10-year Treasury Yield
The interest rate on U.S. Treasury bonds with a maturity of 10 years.
A type of FHA loan that allows borrowers to finance the purchase and renovation of a property in a single loan.
A type of mortgage loan where the borrower takes out two loans, one for 80% of the purchase price and another for the remaining 20%.
Area Median Income (AMI) is a measure of the median income for a particular geographic area. It is used as a benchmark to determine eligibility for certain housing programs, such as low-income housing tax credits. To calculate AMI, the income of all households in the area is collected and the median income is determined.
Automated Underwriting System
An automated underwriting system (AUS) is a technology system created by Freddie Mac and Fannie Mae that uses algorithms to evaluate mortgage loan applications and provide lenders with a recommendation on whether to approve or reject the loan based on predetermined risk factors.
Borrower Paid Compensation
A type of compensation paid by the borrower, rather than the lender, to the mortgage broker or other intermediary for their services in arranging the loan.
The most common type of corporation in the United States, in which the corporation is treated as a separate legal entity from its owners and is subject to corporate income tax only on its profits.
Cash out rule
A rule that restricts when you can take cash out of a mortgage refinance and the amount of cash out based on factors such as LTV.
Credit Alert Interactive Voice Response System (CAVIRS) is a database maintained by the HUD that contains information on borrowers who are delinquent on their federal debts or have defaulted on a government-insured loan.
A person who applies for a loan with the primary borrower and is jointly responsible for repaying the debt.
Combined Loan to Value
Combined Loan to Value (CLTV) ratio is similar to TLTV, but takes into account multiple loans on the property such as the current balance of a HELOC. It is calculated by dividing the total amount of all loans on the property by the value of the property.
Condominiums are a type of residential property in which the individual interiors of each unit is owned separately by the residents, but the common areas, such as hallways and recreational facilities, are owned jointly.
An individual who helps get a loan application to closing by providing guidance to get all necessary documents and information together before passing it along to underwriting. Key responsibilities include reviewing financial documents and requesting any additional items, ordering appraisals and title work, clearing conditions, prepare loan files for closing, and keep everything on schedule.
A lender or mortgage broker that originates and funds loans on behalf of another lender.
A person who signs a loan or credit application with the primary borrower, agreeing to take on responsibility for the debt if the primary borrower fails to make payments.
Delayed financing allows a buyer to purchase a home with cash and get a mortgage within six months using a cash out refinance. This provides the buyer with the the advantages of buying with cash without leaving that cash locked in the equity of the home after the sale closes.
Desktop Underwriter (DU) is a software application developed by Fannie Mae that automates the process of evaluating mortgage loan applications for credit worthiness based on predetermined risk factors.
Earnest Money Deposit
Earnest Money Deposit (EMD) is a deposit made by a buyer to show their commitment to a real estate purchase. The EMD is typically held in escrow and is applied towards the down payment or closing costs.
A financial arrangement in which a third party holds and manages the payment of funds on behalf of two other parties, typically to ensure that the funds are used for a specific purpose or transaction such as earnest money deposits, homeowners insurance premiums, or property taxes.
A mortgage loan insured and backed by the government and issued by an approved lender. FHA (Federal Housing Administration) loans require lower down payments than many conventional loans and allow for lower minimum credit scores making them extremely popular with first-time homebuyers.
FHA Case Number
A unique number assigned by the Federal Housing Administration to each mortgage loan application registered with HUD to be underwritten to FHA guidelines. The FHA case number is used to track the loan throughout the origination and servicing process.
Federal Home Loan Mortgage Corporation (FHLMC), commonly know as Freddie Mac, is a government-sponsored entity that purchases mortgage loans from small banks and credit unions and backs these loans on the secondary mortgage market. It is the brother program to Fannie Mae and was started by Congress in 1970.
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a government-sponsored entity that purchases mortgage loans from large, commercial banks to make mortgages more available to low- to median-income borrowers. Fannie Mae does not origniate loans but backs these loans on the secondary mortgage market. It is the sister program to Freddie Mac and was started by Congress in 1938.
Freddie Mac's Loan Level Price Adjustments, which are fees applied to mortgage loans based on the borrower's credit score and loan-to-value ratio.
Insurance provided by the title insurance provider to cover the costs of the time between the title search completion and the deed/new mortgage recording.
Gift of Equity
A portion of the seller's equity in the property that is transferred from the seller of a property to the buyer as a credit in the transaction. This is typically done to help the buyer afford the down payment or closing costs.
Home Equity Line of Credit (HELOC) is a line of credit borrowed against the available equity of a home that gives the homeowner a revolving line of credit to use for any expenses desired. The home is used as collateral for this line of credit.
High Loan to Value
High Loan to Value (HLTV) ratio is similar to both TLTV and CLTV, but refers to the maximum loan amount a lender is willing to approve you for based on what your collateral is worth. It is calculated in the same way as TLTV and CLTV, by dividing the total amount of the loan by the value of the property.
The Home Ownership and Equity Protection Act, a federal law that provides protections for consumers against predatory lending practices.
A loan program offered by Freddie Mac that is similar to HomeReady. It is also designed to help low- to moderate-income borrowers buy a home and offers flexible credit and income guidelines. It allows for a down payment as low as 3% of the purchase price.
A type of insurance that provides coverage for the structure of a home, as well as the personal belongings and liability of the homeowner, against a number of risks such as fire, burlgary, and storms.
A loan program offered by Fannie Mae that is designed to help low- to moderate-income borrowers buy a home. It offers flexible credit and income guidelines and allows for a down payment as low as 3% of the purchase price.
The official handbook for the Federal Housing Administration's Single Family Housing Policy, which provides detailed guidance on the rules and regulations for FHA-insured mortgages.
