I know that the mortgage industry can seem overwhelming and that its complexity causes many people to walk away from substantial savings. I work one-on-one with my clients to help ensure their comfort through every step of the mortgage loan process. Below, I have listed and defined some of the more common industry terms.

Adjustable rate mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.

Annual percentage rate (A.P.R.)
A measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate. APR provides borrowers with a good way to compare different mortgages because all lenders apply the same rules in calculating the annual percentage rate.

Bi-weekly Payment Mortgage
A payment plan that takes a monthly Principle & Interest (P & I) payment and splits it in half so the half is paid every other week. This results in 26 payments allowing the borrower to make an extra payment each year resulting in drastically reduced principle balances and increased savings in interest.

Conforming Loan
Loans that qualify for a Fannie Mae or Freddie Mac approval and are below $359,650.

Conventional loan
A mortgage not insured by FHA or guaranteed by the VA. All of my loans are privately held and are not funded through government associated banks & lenders.

Debt-to-Income Ratio (DTI)
The ratio, expressed as a percentage, of a borrower's monthly payments on debts is divided by his or her gross monthly income.

Equity
The difference between the amount(s) you owe on your current mortgage and the present value of your home.

Federal Home Loan Mortgage Corporation (FHLMC)
"Freddie Mac" Agency which purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers.

Federal National Mortgage Association (FNMA)
"Fannie Mae" A federally sponsored private corporation which purchases and sells conventional residential mortgages.

HELOC ((Home Equity Line of Credit)
Much like a credit card, a HELOC is a revolving line of credit derived from available equity in a borrower’s house.

HUD-1 statement
Itemized listing of the funds payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts as well as show the seller's net proceeds and the buyer's net payment at closing.

Jumbo Loan
A loan amount that exceeds $359,650.

Loan-to-Value Ratio (LTV)
A percentage derived by the amount of the loan to the appraised value of the property.

Lock
Lender's guarantee that the mortgage rate quoted will be good for a specific number of days from day of application.

Mortgage Insurance
Money paid to insure the mortgage when the down payment is less than 20 percent or LTV is greater than 80%.

Mortgage Life Insurance
A term life insurance that ensures the debt is automatically paid by insurance proceeds if the borrower dies while the policy is in force.

Origination Fee
Fee charged by a lender to cover various expenses relevant to the loan process such as preparation of loan documents, credit checks, etc. Often it is computed as a percentage of the loan amount.

PITI
Principal, Interest, Taxes and Insurance.

Points
A percentage point, equal to one percent of the loan. (e.g., two points on a $100,000 mortgage would cost $2,000). Generally used to “buy-down” the interest rate of the loan by prepaying interest.

Prepaid Expenses
Costs paid in advance such as interest or to create/adjust an escrow account.

Prepayment Penalty
Financial charge for early repayment of debt, usually a percentage of the remaining principle balance of the loan.

Real Estate Settlement Procedures Act (RESPA)
Consumer protection law that requires lenders to give borrowers advance notice of closing costs and various disclosures.

Recession
Law that gives the borrower the right when refinancing, three days to cancel after settlement. This does not apply to purchases or investment property refinances.

Second Mortgage
Mortgage held in the second lien position behind a first mortgage.

Secondary Mortgage Market
Where primary mortgage lenders sell their mortgages in order to originate more new loans.

Title Insurance
Policies protecting the lender and/or borrower against any errors in the title search or preexisting liens not found during title search.

Verification of Deposit (VOD)
A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.

Verification of Employment (VOE)
A document signed by the borrower's employer verifying his/her position and salary.