Definitions related to mortgages, refinancing, real estate, and lending.

loan to value ratio

Define: loan to value ratio

Definition: The loan to value ratio is the relationship between the loan amount and the value of the property expressed as a percentage of the property’s value.

assigned loan

Define: assigned loan

Definition: An assigned loan is the transfer of ownership from one person to another.

dwelling

Define: dwelling

Definition: A dwelling is a residential structure that contains one to four units, whether or not that structure is attached to real property.

non-conforming loan

Define: non-conforming loan

Definition: A non-conforming loan is a loan that does not conform to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. Jumbo loans are non-conforming.

non-traditional mortgage

Define: non-traditional mortgage

Definition: A non-traditional mortgage is a residential mortgage loan product that allows borrowers to defer repayment of principal and, sometimes interest. They include products such as “interest only” mortgages where a borrower pays no loan principal for the first few years of a loan, and “payment option” adjustable-rate mortgages (ARMs) where a borrower has flexible payment options with the potential for negative amortization.

2 1 buydown mortgage

Define: 2 1 buydown mortgage

Definition: A 2 1 buydown mortgage is a type of mortgage with a set of two initial primary interest rates. The interest rate for the first year is 2 percent lower than the permanent interest rate and 1 percent lower the second year. The initial interest rate is paid for either by the borrower to qualify them for a mortgage or by a builder as an incentive to purchase a home.

underwriting

Define: underwriting

Definition: Underwriting is the process used to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

tolerance

Define: tolerance

Definition: Tolerance  is the degree to which state closing costs can vary between the Loan Estimate and the Closing Disclosure.

third party providers

Define: third party providers

Definition: Third party providers are settlement providers other than the lender including the title company, hazard insurance company, credit report providers, appraisers, surveyors, and pest inspectors.

subprime mortgage

Define: subprime mortgage

Definition: A subprime mortgage is a loan that is meant to be offered to prospective borrowers with impaired credit records. A higher interest rate is intended to compensate the lender for accepting the greater risk in lending to these borrowers.