Adjustable Rate Mortgage (ARM) A mortgage loan subject to changes in interest rates. When rates change, ARM monthly payments increase or decrease at intervals determined by the lender.

Appraisal Fee A fee charged by a licensed, certified appraiser for a written estimate of a property's current value. The lender needs to know that the value of the property is sufficient for the security of their loan.

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Broker Your Pitt Mortgage consultant who oversees the entire mortgage process from application to closing.

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City or County Transfer Tax A one-time tax charged when a property transfers ownership. Local recurring property tax will be charged independently of this. See also Property Taxes

Closing Costs All costs incurred during buying or refinancing a home, not including the sale price itself. This may include (but is not limited to) points, origination fees, attorney's fees and title insurance.

Credit Report A report generated by a credit bureau that shows an individual’s credit or repayment history over time. Used by lenders to determine creditworthiness.

Courier Fee Cost associated with transporting documents to the closing agent. This fee may also include the cost of obtaining other documents necessary to complete the preparation of your mortgage documents.

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Debt to Income Ratio (DTI) Your total monthly debt in relation to your gross monthly income. The higher the DTI, the higher the lender’s risk.

Discount Points A one time fee charged by the lender to lower the interest rate normally charged. Each point is equal to 1% of the mortgage amount.

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Escrow The holding of funds by an impartial third party for the other two participants in a business transaction. When the transaction is completed, the escrow agent releases the entrusted property.

Equity The amount of vested or owned interest in your property. Subtract the total balance owed on the property from the appraised value to determine your equity.

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Federal Housing Administration (FHA) Loan A residential mortgage insured by the Federal Housing Administration that is open to all qualified home purchasers. The down payment on an FHA loan is usually less than that for a conventional mortgage.

FICO Score The credit scoring model that determines the likelihood of repayment. This number is calculated based on your complete credit profile and takes into account late payments, balances on trade lines, inquiries for additional credit, judgments, bankruptcies, total debt, length of credit history, and more. The lower the FICO score, the higher the lender’s risk.

Fixed Rate Loan A conventional mortgage loan with a set interest rate and equal monthly payments for the entire term of the loan.

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Homeowner's Insurance If you are purchasing the property, the lender will require you to pay the entire first year's premium. If you have an escrow account, at least two additional months will be collected at closing to deposit in the account. See also Escrow.

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Inspection Fee This fee is charged for inspection of a property after an appraisal. It is usually done if you are buying new construction and the lender wants to be assured the house is completed. See also Appraisal Fee

Interest to End of the Month Lenders charge interest from the date the loan is funded until the first day of the following month.

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Lender A Bank, Credit Union or Trust Company that lends money on the security of land, houses and real estate.

Loan to Value Ratio (LTV) The ratio of money borrowed on a property to the property's fair market value. The higher the LTV ratio, the higher the lender’s risk.

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Mortgage Insurance Premium Private Mortgage Insurance (PMI) may be required on certain loans, generally if you are putting less than 20% down. See also Private Mortgage Insurance

Mortgage Pre-Approval A process whereby a potential home buyer secures a guaranteed mortgage approval before making an offer on a house. The information submitted during the pre-qualification process is verified and a lender guarantees in writing to grant a loan for a specified amount. See also Mortgage Pre-Qualification

Mortgage Pre-Qualification A non-binding process of calculating how much money a potential homebuyer can borrow before applying for a loan. A credit report is run and your broker reviews it to determine the best loan for you and the amount you may qualify for. A pre-qualification is only the broker’s opinion of your ability to obtain a mortgage loan and information submitted is subject to verification at application. See also Mortgage Pre-Approval

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Origination Fee A fee charged by the lender for making a mortgage on the property. This fee is usually computed as a percentage of the loan amount.

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Private Mortgage Insurance (PMI) Insurance to protect the lender in case the borrower defaults on his/her loan. PMI is similar to insurance issued by a government agency such as the FHA, except that it is issued by a private insurance company. The premium is paid by the borrower and is included in the mortgage payment. See also Federal Housing Administration Loan

Processing Fee Fee charged to pay for the processing of the paperwork for your loan.

Processor Prepares your loan for underwriting. This entails verifying your <the buyer’s> income, ensuring that the appraisal has been performed and that the title and escrow have been opened. See also Underwriter

Property Taxes Taxes billed for the ownership of property, usually paid twice a year. These taxes are generally prorated and sometimes result in a credit from the seller when purchasing a property. If you have an escrow account, several months worth of taxes may be collected from you at closing to deposit in this account. See also Escrow

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Recording Fees Fees paid to your county which records documentation of your legal ownership of the property, such as the deed, mortgage, note, etc.

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Settlement Fee A fee paid to the title company for handing all the financial transfers and payments associated with the transaction.

Stated Income Your own statement of income on the application versus income that can be
independently verified. Use of stated income is often an option for self-employed individuals
or those with hard to prove income.

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Tax Service Fee A fee charged for researching county tax records to confirm that the taxes are paid in full and up-to-date.

Title A legally binding document that establishes evidence of ownership of an asset and any liens or other claims filed against the asset.

Title Insurance Insurance that guarantees that a property has no other liens or claims against it. Your lender will require that you purchase title insurance.

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Underwriter Hired by the lender to review all aspects of the loan based on the lender’s approval guidelines. Ultimately makes the decision to approve or deny the loan.

Underwriting Fee The lender's fee for reviewing your loan application.

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Veterans Affairs (VA) Loan A long-term, low-or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.

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