Repaying of a mortgage debt with equal periodic payments of both principal and interest, calculated to retire the obligation at the end of a fixed period of time.

The annual cost of a loan, expressed as a yearly rate. APR takes into account interest, discount points, lender fees and mortgage insurance, so it will be slightly higher than the interest rate on the loan.

Often referred to as a 1003, an initial statement of personal and financial information required to approve your loan.

A written estimate by a licensed residential appraiser of a property’s current market value, based on recent sales information for similar properties, the current condition of the property and other neighborhood characteristics.

A professional with knowledge of real estate markets and skilled in the practice of assessing the fair market value of real property. When a property is appraised in connection with a loan, the appraiser is selected by the lender, but the appraisal fee is usually paid by the borrower.

Approval means that the borrower meets the lender’s qualification requirements and also its underwriting requirements for the loan requested.

A ratio that indicates what portion of a person’s gross monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI, or principal, interest, taxes and insurance), credit card payments, child support and other loan payments. Also known as debt-to-income ratio.

Limits on changes in ARM interest rates or monthly payments, either in an adjustment period or over the life of the loan.

Borrower funds that are available to cover down payment and closing costs. If lending guidelines require the borrower to have cash reserves at the time the loan closes, or that the down payment come from specified sources, the borrower’s cash available for closing does not include cash reserves or money from other sources.

A refinance for more than the balance of the original mortgage, with the extra money taken out of the equity in the property.

Meeting between the buyer, seller and lender (or their agents) at which property and funds legally change hands.

Fees incurred in a real estate or mortgage transaction and paid by borrower and/or seller during a mortgage loan closing. These typically include a loan origination fee, discount points, attorney’s fees, title insurance, appraisal fees, survey fees and any items that must be prepaid, such as taxes and insurance escrow payments. The cost of closing is usually about 2 to 5 percent of the mortgage amount.

A disclosure that lenders are required to provide to consumers at least three days prior to loan settlement. The Closing Disclosure outlines loan terms, projected payments, closing costs, cash to close, loan calculations and other information specific to the loan transaction.

A condition that must be satisfied before a contract is legally binding before a sale can close.

A mortgage not insured by the FHA or guaranteed by the VA.

A report detailing the credit history of a prospective borrower, used when determining creditworthiness.

A single numerical score, based on an individual’s credit history, that measures that individual’s credit worthiness. Credit scores are as good as the algorithm used to derive them. The most widely used credit score is called FICO for Fair Issac Co. (which developed it).

Rolling short-term debt into a home mortgage loan, either at the time of home purchase or later

The ratio, expressed as a percentage, that results when a borrower’s monthly payment obligation on long-term debts is divided by monthly income.

A legal document that transfers a property from one owner to another. The deed contains a description of the property, and is signed, witnessed and delivered to the buyer at closing.

Agreement to pledge property as security for a loan, used in many states in place of a mortgage. In this arrangement, the borrower transfers legal title to a trustee who holds the property in trust as security for the repayment of the debt. The deed of trust becomes void if the debt is repaid, but if the borrower defaults on the loan, the trustee may sell the property to pay the debt.

Money paid to a lender at closing in exchange for lower interest rates. Each point is equal to 1 percent of the loan amount. 

Money paid for a house from one’s own funds at closing. The down payment will be the difference between the purchase price and the mortgage amount.

Deposit made by a buyer in evidence of good faith when the purchase agreement is signed.

Federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

The percentage of property value held by the owner; the difference between the current market value of a property and the outstanding mortgage balance.

Account held by a lender containing funds collected as part of mortgage payments for annual expenses such as taxes and insurance, so that the homeowner does not have to pay a large sum when these fall due.

Prohibits discrimination in real estate transactions because of race, color, religion, sex, handicap, familial status (families with children), or national origin. It applies to mortgage lending as well as other aspects of real estate transactions, including sales and rentals, real estate brokerage, and appraisals.

A government agency, division of the Department of Housing and Urban Development, that insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans.

The finance charge is the cost of consumer credit expressed as a dollar amount. It includes the amount of interest you will pay during the term of the loan, origination points, and certain other items. Some closing costs are not treated as finance charges.

 An interest rate that is fixed for the term of the loan.

Allowing the interest rate and points to vary with changes in market conditions.

Protection against flood loss through the 1973 Flood disaster Protection Act. This insurance compensates for physical damage to a property by flood. Flood is typically excluded from the standard homeowner’s hazard insurance provisions.

A ratio that indicates what portion of an individual’s income is used to make mortgage payments. It is calculated as an individual’s monthly housing expenses divided by his or her monthly gross income and is expressed as a percentage.

The VA funding fee is a percentage of the loan amount which varies based on the type of loan, your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.

The funds a borrower receives that do not have to be paid back. The gift is often from a family member to be used towards a down payment on a home purchase.

Also known as homeowner’s insurance. Protects the insured against loss due to fire or other natural disaster in exchange for a premium paid to the insurer.

An inspection of the condition of a property. A third party conducts the inspection, which includes all major appliances and structural elements. If an inspector finds something wrong, and your sales contract allows you to, you can request that the seller pay for the repairs. If the seller refuses, and your sales contract allows you to, you may not have to proceed with the purchase of the home.

Insurance purchased by the borrower, and required by the lender, to protect the property against loss from fire and other hazards. Also known as Hazard Insurance.

Charge paid for borrowing money, calculated as a percentage of the amount borrowed.

The rate charged to the borrower each period for the amount of the loan.

Real estate bought for investment purposes as opposed to private residential. Often the property will be used for rental purposes, such as a rental home, apartments or other spaces that give owners the opportunity to create profit and income over the long term.

A mortgage larger than the limits set by Fannie Mae or Freddie Mac. This limit is changed periodically. A C&F Mortgage Loan Officer can tell you the current limit. This does not mean that you cannot borrow more than the limit it simply means that Fannie Mae and Freddie Mac agencies would not purchase the loan.

An additional charge that a borrower is required to pay as a penalty for failure to pay a regular installment when due.

The amount the borrower promises to repay, as set forth in the mortgage contract. 

A document required by lenders prior to loan approval; containing detailed information about the borrower and property. Referred at as a 1003.

A formal notification from a lender stating that the borrower’s loan has been conditionally approved, and specifying the terms under which the lender agrees to make the loan.

A Loan Estimate is a three-page form that you receive after applying for a mortgage. The Loan Estimate tells you important details about the loan you have requested. The lender must provide you a Loan Estimate within three business days of receiving your application.

Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses. They are also known as Loan Advisors, Loan Originators, and Mortgage Loan Professionals.