Licensed Correspondent Lender
1545 South Belcher Road
Clearwater, FL 33764
727.687.4762
Linda A. Kelada
Sr. Loan Specialist
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Licensed Correspondent Lender 1545 South Belcher Road Clearwater, FL 33764 727.687.4762
Linda A. Kelada Sr. Loan Specialist
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Acceleration clause - Allows a lender to declare the entire outstanding balance of a loan immediately due and payable if a borrower violates specific loan provisions or defaults on the loan.
Adjustable Rate Mortgage (ARM) - A variable or flexible rate mortgage with an interest rate that varies according to the financial index it is based upon. To limit the borrower’s risk, the ARM may have a payment or rate cap. See also: cap.
Alternative documentation –Expedited and simpler documentation requirements designed to speed up the loan process. Instead of verifying employment with the applicant’s employer and bank deposits with the applicant’s bank, the lender will accept paycheck stubs, W-2’s and the borrowers original bank statements.
Amortization - Liquidation of a debt by regular installments of principal and interest. An amortization schedule is a table showing the payment amount, interest, principal and unpaid balance for the entire term of the loan.
Annual Percentage Rate (APR) - The annual percentage rate, is a comprehensive measure of credit cost, to the borrower, that takes into account the interest rate, points and flat dollar charges.
Application – A request for a loan that includes the information about the potential borrower, the subject property and the requested loan. All lenders use a standardized application known as the “1003.”
Appraisal - Estimate of a property’s value as of a given date, determined by a qualified professional appraiser. The value may be based on replacement cost, the sales of comparable properties or the property’s ability to produce income.
Appreciation - Increase in value due to inflation or economic factors.
Automated underwriting -A computer driven process for informing the loan applicant very quickly, sometimes within a few minutes, whether the applicant will be approved, or whether the application will be forwarded to an underwriter. The quick decision is based on information provided by the applicant, which is subject to later verification, and other information retrieved electronically including information about the borrower’s credit history and the subject property.
Automated underwriting system – A particular computerized system for doing automated underwriting. Mortgage insurers and some large lenders have developed such systems, but the most widely used are Fannie Mae’s “ Desktop Underwriter” (DU) and Freddie Mac’s “ Loan Prospector” (LP).
Balance – The amount of the original loan remaining to be paid. It is equal to the loan amount less the sum of all prior payments of principal.
Balloon mortgage – A mortgage which is payable in full after a period that is shorter than the term. Balloon mortgages are similar to ARM’s in that the borrower trades off a lower rate in the early years against the risk of a higher rate in the future.
Balloon – The loan balance remaining at the time the loan contract calls for full repayment.
Biweekly mortgage – A mortgage on which the borrower pays half the monthly mortgage payment every two weeks. Because this results in 26 (rather than) 24 payments per year, the biweekly mortgage amortizes before term.
Cap - Limit in how much an adjustable rate mortgage’s monthly payment or interest rate can increase or decrease.
Closing – On a home purchase, the process of transferring ownership from the seller to the buyer, the disbursement of funds from the seller and the lender and the execution of all the documents associated with the with the sale and the loan. On a refinance there is no transfer of ownership, but the closing includes repayment of the old lender.
Closing costs - Costs payable by both seller and buyer at the time of settlement, when the purchase of a property is finalized.
Co-borrowers – One or more persons who have signed the note, and are equally responsible for repaying the loan. Unmarried co-borrowers who live together are advised to agree beforehand on what happens if they split.
Commitment fee - A fee charged when an agreement is reached between a lender and a borrower for a loan at a specific rate and points and the lender guarantees to lock in that rate.
Co-mortgagor - One who is individually and jointly obligated to repay a mortgage loan and shares ownership of the property with one or more borrowers. See also: co-signer.
Condominium - An individually owned unit within a multi-unit building where others or the Condominium Owners Association share ownership of common areas such as the grounds, the parking facilities and the tennis courts.
Consumer Handbook on Adjustable Rate Mortgages (CHARM) - A disclosure required by the federal government to be given to any borrower applying for an adjustable rate mortgage (ARM).
