March 2008 - Posts

• Differences between FHA and conventional mortgages

  The Federal Housing Administration provides a loan guarantee program in lieu of private mortgage insurance so qualified borrowers can get a mortgage loan with a low down payment. The FHA doesn't lend you the money, they guarantee the loan, so the lender doesn't take on a financial risk by extending you credit. The U.S. Department of Housing and Urban Development Web site can help you find HUD-approved counselors in your area who can answer your questions about FHA loans, specific to your situation. The most popular FHA loan has a minimum cash investment requirement of 3 percent but permits 100 percent of the money needed at closing to be a gift from a relative, nonprofit organization or government agency. FHA lending guidelines are not as strict as the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Sellers must pay part of the closing costs, while some of the borrower's closing costs can be included in the loan amount. FHA loans are assumable, meaning you can transfer your loan to the new owner if you sell your house. That allows the new owner to take over your FHA loan without the additional cost of obtaining a new loan. To assume the loan, the buyer has to meet the credit standards for the loan. This feature can make it easier to sell your home. There are three FHA loan programs: 1. FHA 203(b) fixed-rate mortgage (15- or 30-year loans) 2. FHA 251 adjustable-rate mortgage 3. FHA 2-1 buy-down loans There's also an Energy Efficient Mortgages program that allows homeowners to finance adding energy-efficient features to new or existing homes as part of either their home purchase or FHA refinancing. The biggest disadvantage to FHA loans is the mortgage insurance premium. In most 15- or 30-year FHA loans, the borrower pays 1.5 percent of the loan amount at closing, along with a 0.5 percent annual renewal premium paid annually over the life of the loan. Unlike private mortgage insurance, the mortgage insurance premium isn't canceled when the homeowner's equity reaches a target level. You may qualify, however, for a partial refund of the upfront mortgage insurance premium if you owned your home for less than five to seven years. It's five years for loans closed after Jan. 1, 2001 and seven years for loans closed before Jan. 1, 2001 and after September 1983. You need to shop rates when looking for a FHA mortgage just as you would with a conventional loan because the rates are established by the lender, not the government. FHA loan rates are typically higher than conventional (nongovernment guaranteed) loan rates but shouldn't be a lot higher unless you have credit problems. Before you start applying for loans you should request a copy of your credit report from at least one of the three major credit bureaus and get a credit score from them as well. Review the report for errors. If you find any, use the dispute-resolution process to correct the report. Bankrate provides contact information for the credit bureaus and a guide to handling the dispute-resolution process. By Dr. Don Taylor • Bankrate.com    Posted Mar 21 2008, 09:21 AM by admin with no comments

• FHA Loan & VA Loan

  FHA Loan VA Loan FHA Loan and VA Loan provides affordable home loans for purchase or refinance   Little or NO Money Down 100% of the Down Payment can be a Gift Non-occupant co-borrowers are allowed to assist in qualifying for the loan FHA loans are assumable under certain conditions. (Conventional fixed rate loans seldom are.) The Seller is required to pay Processing fee, Document Prep Fee, and the Tax Service Fee in an FHA loan The VETERAN can literally move in WITHOUT any of their own funds! NO Down Payment Up to $359,650 100% of the Down Payment can be a Gift VA loans allow the borrower to use 100% gift moneys for the down payment. Closing costs can be paid by the seller, or gifts funds may be used No Closing Cost Easier qualifying standards No prepayment penalties FHA Loan VA Loan Credit history DOES NOT have to be spotless to obtain financing through FHA Loan and VA Loan   Bankruptcies 2 years from date of discharge No late payments in the last 12 months Foreclosures Must be more than 3 years old No late payments in the last 12 months Repossessions Must be more than 2 years old No late payments in the last 12 months Late Payments No late payments in the last 12 months   Bankruptcies 2 years from date of discharge No late payments in the last 12 months Foreclosures Must be more than 3 years old No late payments in the last 12 months Repossessions Must be more than 2 years old No late payments in the last 12 months Late Payments No late payments in the last 12 months Underwriting guidelines for VA loans are even more specific. For example, a borrower may be able to get a VA loan one year after discharge of a Chapter 7 if the borrower is re-establishing credit and can demonstrate that the bankruptcy was due to circumstances beyond their control such as "medical bills not covered by insurance," according to the The VA Lender’s Handbook by Allregs. According to HUD / FHA For example, loans may be permitted for consumers who have discharged their bankruptcy as recently as one year ago if the borrower can demonstrate "extenuating circumstances beyond the control of the borrower." Documenting the fact that an unexpected illness caused high medical bills would be one way to address this guideline and help the borrower get an FHA loan. Posted Mar 21 2008, 08:53 AM by admin with 1 comment(s)

