Glossary

Adjustable Rate Mortgage (ARM) - a mortgage having an interest rate which is usually initially lower than that of a mortgage with a fixed rate but is adjusted periodically according to the cost of funds to the lender

Amortize - To liquidate (a debt, such as a mortgage) by installment payments or payment into a sinking fund. Part of your payment is applied to principal and some to interest until your debt is paid in full.

Appraisal - a valuation of property by the estimate of an licensed appraiser.

APR (Annual Percentage Rate) describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a mortgage. It is a finance charge expressed as an annual rate.

Bi-Weekly Payments - thirteen payments per year made every two weeks. The net result is that your mortgage will be paid before the end of the term.

Clear To Close - the step in the mortgage process when the borrowers can schedule their closing and all commitment conditions have been reviewed and accepted by the lender.

Closing - (or settlement) is the final step in executing a real estate transaction. Transfer of title occurs at this time.

Commitment Letter - A Loan Commitment Letter is the document an underwriter sends to the borrower once a loan is approved.

Conventional Mortgage - A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac.

Debt Ratio - calculated by dividing the total monthly debt payments by the total gross monthly income.

Deed - a formal legal document signed, witnessed, and delivered to effect a conveyance or transfer of property or to create a legal obligation or contract.

Fixed Rate - An interest rate that does not change over the life of a loan

FHA (Federal Housing Administration) mortgage loan which is provided by a FHA - approved lender. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.

Loan To Value (LTV) -ratio expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. For instance, if a borrower borrows $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000/$150,000 or 87%.(LTV)

Mortgage - a loan secured by real property. Note- A written promise to pay a specific sum of money on a certain date. Also called promissory note.

Pre-qualification - The act or process of determining the approximate amount a borrower will be able to borrow before he/she actually applies for a loan. Prequalification looks at the borrower's current income and debt to make this determination.

Pre-Approval - A commitment by a mortgage lender to provide a loan with a certain monthly payment to a borrower. A lender offers pre-approvals in hopes that the borrower to whom it is offered will use that lender in securing a mortgage.

PMI - (mortgage insurance)- An insurance policy that a mortgage holder buys on behalf of a lender, protecting the lender in the event of default on the mortgage. Most lenders require their mortgage borrowers to purchase PMIs if the mortgage's loan-to-value ratio is more than 80%.

SONYMA - The State of New York Mortgage Agency (SONYMA) is a public authority created in 1970 by the state government of New York to provide affordable homeownership to low- and moderate-income New Yorkers. It offers affordably priced fixed-rate mortgages through several mortgage programs for eligible homebuyers. Each program offers competitive interest rates, low down payments, down payment assistance and no prepayment penalties. SONYMA offers its programs through a network of participating lenders throughout New York state who contract with the agency to offer SONYMA's programs to their customers.

USDA - USDA stands for United States Department of Agriculture. USDA mortgages provide low-cost insured home mortgage loans. Income and property price limits apply as well as geographical restrictions.

VA - Department of Veteran Affairs provides mortgages for qualified veterans and spouses.

Thank you so much for all your help!! Over the last few months, you've been there to help answer our questions whether it was midday or after hours. You really helped to make this process easier for us! We appreciate it and will definitely send anyone we know who is looking into buying buying a home your way! - C.D. and D.L.

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