Conventional loan - A mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA) or Rural Economic Community Development (RECD) (formerly Farmers Home Administration).
Co-signer – A person who assumes responsibility for someone else’s loan in the event that the party defaults.
Curtailments - The borrower’s privilege to make payments on a loan’s principal before they are due. Paying off a mortgage before it is due may incur a penalty if so specified in the mortgage’s prepayment clause.
Debt - Money owed to repay someone.
Debt-to-income ratio - The ratio between a borrower’s monthly payment obligations divided by his or her net effective income (FHA or VA loans) or gross monthly income (conventional loans).
Default – Failure of the borrower to honor the terms of the loan agreement. Lenders (and the law) usually view borrowers delinquent 90 days or more as in default.
Delinquency – A mortgage payment that is more than 30 days late.
Department of Housing and Urban Development (HUD) - The U.S. government agency that administers FHA and other housing programs.
Discount points - Amounts paid to the lender, based on the loan amount, to buy the interest rate down. Each point is one percent of the loan amount; for example, two points on a $1OO,OOO mortgage is $2,OOO.
Down payment - The difference between the purchase price and mortgage amount. The down payment becomes the property equity. Typically it should be cash savings, but it can also be a gift that is not to be repaid or a borrowed amount secured by assets.
Due-on-sale - A clause in a mortgage or deed of trust allowing a lender to require immediate payment of the balance of the loan if the property is sold (subject to the terms of the security instrument).
Earnest money - Deposit in the form of cash or a note, given to a seller by a buyer as good faith assurance that the buyer intends to go through with the purchase of a property.
Escrow - The holding of documents and money by a neutral third party prior to closing; also, an account held by a lender (or servicer) into which a homeowner pays money for taxes and insurance.
Fair market value - The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area.
Fannie Mae - Federal National Mortgage Association (FNMA) - A private corporation that acts as a secondary market investor to buy and sell mortgage loans. FNMA sets many of the guidelines for conventional mortgage loans, as does FHLMC. The major purpose of this organization is to make mortgage money more affordable and more available.
FHA - Federal Housing Administration - An agency within the Department of Housing and Urban Development that sets standards for underwriting as well as insures residential mortgage loans made by private lenders.
Foreclosure - a legal process by which a mortgaged property may be sold when the mortgage is in default.
Freddie Mac - Federal Home Loan Mortgage Corporation (FHLMC) - A quasi-governmental, federally sponsored organization that acts as a secondary market investor to buy and sell mortgage loans. FHLMC sets many of the guidelines for conventional mortgage loans, as does FNMA.
Fee simple - The maximum form of ownership, with the right to occupy a property and sell it to a buyer at any time. Upon the death of the owner, the property goes to the owner’s designated heirs. Also known as fee absolute.
Fixed Rate Mortgage - A mortgage whose rate remains constant throughout the life of the mortgage.
Gift - This includes money from a relative or a grant from a qualified charitable organization that does not have to be repaid.
Gift of equity – A sale price below market value, where the difference is a gift from the sellers to the buyers. Such gifts are usually between family members. Lenders will usually allow the gift to be counted as down payment.
Good faith estimate - Estimate on closing costs and monthly mortgage payments provided by the lender to the homebuyer within three business days of loan application.
Hazard insurance – Insurance purchased by the borrower, and required by the lender, to protect the property against loss from fire and other hazards. Also known as “ homeowners insurance.”
Home equity loan - A mortgage on the borrower’s principal residence, usually for the purpose of making home improvements or debt consolidation.
Home inspection - A thorough review of the physical aspects and condition of a home by a professional home inspector. This inspection should be completed prior to closing so that any repairs or changes can be completed before the home is sold.
Homeowners insurance -A form of insurance that protects the insured property against loss from theft, liability and most common disasters.
Housing and Urban Development (HUD) - The U.S. government agency that administers FHA and other housing programs.
HUD 1 – The form a borrower receives at closing that details all the payments and receipts among the parties in a real estate transaction, including borrower, lender, home seller, mortgage broker and various service providers.
Insurance -As a part of PITI, the amount of the monthly mortgage payment that does not include the principal, interest, and taxes. Also see: homeowners insurance.
