An appraisal definition is a professional opinion of value of a certain property. Appraisals are commonly used in the mortgage industry in order to determine the loan-to-value ratio of a potential borrower. What are the important elements of a good appraisal system? -The important elements of a good appraisal system are as follows: -An appraisal … Read more
A 2-1 buydown is a type of mortgage financing where the interest rate is reduced for the first two years of the loan term. After the initial two-year period, the interest rate then increases to a higher rate for the remaining term of the loan. This type of financing is often used by homebuyers who … Read more
The Process of Origination and What to Expect What are the 3 different types of mortgage loan originators? The three different types of mortgage loan originators are banks, credit unions, and mortgage brokers. Each has its own advantages and disadvantages, so it’s important to compare them before choosing one. Banks are the most common type … Read more
A dry loan is a loan that is not insured or guaranteed by the federal government. Dry loans are made by private lenders and typically have higher interest rates than government-backed loans. Dry loans are also more difficult to qualify for, as they typically require a higher credit score and down payment than government-backed loans. … Read more
A first mortgage is a loan that is secured by a property’s title. The borrower uses the property as collateral for the loan. A first mortgage is the primary loan that pays for the property. It has priority over all other liens or claims on the property. If the borrower defaults on the loan, the … Read more
A payment shock is when a borrower’s mortgage payments increase suddenly and dramatically. This can happen if the borrower has an adjustable-rate mortgage (ARM) and the interest rate goes up, or if the borrower has a fixed-rate mortgage but their income decreases. Payment shocks can also happen when a borrower’s mortgage payments increase because they’re … Read more
Pre-approval is when a lender reviews your financial information (income, debts, assets, credit score, etc.) and gives you a letter stating how much money you could borrow and at what interest rate. Getting pre-approved is the first step towards getting a mortgage, but it doesn’t guarantee that you’ll actually get the loan. What’s the difference … Read more
A closed-end mortgage is a type of mortgage loan that is secured by the collateral of a property that is not put up for sale during the life of the loan. The loan is typically repaid over a period of time agreed upon by the lender and the borrower, and the interest rate is generally … Read more
A graduated payment mortgage is a type of home loan in which the monthly payments start out low and then increase over time. The increase is typically tied to an index, such as the prime rate, and the payments may continue to increase until a pre-determined maximum is reached. The main advantage of a graduated … Read more
The term “owner-occupant” refers to a borrower who intends to occupy the property they are purchasing as their primary residence. In order to qualify for certain types of mortgages, lenders require that the borrower be an owner-occupant. This is to ensure that the borrower is invested in the property and is less likely to default … Read more