• FHA Mortgage Limits List

  FHA Mortgage Limits List - FHA Forward Message:   MORTGAGE LIMITS SUCCESSFULLY COMPLETED Mortgage maximums as of Thursday March 20, 2008 (58 records were selected, records 1 through 50 displayed) MSA Name MSA Code Division County Name County Code State One-Family Two-Family Three-Family Four-Family Last Revised OAKLAND-FREMONT-HAYWARD, CA METROPOLITAN DIVISION 41860 36084 ALAMEDA 001 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 NON-METRO 99999   ALPINE 003 CA $547,500 $700,900 $847,200 $1,052,900 03/05/2008 NON-METRO 99999   AMADOR 005 CA $443,750 $568,050 $686,650 $853,350 03/05/2008 CHICO, CA (MSA) 17020   BUTTE 007 CA $400,000 $512,050 $618,950 $769,250 03/05/2008 NON-METRO 99999   CALAVERAS 009 CA $462,500 $592,050 $715,700 $889,450 03/05/2008 NON-METRO 99999   COLUSA 011 CA $397,500 $508,850 $615,100 $764,400 03/05/2008 OAKLAND-FREMONT-HAYWARD, CA METROPOLITAN DIVISION 41860 36084 CONTRA COSTA 013 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 CRESCENT CITY, CA (MICRO) 18860   DEL NORTE 015 CA $311,250 $398,450 $481,650 $598,550 03/05/2008 SACRAMENTO--ARDEN-ARCADE--ROSEVILLE, CA (MSA) 40900   EL DORADO 017 CA $580,000 $742,500 $897,500 $1,115,400 03/05/2008 FRESNO, CA (MSA) 23420   FRESNO 019 CA $381,250 $488,050 $589,950 $733,150 03/05/2008 NON-METRO 99999   GLENN 021 CA $287,500 $368,050 $444,900 $552,900 03/05/2008 EUREKA-ARCATA-FORTUNA, CA (MICRO) 21700   HUMBOLDT 023 CA $393,750 $504,050 $609,300 $757,200 03/05/2008 EL CENTRO, CA (MSA) 20940   IMPERIAL 025 CA $325,000 $416,050 $502,900 $625,000 03/05/2008 BISHOP, CA (MICRO) 13860   INYO 027 CA $437,500 $560,050 $677,000 $841,350 03/05/2008 BAKERSFIELD, CA (MSA) 12540   KERN 029 CA $368,750 $472,050 $570,600 $709,150 03/05/2008 HANFORD-CORCORAN, CA (MSA) 25260   KINGS 031 CA $325,000 $416,050 $502,900 $625,000 03/05/2008 CLEARLAKE, CA (MICRO) 17340   LAKE 033 CA $401,250 $513,650 $620,900 $771,650 03/05/2008 SUSANVILLE, CA (MICRO) 45000   LASSEN 035 CA $285,000 $364,850 $441,000 $548,050 03/05/2008 LOS ANGELES-LONG BEACH-GLENDALE, CA METROPOLITAN D 31100 31084 LOS ANGELES 037 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 MADERA, CA (MSA) 31460   MADERA 039 CA $425,000 $544,050 $657,650 $817,300 03/05/2008 SAN FRANCISCO-SAN MATEO-REDWOOD CITY, CA METROPOLI 41860 41884 MARIN 041 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 NON-METRO 99999   MARIPOSA 043 CA $412,500 $528,050 $638,300 $793,250 03/05/2008 UKIAH, CA (MICRO) 46380   MENDOCINO 045 CA $512,500 $656,100 $793,050 $985,600 03/05/2008 MERCED, CA (MSA) 32900   MERCED 047 CA $472,500 $604,900 $731,150 $908,650 03/05/2008 NON-METRO 99999   MODOC 049 CA $271,050 $347,000 $419,400 $521,250 03/05/2008 NON-METRO 99999   MONO 051 CA $462,500 $592,050 $715,700 $889,450 03/05/2008 SALINAS, CA (MSA) 41500   MONTEREY 053 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 NAPA, CA (MSA) 34900   NAPA 055 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 TRUCKEE-GRASS VALLEY, CA (MICRO) 46020   NEVADA 057 CA $562,500 $720,100 $870,450 $1,081,750 03/05/2008 SANTA ANA-ANAHEIM-IRVINE, CA METROPOLITAN DIVISION 31100 42044 ORANGE 059 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 SACRAMENTO--ARDEN-ARCADE--ROSEVILLE, CA (MSA) 40900   PLACER 061 CA $580,000 $742,500 $897,500 $1,115,400 03/05/2008 NON-METRO 99999   