (CRV) (back to the mortgage terms) An appraisal issued by the Veterans Administration showing the property's current market value Certificate of veteran status (back to the mortgage terms) The document given to veterans or reservists who have served 90 days of continuous active duty (including training time). It may be obtained by sending DD 214 to the local VA office with form 26-8261a (request for certificate of veteran status. This document enables veterans to obtain lower down payments on certain FHA insured loans). Closing (back to the mortgage terms) The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing is usually about 3 to 6 percent of the mortgage amount. Commitment (back to the mortgage terms) A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions. Construction loan (back to the mortgage terms) A short-term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses. Contract sale or deed: (back to the mortgage terms) A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale. Conventional loan (back to the mortgage terms) A mortgage not insured by FHA or guaranteed by the VA. Credit Report (back to the mortgage terms) A report documenting the credit history and current status of a borrower's credit standing. Debt-to-Income Ratio (back to the mortgage terms) 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. Deed of trust (back to the mortgage terms) In many states, this document is used in place of a mortgage to secure the payment of a note. Default (back to the mortgage terms) Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage. Deferred interest (back to the mortgage terms) When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization Delinquency (back to the mortgage terms) Failure to make payments on time. This can lead to foreclosure. Department of Veterans Affairs (VA) (back to the mortgage terms) An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans. Discount Point (back to the mortgage terms) see point Down Payment (back to the mortgage terms) Money paid to make up the difference between the purchase price and the mortgage amount. Due-on-Sale-Clause (back to the mortgage terms) A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. Earnest Money (back to the mortgage terms) Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment. Entitlement (back to the mortgage terms) The VA home loan benefit is called entitlement. Entitlement for a VA guaranteed home loan. This is also known as eligibility. Equal Credit Opportunity Act (ECOA) (back to the mortgage terms) Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs. Equity (back to the mortgage terms) The difference between the fair market value and current indebtedness, also referred to as the owner's interest. The value an owner has in real estate over and above the obligation against the property. Escrow (back to the mortgage terms) An account held by the lender into which the homebuyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing. Fannie Mae (back to the mortgage terms) see Federal National Mortgage Association. Farmers Home Administration (FmHA) (back to the mortgage terms) Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere. Federal Home Loan Bank Board (FHLBB) (back to the mortgage terms) The former name for the regulatory and supervisory agency for federally chartered savings institutions. Agency is now called the Office of Thrift Supervision Federal Home Loan Mortgage Corporation (FHLMC) also called "Freddie Mac" (back to the mortgage terms) A quasi-governmental agency that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers Federal Housing Administration (FHA) (back to the mortgage terms) A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages. Federal National Mortgage Association (FNMA) also know as "Fannie Mae" (back to the mortgage terms) A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable. FHA loan (back to the mortgage terms) A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans ($155,250 as of 1/1/96), they are generous enough to handle moderately priced homes almost anywhere in the country. FHA mortgage insurance (back to the mortgage terms) Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid. FHLMC (back to the mortgage terms) The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as "Freddie Mac." Firm Commitment (back to the mortgage terms) A promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan. Fixed Rate Mortgage (back to the mortgage terms) The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower. FNMA (back to the mortgage terms) The Federal National Mortgage Association is a secondary mortgage institution which is the largest single holder of home mortgages in the United States. FNMA buys VA, FHA, and conventional mortgages from primary lenders. Also known as "Fannie Mae." Foreclosure (back to the mortgage terms) A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property. Freddie Mac (back to the mortgage terms) see Federal Home Loan Mortgage Corporation Ginnie Mae (back to the mortgage terms) see GNMA. GNMA (back to the mortgage terms) Government National Mortgage Association Graduated Payment Mortgage (GPM) (back to the mortgage terms) A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it. Guaranty (back to the mortgage terms) A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract Hazard Insurance (back to the mortgage terms) A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like. Housing Expenses-to-Income Ratio (back to the mortgage terms) The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her gross monthly income. See debt-to-income ratio. Impound (back to the mortgage terms) That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves. Index (back to the mortgage terms) A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one- three-, and five-year U.S. Treasury security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average costs-of-funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down. Interim Financing (back to the mortgage terms) A construction loam made during completion of a building or a project. A permanent loan usually replaces this loan after completion. Investor (back to the mortgage terms) A money source for a lender. Jumbo Loan (back to the mortgage terms) A loan which is larger (more than $214,600 as of 1/1/97) than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate. Lien (back to the mortgage terms) A claim upon a piece of property for the payment or satisfaction of a debt or obligation. Loan-to-Value Ratio (back to the mortgage terms) The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. Margin (back to the mortgage terms) The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate. Market Value (back to the mortgage terms) The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time. MIP (Mortgage Insurance Premium) (back to the mortgage terms) It is insurance from FHA to the lender against incurring a loss on account of the borrower's default. Mortgage Insurance (back to the mortgage terms) Money paid to insure the mortgage when the