Interest- The amount of the entire mortgage loan which does not include the principal.
Interest rate - The simple interest rate, stated as a percentage, charged by a lender on the principal amount of borrowed money. See also: Annual Percentage Rate.
Late fee – Fees that lenders are entitled to collect from borrowers who don’t pay within the grace period. Most mortgage notes offer borrowers a 15-day grace period, with a late charge of 5% on payments received after the 16th or later.
Loan discount - See: points.
Loan origination fee - See: origination fee.
Lock-in - The guarantee of a specific interest rate and/or points for a specific period of time. Some lenders will charge a fee for locking in an interest rate.
Mortgage - A legal instrument in which property serves as security for the repayment of a loan. In some states, a deed of trust is used rather than a mortgage.
Mortgage banker - A lender that originates, closes, services and sells mortgage loans to the secondary market.
Mortgage broker - An intermediary between a borrower and a lender. A broker’s expertise is to help borrowers find financing that they might not otherwise find themselves.
Mortgage Insurance Premium (MIP) - Money paid to insure the lender against loss due to foreclosure or loan default.
Mortgage interest - Interest rate charge for borrowing the money for the mortgage. It is a used to calculate the interest payment on the mortgage each month.
Mortgage term - The length of time that a mortgage is scheduled to exist. Example: a 30-year mortgage term is for 30 years.
Mortgagee - The lender.
Mortgagor - The borrower.
Note - A signed document that acknowledges a debt that the borrower is obligated to pay.
Origination fee - A fee that a lender charges to originate and close a mortgage loan. Origination fees are usually expressed in points.
P&I - Abbreviation for principal and interest.
PITI - Abbreviation for principal, interest, taxes and insurance.
Points - Charges by the lender based on the loan amount. Each point equals one percent of the loan amount. For example, two points on a $100,000 mortgage is $2,000. Discount points are used to “buy down” the interest rate. Points can also include a loan origination fee, which is usually one point.
Pre-qualification - Tentative establishment of a borrower’s qualification for a mortgage loan amount of a specific range, based on the borrower’s assets, debts, and income.
Principal - The amount of the entire mortgage loan, not counting interest.
Private Mortgage Insurance (PMI) - See: mortgage insurance.
Rate cap - See: cap
RESPA - Abbreviation for the Real Estate Settlement Procedures Act, which allows consumers to review settlement costs at application and once again prior to closing.
Second mortgage - A loan that is junior to a primary or first mortgage and often has a higher interest rate and a shorter term.
Secondary market - A market comprising investors like GNMA, FHLMC and FNMA, which buy large numbers of mortgages from the primary lenders and sell them to other investors.
Servicing - The responsibility of collecting monthly mortgage payments and properly crediting them to the principal, taxes and insurance, as well as keeping the borrower informed of any changes in the status of the loan.
Settlement costs - See: closing costs.
Survey - A physical measurement of property done by a registered professional showing the dimensions and location of any buildings as well as easements, right of way, roads, etc. (See boundary survey” and “mortgage survey.)
Tenancy - joint tenancy - equal ownership of property by two or more parties. Each has the right of survivorship.
Tenancy by the entireties - ownership of property only between husband and wife in which neither can sell without the consent of the other. The survivor in the event of death of either party owns the property.
Tenancy in common - equal ownership of property by two or more parties without the right of survivorship.
Title- A formal document establishing ownership of property.
Title insurance - A policy issued by a title insurance company insuring the purchaser against any errors in the title search. The buyer, the seller or both may pay for the cost of title insurance.
Truth In Lending Act - A law that requires lenders to disclose the Annual Percentage Rate and other associated costs to homebuyers within three business days of the loan application.
Underwriter - A professional who approves or denies a loan to a potential homebuyer based on the homebuyer’s credit history, employment history, assets, debts and other factors such as loan guidelines.
Veterans Administration (VA) - The federal agency responsible for the VA loan guarantee program as well as other services for eligible veterans
Walk-through - An inspection of a property by the prospective buyer prior to closing on a mortgage. |
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