PLUMAS 063 CA $410,000 $524,850 $634,450 $788,450 03/05/2008 RIVERSIDE-SAN BERNARDINO-ONTARIO, CA (MSA) 40140   RIVERSIDE 065 CA $500,000 $640,100 $773,700 $961,550 03/05/2008 SACRAMENTO--ARDEN-ARCADE--ROSEVILLE, CA (MSA) 40900   SACRAMENTO 067 CA $580,000 $742,500 $897,500 $1,115,400 03/05/2008 SAN JOSE-SUNNYVALE-SANTA CLARA, CA (MSA) 41940   SAN BENITO 069 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 RIVERSIDE-SAN BERNARDINO-ONTARIO, CA (MSA) 40140   SAN BERNARDINO 071 CA $500,000 $640,100 $773,700 $961,550 03/05/2008 SAN DIEGO-CARLSBAD-SAN MARCOS, CA (MSA) 41740   SAN DIEGO 073 CA $697,500 $892,950 $1,079,350 $1,341,350 03/05/2008 SAN FRANCISCO-SAN MATEO-REDWOOD CITY, CA METROPOLI 41860 41884 SAN FRANCISCO 075 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 STOCKTON, CA (MSA) 44700   SAN JOAQUIN 077 CA $488,750 $625,700 $756,300 $939,900 03/05/2008 SAN LUIS OBISPO-PASO ROBLES, CA (MSA) 42020   SAN LUIS OBISPO 079 CA $687,500 $880,100 $1,063,850 $1,322,150 03/05/2008 SAN FRANCISCO-SAN MATEO-REDWOOD CITY, CA METROPOLI 41860 41884 SAN MATEO 081 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 SANTA BARBARA-SANTA MARIA, CA (MSA) 42060   SANTA BARBARA 083 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 SAN JOSE-SUNNYVALE-SANTA CLARA, CA (MSA) 41940   SANTA CLARA 085 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 SANTA CRUZ-WATSONVILLE, CA (MSA) 42100   SANTA CRUZ 087 CA $729,750 $934,200 $1,129,250 $1,403,400 03/05/2008 REDDING, CA (MSA) 39820   SHASTA 089 CA $423,750 $542,450 $655,700 $814,900 03/05/2008 NON-METRO 99999   SIERRA 091 CA $285,000 $364,850 $441,000 $548,050 03/05/2008 NON-METRO 99999   SISKIYOU 093 CA $293,750 $376,050 $454,550 $564,900 03/05/2008 VALLEJO-FAIRFIELD, CA (MSA) 46700   SOLANO 095 CA $557,500 $713,700 $862,700 $1,072,150 03/05/2008 SANTA ROSA-PETALUMA, CA (MSA) 42220   SONOMA 097 CA $662,500 $848,100 $1,025,200 $1,274,050 03/05/2008 MODESTO, CA (MSA) 33700   STANISLAUS 099 CA $423,750 $542,450 $655,700 $814,900 03/05/2008 Selection criteria Sorted by: County State: CA County: County Code: MSA Name: MSA Code: Limit Type: FHA Forward Last Revised:   The current basic standard mortgage limits for FHA insured loans are:       One-family   Two-family   Three-family   Four-family     FHA Forward   $271,050.00   $347,000.00   $419,400.00   $521,250.00     HECM   $200,160.00         Fannie/Freddie   $417,000.00   $533,850.00   $645,300.00   $801,950.00   High cost area limits are subject to a ceiling based on a percent of the Freddie Mac Loan limits The ceilings are currently:       One-family   Two-family   Three-family   Four-family     FHA Forward   $729,750.00   $934,200.00   $1,129,250.00   $1,403,400.00     HECM   $362,790.00         Fannie/Freddie   $729,750.00   $934,200.00   $1,129,250.00   $1,403,400.00   Section 214 of the National Housing Act provides that mortgage limits for Alaska, Guam, Hawaii, and the Virgin Islands may be adjusted up to 150 percent of the new ceilings. This results in new ceilings for these areas of:       One-family   Two-family   Three-family   Four-family     FHA Forward   $1,094,625.00   $1,401,300.00   $1,693,875.00   $2,105,100.00     HECM   $544,185.00         Fannie/Freddie   $1,094,625.00   $1,401,300.00   $1,693,875.00   $2,105,100.00   Posted Mar 21 2008, 08:49 AM by admin with no comments