down payment is less than 20 percent. See private mortgage insurance, FHA mortgage insurance. Mortgagee (back to the mortgage terms) The lender Mortgagor (back to the mortgage terms) The borrower or homeowner Negative Amortization (back to the mortgage terms) Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amortization is that the homebuyer ends up owing more than the original amount of the loan. Net Effective Income (back to the mortgage terms) The borrower's gross income minus federal income tax. Non Assumption Clause (back to the mortgage terms) A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. Note: The signed obligation to pay a debt, as a mortgage note. Office of Thrift Supervision (OTS) (back to the mortgage terms) The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board Origination Fee (back to the mortgage terms) The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan. Permanent Loan (back to the mortgage terms) A long term mortgage, usually ten years or more. Also called an "end loan." PITI (back to the mortgage terms) Principal, Interest, Taxes and Insurance. Also called monthly housing expense. Pledged account Mortgage (PAM): (back to the mortgage terms) Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments. Points (loan discount points) (back to the mortgage terms) 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). Power of Attorney (back to the mortgage terms) A legal document authorizing one person to act on behalf of another. Prepaid Expenses (back to the mortgage terms) Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments. Prepayment (back to the mortgage terms) A privilege in a mortgage permitting the borrower to make payments in advance of their due date. Prepayment Penalty (back to the mortgage terms) Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states. Primary Mortgage Market (back to the mortgage terms) Lenders making mortgage loans directly to borrower's such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc. Principal (back to the mortgage terms) The amount of debt, not counting interest, left on a loan. Private Mortgage Insurance (PMI) (back to the mortgage terms) In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on you loan's structure. Realtor (back to the mortgage terms) A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors. Recision (back to the mortgage terms) The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security. Recording Fees (back to the mortgage terms) Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records. Refinance (back to the mortgage terms) Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property. Renegotiable Rate Mortgage (back to the mortgage terms) A loan in which the interest rate is adjusted periodically. See adjustable rate mortgage. RESPA (back to the mortgage terms) Short for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only. Reverse Annuity Mortgage (RAM) (back to the mortgage terms) A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as Satisfaction of Mortgage: The document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage." Second Mortgage (back to the mortgage terms) A mortgage made subsequent to another mortgage and subordinate to the first one. Secondary Mortgage Market (back to the mortgage terms) The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders. Servicing (back to the mortgage terms) All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like. Settlement/Settlement Costs (back to the mortgage terms) see closing/closing costs Shared Appreciation Mortgage (SAM) (back to the mortgage terms) A mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation. Simple Interest (back to the mortgage terms) Interest which is computed only on the principle balance. Survey (back to the mortgage terms) A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings. Sweat Equity (back to the mortgage terms) Equity created by a purchaser performing work on a property being purchased. Title (back to the mortgage terms) A document that gives evidence of an individual's ownership of property. Title Insurance (back to the mortgage terms) A policy, usually issued by a title insurance company, which insures a homebuyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests. Title Search (back to the mortgage terms) An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company. Truth-In-Lending (back to the mortgage terms) A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z. Two-Step Mortgage (back to the mortgage terms) A mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. Also called "Super Seven" or "Premier" mortgage. Underwriting (back to the mortgage terms) The decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount. USURY (back to the mortgage terms) Interest charged in excess of the legal rate established by law. VA Loan (back to the mortgage terms) 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. VA Mortgage Funding Fee (back to the mortgage terms) A premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed. Variable Rate Mortgage (VRM) (back to the mortgage terms) see adjustable rate mortgage Verification of Deposit (VOD) (back to the mortgage terms) A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts. Verification of Employment (VOE) (back to the mortgage terms) A document signed by the borrower's employer verifying his/her position and salary. Warehouse Fee (back to the mortgage terms) Many mortgage firms must borrow funds on a short term basis in order to originate loans which are to be sold later in the secondary mortgage market (or to investors). When the prime rate of interest is higher on short term loans than on mortgage loans, the mortgage firm has an economic loss which is offset by charging a warehouse fee. Wraparound mortgage (back to the mortgage terms) Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top. Resources: RESOURCES Mortgage Bankers Association of America Consumer Information The Mortgage Bankers Association of America is the preeminent association representing the real estate finance industry. Their consumer information site contains several tools and guides to aid in purchasing or refinancing a home. Federal Reserve Board Consumer Information The Federal Reserve Board maintains a web page with consumer information, including a section on home mortgages. The section covers topics such as finding the best mortgage and understanding ARMs. Homebuyer Education by Freddie Mac Freddie Mac is a publicly held corporation chartered by Congress to increase the supply of funds that mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, can make available to homebuyers and multifamily investors. This Freddie Mac site offers a step-by-step tutorial on the home buying decision process and the mortgage application process. United States Postal Service Official Movers Guide What happens after you complete the purchase process? This U.S. Postal Service site provides all kinds of tools and tips to help make the moving process easier.
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