A mortgage loan application (1003) and transmittal summary form (1008) developed by Fannie Mae. 1003 is sometimes called the Uniform Residential Loan Application.
4506-T Request for Tax Return Transcript
A form used to request a transcript of tax returns and W-2’s from the IRS.
Appraisal Management Company (AMC)
An independent administrative entity that selects the appraiser and delivers the appraisal report to the lender.
Annual Percentage Rate (APR)
The annual percentage rate is a measure of the cost of credit, expressed as a yearly rate, that relates the amount and timing of value received by the consumer to the amount and timing of payments made. The costs included in the calculation include origination fees, discount points, escrow fees, prepaid interest, and mortgage insurance premiums. This rate must be disclosed along with an interest rate to allow borrowers to compare loans.
Amortization is the distribution of loan repayments into equal amounts for the duration of the loan. A greater amount of the payment is applied to interest at the beginning of the amortization schedule, while more money is applied to principal at the end.
Appraisal, Property appraisal
A fair market value of property performed by a licensed appraiser. The appraiser takes into account not only condition, but also the value of similar local properties or comparable sales.
The measurable value that increases on a home or property. Market improvements and home renovations often drive appreciation value.
The decision to make a loan after review of credit, income, assets and property
A type of mortgage in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer.type of mortgage that may be transferred, interest rate and all, from seller to buyer. Buyer usually needs to qualify.
Automated Underwriting System (AUS)
An automated platform that processes the borrower’s information through a programmed process that instantly arrives at a loan decision.
The individual(s) extended a loan and mortgage for the purchase of a house and/or property. The borrower is responsible for making all payments and fees associated with the loan over the life of the loan.
Real estate agent that works on behalf of the homebuyer.
Maximum interest rate, as defined in the promissory note, that a borrower may be expected to pay on an adjustable rate mortgage (ARM) over the life of the mortgage.
Cash out refinance
A mortgage refinance in which the borrower accesses equity in the property to increase the size of the loan to garner additional cash. E.g.; A borrower who owes $300,000, refinances into a new $400,000 loan, because the value of the home increased since date of original purchase. Interest rates are sometimes higher for cash out loans, depending on the amount of equity remaining in the home. An alternative way to access cash from home equity would be from a Home Equity Line of Credit (as a second mortgage).
The formal documented sale of a home and/or property that includes signing all documents associated with the exchange and payment of required closing fees. An escrow agent usually oversees this process.
Closing (escrow) agent
The person responsible for mediating the closing, documenting the process, and assuring all associated paperwork is complete.
- Non-recurring closing costs include one-time fees paid at closing like the escrow fee, appraisal fee, notary fee, processing/underwriting fee, recording fee, title insurance, etc.
- Recurring fees are fees that will continue even after the close of escrow: mortgage interest, property taxes and insurance. These fees recur throughout the life of the loan.
Closing Disclosure (CD)
Disclosure provided to borrower three days prior to signing loan documents, to compare costs to the Loan Estimate. The CD offers a clear, concise picture of fees and terms of the mortgage loan. This form is a required step in the loan application process per TRID.
A required document prepared by escrow for lender that states the actual costs of the loan. The closing statement should match with the CD.
A borrower with good credit that agrees to take on shared responsibility for a home loan, so the primary borrower may purchase property. The co-borrower may be a non-occupant co-borrower who doesn’t live in/on the property.
Comparable sales (comps)
Similar home sale prices in the region used as a metric in the calculation of a home’s appraised value.
Additional information or documentation required by the AUS or an underwriter to finalize loan approval. Conditions can be PTD (prior to document) or PTF (prior to funding). PTD conditions can impact the borrower/property qualification whereas PTF conditions, although necessary, are more fundamental in nature.
A conventional loan that “conforms” to Fannie and Freddie guidelines. Fannie and Freddie will not purchase loans that do not conform, which is why we call them “conforming loans.” There are limits for conforming loans that vary based on county. Any loan that exceeds the county loan limit or does not conform to Fannie/Freddie guidelines would be considered “non-conforming”. Non-conforming loans include FHA, jumbo and portfolio products.
Contingencies are common clauses added to purchase agreements that allow the buyers to back out of the deal without losing their good faith (or EMD) deposit. Common contingencies are loan, appraisal and inspection contingencies. A loan contingency expresses that the offer is contingent upon securing financing for the house. An appraisal contingency expresses that the offer is contingent upon the buyer’s review of the appraisal report. An inspection contingency expresses that the offer is contingent upon the buyer’s review of the inspection reports. The buyer will indicate in his offer the specific contingencies and the number of days that they will leave each contingency in place.
A loan that is not insured or guaranteed by the federal government (like FHA or VA). A conventional loan will be bound to Fannie Mae and Freddie Mac guidelines.
Money extended from a lender to a borrower based on that borrower’s credit history.