• FHA Home Mortgage Purchase or Refinance Loan - Why You Might Consider Getting an FHA Loan

  Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don't realize that FHA loans can also be does for refinancing. They are not only for purchasing a house. HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house. If the borrower falls within FHA's requirements FHA insures the loan for the lender, which makes the loan very low risk for the lender, which is very good for the borrower. It could mean a lower interest rate, better terms and just an overall better loan. FHA's requirements are; a down payment of 3-5%, the home must be under the FHA's set loan limit for the county that the borrower lives in and a few other small requirements. The main advantage to an FHA loan, is if you can fall within their requirements, your credit history or income level, will not hold you back from getting a home loan. If you are getting turned down from other lenders because of a high debt to income ratio or because your credit is bad. You may want to consider applying for an FHA loan, where those requirements are either non-existant or much more flexible. If the idea of down payment is holding you back, consider also, that FHA loans allow the use of a non-profit organization as a source for the down payment, which opens up the option of using down payment assistance programs like Neighborhood Gold. Free Article Posted Mar 20 2008, 08:42 AM by admin with no comments

• FHA Mortgage Advice and Home Loan FAQs

  How can I buy a HUD Home? Anyone can purchase a HUD Home as long as you have the cash to purchase the home or you can qualify for a loan to purchase it. HUD Homes are sold through a bid process and you will need a HUD-approved real estate agent to assist you with that bid process. HUD will even pay that real estate agent's fee. HUD Homes are sold "as-is," without warranty. That means that HUD will not pay to correct any problems. But even if a HUD Home needs fixing up - and not all of them do - it can be a real bargain! For example, HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. HUD might offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. And keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs. Your real estate agent will have details. We encourage you to get the home professionally inspected before you make an offer so you will know what repairs you may have to make BEFORE you submit your bid. Start your HUD Home buying process by finding a participating real estate agent. Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an "Offer Period." At the end of the Offer Period, all offers are opened and, basically, the highest reasonable bid is accepted. If the home isn't sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. They will be opened the next business day. If your bid is acceptable to HUD, your real estate agent will be notified, usually within 48 hours. You'll be given a settlement date, normally within 30-60 days, by which you need to arrange financing and close the sale. How can FHA help me buy a home? FHA insured mortgages offer many benefits and protections that only come with FHA: Easier to Qualify: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify. Less than Perfect Credit: You don't have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan. Low Down Payment: FHA loans have a low 3% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don't allow this. Costs Less: FHA loans have competitive interest rates because the Federal government insures the loans. Always compare an FHA loan with other loan types. Helps You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure. FHA does not provide direct financing nor does it set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. In order to initiate the loan application process, please contact an FHA approved lender. An FHA insured mortgage may be used to purchase or refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation). What are the advantages of refinancing to a fixed rate FHA mortgage? There are significant advantages to refinancing to an FHA mortgage with a fixed interest rate, particularly if you currently have a higher cost mortgage or have a mortgage that has an adjustable or a variable interest rate, optional payments or interest only payments that will increase in the near future. Borrowers with adjustable or variable interest rate mortgages or interest only payment mortgages often encounter much higher monthly payments ("payment shock") after having the mortgage for just a few years. FHA fixed interest rate mortgages cost less. FHA loans have competitive interest rates because the Federal government insures the loan. A fixed interest rate FHA loan will have a low interest rate compared to a subprime loan and the FHA loan will have fixed payments of principal and interest compared to an adjustable rate or variable interest rate mortgage or a mortgage with optional or variable payments. You don't have to have perfect credit to get an FHA fixed rate mortgage. Even if you have had credit problems, such as a bankruptcy, you may still qualify for an FHA mortgage. Should you encounter hard times after refinancing your home, FHA has programs to help you keep you in your home and avoid foreclosure. FHA does not provide direct financing nor does it set the interest rates on the mortgages it insures. