C F M - Mortgage Review

Mortgage

Type of loan for a residence or property paid over time

Borrower

The person taking out a mortgage

Lender

The bank/other institution that lends a mortgage

Fixed Rate Mortgage

A mortgage with a fixed/set interest rate for the rest of the loan

ARM

interest rate is fixed for a time but then “adjusts”

Principle

The amount of money that is borrowed for the mortgage

Interest

the cost of borrowing money

Closing costs

the costs incurred by by the buyer during the mortgage process

Down payment

prepaid amount: price of home - down payment = mortgage

Equity

difference between the value of the home and the mortgage loan

Pay Stubs

documents that an employee receives attached to a paycheck: provides current tax, salary, etc.

W2 Forms

Reports an employees annual wages and the withheld from their paycheck

No Doc Mortgage

Program in which assets and income aren’t disclosed on the loan application + employment isn’t verified

Home appraisal

estimation of a homes market value by a licensed appraiser

Home title

Document that gives evidence of legal ownership over a property

Property Liens

Legal claim on real estate that grants the holder a specific amount of money upon sale of the property

Loan origination Fee

upfront charge, percentage of a loan that lenders charge for processing + setting it up

Point

Unit to measure percentage

Term

Fixed amount of time

Escrow

an account that holds funds + assets on behalf of a third party until both conditions are met.

PMI

“Private Mortgage Insurance:“ You pay extra if you don’t put 20% down and its added to your mortgage+loan to value ration

When does PMI end?

After the 20% is covered

Closing costs are how much of the costs of the house?

2-5%

Buying Contingent

A listing that is kept active Incase a condition isn’t satisfied

P.I.T.I

Principal, Interest, taxes, Insurance

WHat is the recommended Conservative formula

3x your family’s income with a 20% down payment

What is a forclosure

Process of taking possession of a mortgages property as a result of a mortgagors failure to pay

What is a lease?

Legally-binding contract that explains the obligations & rights of a tenant and landlord

What is renters insurance

Protects your personal possessions and liability