Close of Escrow
Date upon which all paperwork associated with a mortgage/property sales exchange is finalized.
Amount of money a borrower owes to creditors; a metric used to calculate creditworthiness.
Debt to Income Ratio (DTI)
DTI helps determine how much a borrower can afford to pay each month by dividing the borrower’s liabilities by monthly income (before taxes) and arriving at a percentage. The borrower needs to fall below certain thresholds to qualify.
An official and public document that establishes property ownership.
Deed of trust
The document used to transfer legal title in real property to a trustee, which holds the property as security for the loan between the borrower and lender. The deed of trust remains in place until the borrower pays the loan in full. The borrower keeps the equitable title to the property, but the trustee holds the legal title to the property. Equitable title refers to a person’s right to obtain full ownership of the property. Legal title is the actual ownership of the land. The bank holds legal title which gives it the rights to transfer ownership of the property to another party (in the case of default).
Inability of borrower to make regular and consecutive payments on a loan. Once a borrower is 90 days late, a notice of default is issued.
A reduction in the value of an asset over the course of time, usually due to “wear and tear.” A borrower may depreciate their rental property or personal property used for a business on their tax returns.
A measure of interest; 1 point = 1% of the home loan value. Homebuyers may pay points up front (a type of buy-down) to lower their overall interest rate and mortgage payment.
Earnest money (good faith deposit)
A sum of money usually put up front by the buyer when an offer on a home or property is made. The purpose of earnest money is as a token of “good faith,” a symbol that the buyer is serious about pursuing purchase.
Home equity is the measurable value of a property above and beyond that owed on a loan. This value grows as the property owner pays off the mortgage, and/or as the value of the home appreciates with the market.
An escrow company acts as the third-party buffer between buyer and seller during a real estate transaction. Because buying or selling real estate generally involves transferring a large amount of money, is it imperative to have a licensed and highly regulated neutral third party to coordinate the transaction. Escrow orders title insurance, collects and prepares loan/legal documents, arranges document signing, collects funds, and disperses to all parties in the transaction.
Escrow account (impound account)
An Impound Account is set up to allow the borrower to pay property taxes and home insurance on a pro-rata monthly basis, instead of on a semi-annual or annual basis. The taxes and insurance are simply added into the monthly mortgage payment by the loan servicer. The servicer will then keep these funds in the impound account until the bills come due. At that point, the servicer will pay these bills automatically on the borrower’s behalf. Impound accounts are usually required if you are putting less than 10% down, and are always required with FHA and VA loans.
The contact from the escrow company that is responsible for mediating the closing, documenting the process and ensuring that all associated paperwork is completed. (also see Escrow Company).
The price that a piece of property will bear in the current market.
Fannie Mae (FNMA)
A private mortgage corporation that began as a government subsidized entity in the late 1930s. Fannie Mae is a government sponsored enterprise (GSE) and is responsible for setting annual conforming loan limits and assuring that most Americans can finance a home (in addition to Freddie Mac). Fannie Mae is commonly known as a secondary mortgage market and lends to mortgage lenders which in turn extend mortgages to borrowers.
Federal Housing Administration. The FHA is a U.S. government agency under the Department of Housing and Urban Development (HUD) that insures loans made by banks and lenders.
Loans extended by FHA-approved lenders typically are designed to assist borrowers who are unable to get the necessary approval for conventional home loans. Since guidelines are more flexible, mortgage insurance is a requirement on all FHA loans because there is an additional risk.
First time home-buyer (FTHB)
A home loan borrower who has not had a mortgage in the past 3 years.
Fixed rate mortgage
A conventional mortgage that has fixed, un-changing interest rate over the life of the loan. Monthly payments are the same from month to month.
The repossession of a home and/or property by a lender in the event of borrower loan default or the inability to meet mortgage agreements.
Freddie Mac (FHMC)
Along with Fannie Mae, Freddie Mac is a leading government sponsored enterprise (GSE) and is responsible for maintaining reasonable mortgage market stability to ensure Americans can purchase homes. Freddie Mac is a secondary mortgage market where the corporation lends to lenders, who in turn extend mortgage products directly to borrowers.
For Sale by Owner (FSBO)
The process of selling real estate without the representation of a real estate broker or agent.
- The process of wiring (releasing) money from the mortgage lender to title or escrow prior to closing a real estate transaction. “Table Funding” means the funds must be “on the table” when the borrower signs documents. Table funding is synonymous with wet funding. Texas is a wet funding state, while only CA, AZ, WA, OR, ID, HA, AL, NV (all western states) are dry funding states.
- In a “Dry Fund” state, borrowers can sign loan documents with “prior to funding” conditions outstanding, and the loan does not necessarily have to fund at a set time or fund at all. When we start doing business in Texas, ALL conditions will be PTD conditions because when borrowers sign, we fund (no matter what).
8401 N Fresno Street
Fresno, CA 93720
Company NMLS: 271603