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA fixed interest rate mortgage may be used to refinance a new or existing 1-4 family home, a condominium unit or a manufactured housing unit (provided the manufactured housing unit is on a permanent foundation). What are the basic eligibility requirements for FHA financing? FHA insures mortgages made by approved lenders to individuals and non-profit and government agencies that are approved to participate in HUD's programs; HUD does not loan money to homebuyers. Generally, to be eligible for an FHA loan, you must have a valid social security number and have lawful residency in the United States and be of a legal age to sign on a mortgage in your state. Lenders will verify income, assets, liabilities, and credit history for all parties on the loan. With an FHA loan, you cannot take an ownership interest in a property without qualifying for the loan. FHA's mortgage programs do not typically have maximum income limits for qualifying, although you must have sufficient income to qualify for the mortgage payment and other debts. Income limits may be present when qualifying for down payment assistance or other secondary financing programs (including those funded by HUD) that may be used in conjunction with an FHA loan. FHA does not have minimum credit score requirements, although past credit performance serves as the most useful guide in determining a borrower's attitude toward credit obligations and predicting a borrower's future actions. Using FHA's guidelines, lenders will make a credit determination based on the merits of each case. To find out if you qualify, and how much you can borrow based on your income and debts, you should contact a HUD-approved lender. What is the FHASecure refinance program? Under the new "FHASecure" refinance program, FHA will allow families with acceptable credit histories who had been making timely mortgage payments before the interest rate on their adjustable rate mortgages reset-but are now in default-to qualify for refinancing to an FHA mortgage. The basic requirements of the FHASecure program are: *The mortgage being refinanced must be a non-FHA Adjustable Rate Mortgage (ARM) and the interest rate has reset. *The homeowner is now delinquent in making payments on the mortgage after the reset. * The homeowner's payment history must show that, prior to the reset of the interest rate on the mortgage, the homeowner was current in making the monthly mortgage payments, i.e., the homeowner's mortgage payment history during the 6 months prior to the interest rate reset showed no instances of making mortgage payments outside the month due. * The homeowner has sufficient income to qualify for an FHA mortgage. If there is sufficient equity in the home, FHA will allow missed mortgage payments to be included in the FHA refinance mortgage, if the arrearages arose after the interest rate reset or the homeowner may be able to use a second mortgage to finance the missed payments. How can FHA help me if I am behind in my mortgage payments? FHA insures your mortgage; therefore, your lender has to follow FHA servicing guidelines and regulations. You should first contact your lender’s Loss Mitigation Division to seek a workout solution, but if your lender is non-responsive, then you will need to contact FHA’s National Servicing Center. All requests for information or clarification of policy on servicing related issues should be directed to the FHA National Servicing Center (NSC). How does HUD define a first time homebuyer? FHA defines a first-time homebuyer (FTHB) as an individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase (closing date) of the property. A FTHB includes any individual that has only owned with a former spouse while married. A FTHB would also include an individual who has only owned a principal residence not permanently affixed to a permanent foundation, or a property that was not in compliance with State, local, or model building codes and cannot be brought into compliance for less than the cost of constructing a permanent structure. Can I use FHA financing to acquire a second home? A secondary residence is a property the borrower occupies in addition to his or her principal residence. Secondary residences are only permitted when the appropriate Home Ownership Center (HOC) agrees that an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is not available for lease in the area or within reasonable commuting distance to work, and the maximum loan amount is 85 percent of the lesser of the appraised value or sales price. Direct Endorsement (DE) lenders are not authorized to grant hardship exceptions. Any request for a hardship exception must be submitted by the lender in writing to the appropriate HOC. HOC jurisdictions are listed in Appendix I of HUD Handbook 4155.1 REV-5. A borrower may have only one secondary residence at any time. All the following conditions must be met for secondary residences: A. The secondary residence must not be a vacation home or otherwise used primarily for recreational purposes; and B. The borrower must obtain the secondary residence because of seasonal employment, employment relocation, or other circumstances not related to recreational use of the residence; and C. There must be a demonstrated lack of affordable rental housing meeting the needs of the borrower in the area or within a reasonable commuting distance of the borrower's employment. Documentation to support this must include: 1. A satisfactory explanation from the borrower of the need for a secondary residence and the lack of available rental housing in the area that meets the need. 2. Written evidence from local real estate professionals who verify a lack of acceptable rental housing in the area. What is the Low/Moderate Income Families Program? The Section 221(d)(2) Low/Mod Income Families program was designed to increase homeownership opportunities for low- and moderate-income families however, this particular program was eliminated in February 2001. The program currently serving low and moderate income families, is the basic FHA loan, Section 203(b). This program requires a low down payment of 3 percent and less stringent underwriting than conventional mortgages. For more information on FHA insured mortgages, contact an FHA approved lender. Posted Mar 20 2008, 08:23 AM by admin with 2 comment(s)