A type of mortgage loan where the borrower only makes payments on the interest accruing on the loan, rather than making payments towards the principal balance.
Intergovernmental Panel on Climate Change, a scientific body that assesses the state of knowledge regarding climate change.
Lender Paid Compensation
A type of compensation paid by the lender, rather than the borrower, to the mortgage broker or other intermediary for their services in arranging the loan.
Lenders Title Insurance
Insurance that protects the lender against losses resulting from defects in the title to a property.
A set of guidelines used by lenders to determine which loan products and terms to offer to borrowers.
Lenders Mortgage Insurance (LMI) is a type of insurance that protects a lender in the event that a borrower defaults on a home loan. It is typically required when a borrower has a high loan-to-value ratio and is typically paid for by the borrower as a one-time premium.
Loan Prospector (LP) is a software application developed by Freddie Mac that automates the process of evaluating mortgage loan applications for credit worthiness based on predetermined risk factors.
A [loan origination system (LOS)](https://www.yoursonar.com/product/loan-origination-software) is a software application used by the mortgage industry to manage and automate the loan origination process.
Loan-to-value ratio, the ratio of the amount of the loan to the value of the property being financed.
Mortgage Insurance Premium (MIP) is the amount paid by the borrower to insure the mortgage against default. It is typically added to loans that have a down payment less than 10% and government-insured mortgages and is required on all FHA Loans.
A situation where the amount of the loan balance increases over time, despite the borrower making regular payments.
Nationwide Mortgage Licensing System (NMLS) is a database maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators that contains information on individual mortgage loan originators and their licensing status.
Non Occupying Co-Borrowers
Co-borrowers who are not living in the property being financed by the mortgage loan.
A written promise to pay a certain amount of money on a specified date. In the context of a loan, the note is the legal agreement between the borrower and the lender that outlines the terms of the loan.
Odd Days Interest
The interest that accrues on a loan between the closing date and the date of the first regular payment. It is calculated based on the number of days left in the period and the loan's interest rate.
Official Loan Estimate
A document provided by a lender, based on federal regulations, to a borrower that estimates the terms and costs of a mortgage loan.
The process of creating or originating a loan, typically involving the evaluation of a borrower's creditworthiness and the determination of the terms and conditions of the loan.
Owners Title insurance
Insurance that protects the owner of a property against losses resulting from defects in the title to the property.
Per Diem Interest
The interest that accrues on a loan on a daily basis. It is calculated by dividing the annual interest rate by the number of days in the year.
Private Mortgage Insurance (PMI) is a type of insurance required by lenders for certain types of mortgages, typically conventional loans with less than 20% down or an LTV above 80% for refinances, to protect the lender against loss if the borrower defaults on the loan.
Power of Attorney and is a legal document that gives someone the authority to act on another person's behalf. In the context of a loan, a POA might be used to grant someone the ability to sign loan documents or make decisions about the loan on the borrower's behalf.
An extra payment to a mortgage that is applied directly to the principal balance. This reduces the outstanding principal balance of the loan and can save the borrower money on interest.
The act of obtaining, through clients and third parties, the necessary documents needed to complete the mortgage decision process.
Planned Unit Developments (PUD) are a type of residential development in which single-family homes, and occasionally condos or townhomes, are grouped togetherin a homeowners association and share common amenities such as parks or community centers.
Regulation B is a federal regulation that implements the Equal Credit Opportunity Act and prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, or age.
Regulation Z is a federal regulation that implements the Truth in Lending Act and sets rules for the disclosure of credit terms to borrowers.
Income generated from renting out a property or units of a property. Rental income can typically be used to qualify for a mortgage if the borrower can prove steady income for the past three years.
An addendum or attachment to a contract that modifies the terms of the agreement. In the context of a loan, a rider might be used to add or remove certain conditions or provisions.
A type of business structure that is similar to a regular corporation, but offers certain tax advantages, such as the ability to pass corporate income, losses, deductions, and credits through to the individual shareholders.
A discount or incentive offered by the seller of a property to the buyer, typically in the form of money off the purchase price or help with closing costs.
The value of a person's labor that is contributed towards a project, such as building a home. Sweat equity could once be used as a form of down payment or collateral for a loan, but is no longer accepted on most loan products.
Truth in Lending Act (TILA) is a federal law that requires lenders to disclose the terms and conditions of a loan to borrowers, including the interest rate and any fees.
A type of insurance that protects the owner of a property against loss or damage resulting from defects in the title to the property such as outstanding claims or liens on the property.
Total Loan to Value
Total Loan to Value (TLTV) ratio is a measure of the size of a loan compared to the value of the property being used as collateral. It is calculated by dividing the total amount of all loans and liens on the property (including subordinated liens) by the value of the property.
A type of residential property that is similar to a row house or terraced house, with multiple units that can be attached side-by-side or detached. Townhomes differ from condos in that the owner owns the entire structure and land.
TILA-RESPA Integrated Disclosure (TRID) is a rule issued by the Consumer Financial Protection Bureau that requires lenders to provide borrowers with a standardized set of mortgage loan documents at various points in the loan origination process
TX - 50 (a) 6 rules
A Texas Section 50(a)(6) loan, also known as a Texas Cash-Out Refinance, is a type of mortgage loan that allows a borrower to take out a new loan to pay off their existing mortgage and to receive cash back at closing.
Upfront Mortgage Insurance Premium (UFMIP) is the amount of mortgage insurance premium that is paid at the time of closing for homes financed with FHA loans. It is determined based on a HUD calculation and loan parameters.
The process of evaluating a loan application and documents based on a predetermined set of guidelines to determine if a borrower qualifies for a particular loan.
A type of mortgage lending where a lender originates and funds loans directly, without going through a retail mortgage broker.