An adjustable-rate mortgage (ARM), also known as a variable rate, is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.
A cash-out refi occurs when a loan is taken out on property already owned, and the loan amount is above and beyond the cost of transaction, payoff of existing liens, and related expenses.
A statistical number that evaluates a consumer's creditworthiness and is based on credit history. Lenders use credit scores to evaluate the probability that an individual will repay his or her debts.
When someone takes out a new loan to pay off a number of liabilities and consumer debts. In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable payoff terms: a lower interest rate, lower monthly payment or both.
The debt-to-income (DTI) ratio is a personal finance measure that compares an individual's debt payment to his or her overall income. DTI is calculated by dividing total recurring monthly debt by gross monthly income, and it is expressed as a percentage.
An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment.
A type of mortgage where the interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments.Return To Top
A form of home financing for whose amount exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). As a result, unlike conventional mortgages, it is not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac.Return To Top
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The term commonly represents the ratio of the first mortgage line as a percentage of the total appraised value of real property.
Mortgage Insurance Premium (MIP) is an insurance policy used with FHA loans if your down payment is less than 20%. The FHA assesses either an upfront MIP at the time of closing or an annual MIP that is calculated every year and paid in 12 installments.
A preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer.
A type of mortgage insurance you might be required to pay for if you have a conventional loan. PMI is usually required when you have a conventional loan and make a down payment of less than 20 percent of the home's purchase price.Return To Top
To finance something again — a home in this case — typically with a new loan at a lower rate of interest.
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