know what a mortgage is, how it works, and what should be considered. But when you go to help the mortgage, your lender so that the words in the same way that cheating others. This is what makes < Loan / a> process so confusing for many homeowners, and because many of them simply give up.
But you must be a financial expert to make good decisions. The knowledge that the loan and changes in the lending industry can help you better understand the situation and know exactly what your lenders say. Below is a list of terms is very likely to find a loan modification, and what they mean for you.
Amortization : The repayment of a loan (usually a mortgage) through regular payments. Payments are determined by the length of the loan, the balance of capital and interest rates.
APR (APR): The total cost of the loan, including interest, mortgage insurance, points and related rights.
(ARM): A type of mortgage where the interest rate changes based on market conditions . This means that payments can increase or decrease from one month to another. Most weapons have a payment limit, which keeps the amount of rise above certain levels.
income debt
(DTI): The relationship between the amount paid for the loan of their total income. Lenders use this to determine whether or not you can comfortably afford the loan. According to the Federal Housing Administration (FHA), the mortgage payment should not exceed 29% of monthly income before taxes, and your total debt (including credit cards and other loans) must not exceed 41%.
instead : an act of passing interest in their property to the lender as a solution to your debt. Unable to keep his house but helps avoid the exclusion process and related costs.
Equity : The amount of financial interest you have in your property. This is calculated by subtracting the amount that you still have the market value of your home.
fair market value (FMV) : a theoretical price at home, given current market conditions. Fair market value assumes that the buyer and the seller to act freely and have all relevant information to the operation. mutual
fixed rate
/ strong>: A type of loan that uses a fixed rate during the term of the loan. This gives you more stability as a borrower, because the payments remain the same regardless of market figures.
/ strong>: A process in which the property is sold and the proceeds go to your lender, allowing them to recover the losses when the loans default.
Tolerance : An agreement where the lender will review the payment plan to help current and avoid foreclosure. This may mean reducing your monthly payments or suspend for a specified period. Unlike loan modification, it is usually temporary and is often used as an option for mitigating losses.
good faith estimate (GFE) : An estimate of the total cost of the loan, including all closing costs, the lender costs and insurance costs. All banks are required to give you a GFE within three days after a loan.
/ strong>: a percentage of capital added to your monthly fee as a way of paying your lender to the use of money. <
only interest / strong>: A structure of loan where you pay interest only for the life of the loan and pay only the capital after a specified period.
Lien : a claim held by the lender against your property as a form of security in case of default of loan.
loan-to-value (LTV) : The relationship between the total amount to pay for the cost of the loan owner home. The higher the LTV, the less you should put as down payment.
Loss Mitigation / strong> , a process that helps borrowers avoid foreclosure and lenders to minimize their losses on defaulting borrowers. When you fall back or get a loan modification, the lender loss mitigation department will handle your case and make decisions.
Mortgage Banker : a company that resells the loans to secondary lenders like Fannie Mae and Freddie Mac , />
agent: a person or company acting as intermediary between agents, buyers, sellers, mortgage lenders e. Brokers are paid a percentage of the amount earned by the lender or seller. Lenders are obliged by law to disclose all fees paid to brokers and other players, so you can be sure you’re not doing bribery charge.
Mortgage Insurance : an insurance policy that minimizes the risk of loss with your lender if you can not keep up with payments. Usually required for borrowers who make a down payment of less than 20% of the purchase price.
Principal Balance Reduction : A type of loan modification the lender to reduce the balance of capital to reduce monthly payments . Creditors typically that only people from areas far depreciated or amortized amount is still below the cost of foreclosing on your home.
refinancing : A process where you take a loan to pay another. This allows you to enjoy better loan terms like a lower interest rate or a more stable structure.
RESPA : Settlement Procedures Act Real Estate This is a law that requires all banks to give an estimate in good faith (GFE) of the loan and disclose all fees in question. It also gives you the right to challenge the charges or cancel the loan within a reasonable time. Sales <
Short / strong>: a common alternative to foreclosure. In a short sale, you sell the house for less than its market value, and give the money to the lender as payment for the house. Even if you can keep your home, is less damaging to the credit of a foreclosure.
Teaser Rate : The interest rate for mortgage borrowers to attract many introductory offer. After the introductory period, interest rates returned to normal, increasing your monthly payments for the remainder of the loan.
Teaser Rate: a temporary reduction in the rate in the niche of a loan.
TILA
: in the Act, also known as the Consumer Credit Protection Act, the National This law requires lenders to give full information on the conditions and the total cost of the loan.