• FHA Mortgage Glossary

  203(b): FHA's single family program which provides mortgage insurance to lenders to protect against the borrower defaulting; 203(b) is used to finance the purchase of new or existing one to four family housing; 203(b) insured loans are known for requiring a low down payment, flexible qualifying guidelines, limited fees, and a limit on maximum loan amount. 203(k): this FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan. A "A" Loan or "A" Paper: a credit rating where the FICO score is 660 or above. There have been no late mortgage payments within a 12-month period. This is the best credit rating to have when entering into a new loan.ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in monthly payment amount, however, is usually subject to a cap.Abstract of Title: documents recording the ownership of property throughout time.Acceleration: the right of the lender to demand payment on the outstanding balance of a loan.Acceptance: the written approval of the buyer's offer by the seller. Additional Principal Payment: money paid to the lender in addition to the established payment amount used directly against the loan principal to shorten the length of the loan. Adjustable-Rate Mortgage (ARM): a mortgage loan that does not have a fixed interest rate. During the life of the loan the interest rate will change based on the index rate. Also referred to as adjustable mortgage loans (AMLs) or variable-rate mortgages (VRMs).Adjustment Date: the actual date that the interest rate is changed for an ARM.Adjustment Index: the published market index used to calculate the interest rate of an ARM at the time of origination or adjustment. Adjustment Interval: the time between the interest rate change and the monthly payment for an ARM. The interval is usually every one, three or five years depending on the index. Affidavit: a signed, sworn statement made by the buyer or seller regarding the truth of information provided. Amenity: a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, woods, water) or man-made (like a swimming pool or garden).American Society of Home Inspectors: the American Society of Home Inspectors is a professional association of independent home inspectors. Phone: (800) 743-2744Amortization: a payment plan that enables you to reduce your debt gradually through monthly payments. The payments may be principal and interest, or interest-only. The monthly amount is based on the schedule for the entire term or length of the loan.Annual Mortgagor Statement: yearly statement to borrowers detailing the remaining principal and amounts paid for taxes and interest.Annual Percentage Rate (APR): a measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders, by federal law, follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans. APR is a higher rate than the simple interest of the mortgage.Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.Application Fee: a fee charged by lenders to process a loan application.Appraisal: a document from a professional that gives an estimate of a property's fair market value based on the sales of comparable homes in the area and the features of a property; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.Appraisal Fee: fee charged by an appraiser to estimate the market value of a property.Appraised Value: an estimation of the current market value of a property.Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.Appreciation: an increase in property value. Arbitration: a legal method of resolving a dispute without going to court. As-is Condition: the purchase or sale of a property in its existing condition without repairs.Asking Price: a seller's stated price for a property.Assessed Value: the value that a public official has placed on any asset (used to determine taxes).Assessments: the method of placing value on an asset for taxation purposes. Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation.Assets: any item with measurable value. Assumable Mortgage: when a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. An assumable mortgage can help you attract buyers if you sell your home.Assumption Clause: a provision in the terms of a loan that allows the buyer to take legal responsibility for the mortgage from the seller. Automated Underwriting: loan processing completed through a computer-based system that evaluates past credit history to determine if a loan should be approved. This system removes the possibility of personal bias against the buyer. Average Price: determining the cost of a home by totaling the cost of all houses sold in one area and dividing by the number of homes sold. B "B" Loan or "B" Paper: FICO scores from 620 - 659. Factors include two 30 day late mortgage payments and two to three 30 day late installment loan payments in the last 12 months. No delinquencies over 60 days are allowed. Should be two to four years since a bankruptcy. Also referred to as Sub-Prime.Back End Ratio (debt ratio): a ratio that compares the total of all monthly debt payments (mortgage, real estate taxes and insurance, car loans, and other consumer loans) to gross monthly income.Back to Back Escrow: arrangements that an owner makes to oversee the sale of one property and the purchase of another at the same time. Balance Sheet: a financial statement that shows the assets, liabilities and net worth of an individual or company. Balloon Loan or Mortgage: a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.Balloon Payment: the final lump sum payment due at the end of a balloon mortgage. Bankruptcy: a federal law whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.