Mortgage Terminology Review

These flashcards cover essential mortgage terms and definitions to aid in understanding housing finance.

APR

Annual Percentage Rate, the annual rate charged for borrowing or earned through an investment.

Backend Ratio

A ratio that determines the availability of income plus any long term debt towards housing affordability, similar to total debt ratio.

CLTV

Cumulative Loan to Value, includes all loans in the ratio of loan(s) to value of the property.

Discount Point

A fee, usually 1% of the amount being loaned, paid to lower the interest rate on a mortgage.

DTI

Debt to Income, a ratio showing the amount of debt a person has versus their income; lower is better.

Equity

The amount of value a property has after subtracting what is owed on any loan.

Frontend Ratio

A ratio that determines the availability of income for just housing affordability, also known as housing ratio.

LTV

Loan to Value, a ratio representing a mortgage loan versus the value of a property.

Mortgage Banker

A person who originates loans for a federally chartered financial institution and is registered with NMLS but does not need to be licensed.

Mortgage Broker

A person who originates loans for their own company and must be licensed by the state or states they work in.

Mortgage Loan Originator (MLO)

A person who originates loans for a Broker or Company and must be licensed by the state or states they work in.

NMLS

Nationwide Mortgage Licensing System, a system that oversees mortgage licensing.

PITI

Principal, Interest, Taxes, and Insurance, the four elements of most mortgage payments.