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15 Cards in this Set
- Front
- Back
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Points |
One loan point is equal to 1% of the borrowers loan amount |
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Why do lenders charge loan points? |
Compensate for processing a new mortgage loan. |
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Loan Origination Fee |
Typically between 1% and 3% and typically can’t be more than 3% of the loan value. (Negotiable between lender and borrower) |
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Discount points |
Permanently reduce a loans interest rate |
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Buydown |
Interest pre-payment at closing to temporarily reduce interest rate, usually for a period of one to three years. |
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LTV (loan-to-ratio) |
Ratio of the loan amount to the property value (sales price or appraised value, whichever is lower) |
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What do lenders use LTV to determine? |
Required down payment amounts when initially writing mortgage loans or when homeowners apply for a home equity loan or home equity line of credit. |
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Interest |
A fee paid back to a lender for the use of its money, typically decreases over the life of the mortgage |
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Interest rates are stated as an _______ |
Annual percentage |
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APR (Annual percentage rate) |
Measure of both the interest rate and other fees associated with a mortgage loan. |
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What is a lock in interest rate? |
Lasts no more than 90 days after the 90 days is up borrowers should expect that they may face an interest rate change. |
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PMI (Private Mortgage Insurance) |
-Used on conventional loans when the down payment is less that 20% and loan-to-ratio value is in excess of 80% |
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What does PMI protect? |
The lenders in case of borrower default. |
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When must lenders terminate PMI? |
When the balance is scheduled to reach 78% of the original property value or when the mortgage loan reaches its originally scheduled amortization midpoint. |
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When can borrowers request PMI termination? |
When the principal balance drops below 80% of the loan balance. |
