Glossary

A · C · D · E · F · H · I · J · L · M · P · R · T · U · V

A

Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that may change periodically based on market conditions.
Consumer Financial Protection Bureau – ARM

Alternative Income Loans
Your dream of qualifying for a mortgage isn’t out of reach, even with alternative income sources like cash-based earnings, tips, commissions, contracts, or retirement funds. At Choice Mortgage Group, we also specialize in providing loans for less traditional borrowers. Examples: 40-year loan, All in One Loan, Bank Statement Loans- Personal or Business: Primary, Secondary, Investment, DSCR – US and Foreign National, No Income Verification, Foreign National, Asset Depletion Loan, Non-QM Loan, Condotel Loan, Co-Op Loan, Bridge Loan, ITIN Loan, Fix and Flip Loan, Hard Money Loan, Mobile or Manufactured Home Loan.

Amortization
The process of paying off a loan over time through regular payments that cover both principal and interest.
Investopedia – Amortization

Assessment
The process of determining the value of a property for taxation purposes.
The Balance – Property Assessment

C  ⇧

Cash-Out Refinance
Offers access to a substantial amount of cash at a favorable interest rate, notably lower compared to alternatives such as personal loans or credit cards.

Certificate of Title
A document that proves ownership of a property and identifies any liens or legal claims against it.
Investopedia – Certificate of Title

Closing Costs
Fees and expenses, beyond the property cost, incurred during the purchase or sale of a property.
Consumer Financial Protection Bureau – Closing Costs

Closing Disclosure (CD)
A document provided to the borrower before closing, outlining all final terms and costs of the mortgage loan.
Consumer Financial Protection Bureau – Closing Disclosure

Construction-To-Permanent Loan
Also referred to as a one-time, single-close, or construction-perm loan, is tailored for individuals constructing a home. This type of mortgage finances both the purchase of land and the construction of the home. Upon completion of the home, the loan seamlessly transitions into a traditional mortgage, typically with a 15- or 30-year term.

Conventional Loan
A homebuyer’s loan made through a private lender. Compared to a Federal Housing Administration (FHA) loan, a conventional loan often requires a higher credit score to qualify. Conventional loans are not offered or secured by a government entity. Instead, these mortgages are available through private lenders, such as banks, credit unions, and mortgage companies.
Investopedia – Conventional Loan

D  ⇧

Debt-to-Income Ratio (DTI)
A ratio used by lenders to determine a borrower’s ability to manage monthly payments and debts.
Federal Deposit Insurance Corporation – DTI

E  ⇧

Equity
The difference between the market value of a property and the amount owed on the mortgage.
Investopedia – Equity

Escrow
Funds held by a third party on behalf of transacting parties until specific conditions are met.
Investopedia – Escrow

F  ⇧

Family Opportunity Loan
Presents a tailored solution for acquiring residential property on behalf of a parent or adult disabled child unable to secure financing independently. In accordance with Fannie Mae guidelines, this mortgage option enables the purchase of a principal residence for a family member unable to meet mortgage qualification criteria due to an inability to work or insufficient income. Despite not residing in the home, the buyer is deemed the owner-occupant as per guidelines.

FHA Loan
A mortgage loan insured by the Federal Housing Administration, often requiring lower down payments and credit scores.
U.S. Department of Housing and Urban Development – FHA Loans

FHA 203(h) Loan
A specialized offering by the FHA that provides up to 100% financing to aid individuals affected by disasters. It serves to assist in purchasing new properties or reconstructing existing homes post-catastrophic damage. This loan is specifically designed for individuals whose primary residence faced destruction or substantial damage necessitating rehabilitation or replacement within a Presidentially Declared Major Disaster Area (PDMDA).

FHA 203(k) Loan
Recognized as a mortgage rehab loan, renovation loan, or Section 203(k) loan, is a comprehensive solution enabling buyers eyeing fixer-uppers to merge both property purchase and renovation expenses into a single mortgage.

Foreclosure
Legal process by which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as collateral for the loan.
U.S. Department of Housing and Urban Development – Foreclosure

H  ⇧

Home Appraisal
An assessment of a property’s value conducted by a licensed appraiser.
The Appraisal Foundation – Home Appraisal

Home Equity Line of Credit (HELOC)
A line of credit secured by the equity in a home, allowing the borrower to access funds as needed.
Bankrate – HELOC

I  ⇧

Interest Rate
The percentage charged by a lender for the use of borrowed money, usually expressed annually.
The Balance – Interest Rate

J  ⇧

Jumbo Loan
A type of non-conforming mortgage loan that is not backed by the federal government and exceeds the conventional conforming loan limits set by the Federal Housing Finance Agency (FHFA). If you’re looking to finance a more expensive property or you live in a high-cost area, you may need a Jumbo Loan.

L  ⇧

Lien
A legal claim against a property used as collateral to secure a debt.
Investopedia – Lien

Loan-to-Value Ratio (LTV)
The ratio of the loan amount to the appraised value or purchase price of a property.
Investopedia – LTV Ratio

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M  ⇧

Mortgage Broker
An intermediary who brings mortgage borrowers and mortgage lenders together.
LINK

Multiple Listing Service (MLS)
A database used by real estate brokers to share information about properties for sale.
National Association of Mortgage Brokers – Mortgage Broker

P  ⇧

Pre-Approval
A lender’s conditional commitment to lend to a borrower based on verified financial and credit information.
Consumer Financial Protection Bureau – Pre-Approval

Private Mortgage Insurance (PMI)
Insurance that protects the lender if the borrower defaults on the loan.
Federal Reserve – PMI

R  ⇧

Real Estate Agent
A licensed professional who represents buyers or sellers in real estate transactions.
National Association of Realtors – Real Estate Agent

Renovation Loan
A government-backed mortgage that combines the costs of a home purchase (or refinance) with the costs of home renovations. This loan offers homeowners and home buyers an easier way to pay for home remodeling costs.

Reverse Mortgage
A loan available to homeowners over 62 years old, allowing them to convert home equity into cash.
U.S. Department of Housing and Urban Development – Reverse Mortgages

T  ⇧

Title Insurance
Insurance that protects against financial loss from defects in title to real property.
National Association of Insurance Commissioners – Title Insurance

U  ⇧

Underwriting
The process of evaluating a borrower’s creditworthiness and the risk involved in extending a mortgage loan.
Investopedia – Underwriting

USDA Loan
A mortgage loan guaranteed by the United States Department of Agriculture for eligible rural and suburban homebuyers.
USDA – Home Loans

V  ⇧

Veterans Affairs (VA) Loan
A mortgage loan guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, service members, and their spouses.
VA.gov – VA Loan