Mortgage Terms & Conditions
Pre-Qualification = Analysis by the Lender who has verbally been given Gross Income, Assets, Credit Rating & Debt by the Appling Borrower for purposes of providing a Quote for financing requested.
Pre-Approval = Formal Document Letter provided by the Lender who has verified the Income, Assets, Credit Rating & Debt of the Appling Borrower.
Conventional First Time Home Buyer = 1% down programs with Mortgage Assistance (when available) or 3% down without assistance programs.
FHA 3 ½% Down Payment = Lower Rate Options over Conventional.
Veterans Administration guarantees VA Loans with 0% Down VA Purchase options.
Purchase Mortgage Financing = Any financing for the purpose of real estate purchase financing.
HELOC = Home Equity Line of Credit. Allows homeowner to use the line of credit as desired with capabilities of paying the balance back & reusing. Payments are calculated only on the balance drawn off the line.
Equity Loan or 2nd Mortgage Financing. A closed end 2nd mortgage distributed in full at closing with a repayment period of an established number of years chosen by the borrower.
EZ Qualify or Bank Statement Financing = Alternate or minimum document financing program for Self Employed borrowers.
DSCR = Debt Service Coverage Ratio loan. Used for investment 1 to 4 unit purchases or refinances uses the rental income as qualifying income for the loan.
Investment Purchase Financing = Used to purchase rental income properties.
Fix and Flip Financing = Purchase financing for investment real estate with additional money for rehab and repairs. Typically 80% of Purchase Price & 100% of rehab repair contracts for 6 months or more. Permanent financing is also available at completion of rehab repairs.
Construction Financing = New Construction Financing of 1 to 4 units for ground up builds for the per specifications of the homeowner. Typically12 month terms with permanent financing at COO (certificate of occupancy).
Refinance = Mortgage Financing on existing owned real estate. Typically Cash Out for Debt Consolidation or Home Improvements as well as Interest Rate Reduction or term Amortization changes.
Underwriting Conditions = Certified professional trained in analysis to qualify borrower meets required conditions to afford repayment of loan applied for.
Credit Score = Mortgage Financing typically uses the middle score of the Three Bureau Merge Credit Report – One credit report with all three credit bureaus reporting. Equifax, Transunion & Experian all contribute their proprietary scoring ratings for credit classifications.
DTI = Debt to Income Ratio derived by dividing monthly debt by gross income. DTI is calculated with two ratios. The top end ratio is derived by dividing the mortgage payment including taxes & insurance by gross income. The bottom end ratio is derived by dividing the total monthly debt by gross income.
Example: $6,500 per month Gross Income (before taxes); New house payment on a $300,000 loan amount including taxes & insurance $2,300 + car payment of $400 & credit card minimum payments of $300 = Total Monthly Debt of $3,000
DTI = 35%/46% *Maximum allowable Bottom Ratio is typically Capped at 48% to 50%.
LTV = Loan to Value Ratio derived by dividing the Loan Amount by the Appraised Value.
Example: Appraised Value $450,000. Loan Amount $360,000
LTV 80%