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18 Cards in this Set
- Front
- Back
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PREAPPROVAL |
Formal loan approval given before the buyer has chosen property to purchase, establishing the maximum loan amount that the lender is willing to provide |
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PREAPPROVAL LETTER |
A letter from a lender in which the lender agrees to loan the borrower up to a specified amount when she finds a home she wants to buy, provided the property meets the lender's standards |
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QUALIFYING (OR UNDERWRITING) STANDARDS |
The standards a lender requires a loan applicant to meet before a loan will be approved |
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NONCONFORMING LOAN |
A loan that does not meet the underwriting standards of Fannie Mae and Freddie Mac |
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AUTOMATED UNDERWRITING SYSTEM |
A computerized system used to analyze a borrower's loan application and credit report, and provide a recommendation for or against approval
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STABLE MONTHLY INCOME |
A loan applicant's gross monthly income that needs the lender's tests of quality and durability |
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INCOME RATIOS |
A standard used in qualifying a buyers for a loan, to determine whether he has sufficient income. The buyer's debts and proposed housing expense should not exceed a specified percentage of his income |
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NET WORTH |
An individual's personal financial assets, minus her personal liabilities |
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LIQUID ASSETS |
Cash and other assets that can be readily turned into cash (liquidated), such as stock |
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LIABILITIES |
Financial debts or obligations |
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CREDIT REPUTATION |
An individual's record of bill payment and debt repayment, as revealed in a credit report compiled by a credit rating bureau |
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CREDIT SCORE |
A figure used in underwriting that encapsulates the likelihood that a loan applicant will default, calculated using a credit scoring model and the information from the applicant's credit report |
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LOW-DOCUMENTATION LOAN |
A loan where the lender waives some of the requirements for proof of income and assets in the underwriting process, in exchange for a higher interest rate |
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SUBPRIME LENDING |
When lenders apply more flexible underwriting standards in order to take on riskier borrowers and riskier loans, in return for higher loan fees and interest rates |
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TRUTH IN LENDING ACT (TILA) |
A federal law that requires lenders to make disclosures concerning loan costs to applicants for consumer loans (including any mortgage loan that will be used for personal, family, or household purposes). It also requires certain disclosures in advertisements concerning consumer credit |
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ANNUAL PERCENTAGE RATE (APR) |
All of the charges that a borrower will pay for the loan (including the interest, loan fees, discount points, and mortgage insurance costs), expressed as an annualized percentage of the total amount financed |
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MORTGAGE LOAN BROKER LAW |
A California law that requires loan brokers to give their customers a disclosure statement, and also limits the size of the commissions and other costs they can charge for smaller loans |
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PREDATORY LENDING |
Lending practices used to take advantage of unsophisticated borrowers |
