Here is a short list of mortgage terms that will be helpful to know as you go through the home-buying and mortgage process:
Appraised Value – An opinion of a properties value as determined by a licensed real estate appraiser.
Clear Title – A home with no liens including outstanding debt or legal questions about its ownership.
Closing Costs – Fees paid when ownership of a property passes from the seller to the buyer. These include real estate agent commission, legal fees and recording fees, property taxes and homeowner’s insurance. The lender must provide the borrower a Good Faith Estimate to itemize the total of the expected closing costs.
Good Faith Estimate (GFE) -An estimate is a standard form which is intended to be used to compare different offers (or quotes) from different lenders or brokers. The good faith estimate is only an estimate. The final closing costs may be different; however, the difference can only be 10% of the third party fees. Once a good faith estimate is issued the lender/broker cannot change the fees in the origination box. Click here for an example GFE.
LTV – The loan-to-value ratio is the percentage relationship between the amount of a loan and the value of the home. To determine LTV, divide the amount of the loan by the home’s value or purchase price.
PITI – This stands for principal, interest, taxes and insurance — the components of a monthly mortgage payment.