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1. Terms you should know when applying for a mortgage loan. Answer
2. What does it cost to submit a loan package? Answer
3. Do I need to have a property picked out before I fill out and submit my loan application? Answer
4. What happens after my loan application is submitted? Answer
5. Can I change my loan program after the application has been submitted? Answer
6. What is a lock? Answer
7. When can I lock my loan? Answer
8. Does it cost anything to lock my loan? Answer

Q : Terms you should know when applying for a mortgage loan.
A : Adjustable Rate Mortgage (ARM) - is a mortgage in which the interest rate is adjusted periodically based on a preselected index.

Adjustment Interval - on an adjustable rate mortgage, the time between changes in the interest rate and the monthly payment, typically 1, 3, or 5 years, depending on the index.

Amoritization - means loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period of time.

Annual Percentage Rate (APR) - an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the note rate because it takes into account the prepaid interest and other closing costs.

Appraisal - an estimate of the value of property, made by a qualified professional called an "appraiser".

Balloon Mortgage - usually a short term fixed rate loan which involves small payments over a period of time followed by one large payment to payoff the loan.

Broker - an individual in the business of assisting in arranginging funding or negotiating contracts for a client, but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.

Buy-Down - when the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

CAPS(interest) - consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Closing - the meeting between the buyer, seller and lender or their agents where the property and funds legally exchange hands. Also called settlement.

Closing Costs - usually include an origination fee, discount points, appraisal fee,title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement.

Commitment - an agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

Coventional loan - a mortgage not insured by FHA or guaranteed by the VA or Farmers Home Administration.

Credit Report - a report documenting the credit history and current status of a borrower's credit standing.

Debt-to-income-ratio - the ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long term debts is divided by his or her net effective income (FHA and VA loans) or gross monthly income (coventional loans).

Deed of Trust - in many states, this document is used in place of a mortgage to secure the payment of a note.

Downpayment - money paid to make up the difference between the purchase price and th eloan amount. Downpayments usually range from 3% to 20% of the purchase price.

Earnest Money - money given by the buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Equal Credit Oppurtunity Act (ECOA) - is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity - the difference between the current value of the property and the current amount owed on the property.

Escrow - refers to a nuetral third party who carries out the instructions of both the buyer and the seller to handle all the paperwork of settlement or "closing." Escrow may also refer to an account held by the lender to pay the taxes and insurance on a property.

Federal Home Loan Mortgage Corporation (FHLMC) - also called "Freddie Mac," is a quasi-governmental agency that purchases conventional mortgages from insured depository institutions and HUD approved mortgage bankers.

Federal Housing Administration (FHA) - a division of the department of Housing and Urban Development. Its main activity is insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.

Federal National Mortgage Association (FNMA) - also known as "Fannie Mae." A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provided funds for one in seven mortgages, makes mortgage money more available and more affordable.

FHA Loan - a loan insured by the Federal Housing Administration open to all qualified home purchasers.

Fixed-Rate Mortgage - a mortgage on which the interest rate is set for the term of the loan.

Foreclosure - a legal procedure in which the property securing debt is sold by the lender to pay the defaulting borrower's debt.

Gross Monthly Income - the total amount the borrower earns per month, before any expenses are deducted.

Hazard Insurance - a form of insurance in which the insurance company protects the insured from specific losses, such as fire, windstorm and the like.

Impound - that portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, insurance, mortgage insurance, lease payment, and other items as they become due. Also called reserves.

Index - a published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments, which is then used to adjust the interest rate on an adjustable mortgage up or down.

Investor - a money source for a lender.

Jumbo Loan - a loan greater than $417,000. These loans usually carry a higher interest rate.

Lien - a claim upon a piece of property for the payment or satisfaction of a debt or obligation.

Loan-To-Value-Ratio - the relationship between the amount of the mortgage loan and the appraised value of the property in a percentage.

Margin - the amount the lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.

Market Value - the highest price that a buyer would pay and the lowest price the seller will accept for a property.

Mortgage Insurance - money paid to insure the mortgage when the downpayment is less than 20 percent.

Mortgagee - the lender

Mortgagor - the borrower or homeowner.

Negative Amoritization - occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amoritization is that the homebuyer ends up owing more than the original amount of the loan.

Origination Fee - the fee charged by a lender to prepare documents, make credit checks, and due the necessary work needed to get your loan approved and closed.

PITI - principal, interest, taxes, and insurance.

Points (Loan Discount Points) - prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount.

Power of Attorney - a legal document authorizing one person to act on behalf of another.

Prepaids - expenses necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance, and special assessments.

Prepayment - a privaledge in a mortgage permitting the borrower to make the payments in advance of their due date.

Prepayment Penalty - money charged for an early repayment of a debt.

Principal - the amount of the debt, not counting interest, left on the loan.

Private Mortgage Insurance (PMI) - in the event that you do not have 20% downpayment, lenders allow a smaller downpayment, as low as 3% in some cases. With the smaller downpayment, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance is an additional monthly fee dependind on the loans structure. This fee insures the lender for the additional risk they encounter by taking less than 20% down.

Realtor - a real estate broker or an associate holding active membership in a local real estate board affiliated with the National Board of Realtors.

Recision - the cancellation of a contract. With respect to refinancing, the law gives the homeowner three days to cancel the contract after the documents are signed.

Recording Fees - money paid to the title company to record the note and deed of trust with the local authorities, thereby making it part of the public records.

RESPA - short for Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement costs once after application and once prior to or at settlement. The law requires lenders to furnish this information after application.

Servicing - all the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections, and the like.

Survey - a measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any buildings.

Title Insurance - apolicy, usually issued by a title insurance company, which insures a homebuyer against errors in the title search. The cost of the policy is ussually a function of the value of the property, and is often paid by the seller.

Title Search - an examination of municiple records to determine the legal ownership of property. Usually is preformed by the title company.

Truth-In-Lending - a federal law requiring disclosure of the Annual Percentage Rate to homebuyer shortly after they apply for the loan.

Underwriting - the decision whether to make a loan to a potential homebuyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.

VA Loan - a long term, low, or no downpayment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.

Verification of Deposit (VOD) - a document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.

Verification of Employment (VOE) - a document signed by the borrower's employer verifying his/her position and salary.

Q : What does it cost to submit a loan package?
A : Nothing. You can submit your loan application and become pre-approved for your loan without incurring any costs. When an appraisal is ordered, you will pay the appraisal fee directly to an appraisal management company.  All other costs are collected at closing.
Q : Do I need to have a property picked out before I fill out and submit my loan application?
A : No. You can submit your loan application for pre-approval without having a property picked out. Once you have picked out a property to purchase we can make the necessary adjustments to your loan application to reflect the precise information for that property.
Q : What happens after my loan application is submitted?
A : Once your loan application has been submitted, we will contact you within 24 hours to discuss your application.
Q : Can I change my loan program after the application has been submitted?
A : Yes. Loan programs and interest rates can be changed as long as we have sufficient time remaining on your lock period to re-disclose to you.
Q : What is a lock?
A : A lock is a guarantee of a specific interest rate for a specific time period. Lock periods can range from 30 days to 90 days, or longer at times. Each loan program has different lock periods available.
Q : When can I lock my loan?
A : For a refinance loan, we will offer you different options and discuss your needs with you.  Once we have emailed you a cost estimate, and you wish to lock your loan, we will lock it for you.  This can be done the same day as your loan application in most cases.

For a purchase loan, we can submit a loan package to a lender and obtain an approval; however, we cannot actually lock your loan program or interest rate until you have a signed contract on a property.

Q : Does it cost anything to lock my loan?
A : No. There is no lock-in fee for any loan.