Refinance Mortgage Basics - Terminology You Need to Know

If you're in the market to refinance your home mortgage loan, learning the lingo can boost your belief and prevent loan officers from taking advantage of you. learning mortgage terminology is a lot like eating your spinach; however, here are basic terms you need to learn before shopping for a new home loan.

Adjustable Rate Mortgages

Mortgage loans with interest rates that change periodically are called Adjustable Rate Mortgages and are often abbreviated Apr. The interest rate is tied to a definite financial index like the prime rate or treasury index. These loans typically come with an ultra low preliminary or "teaser" interest rate; however, at the end of the preliminary duration the interest rate is reset to the compact mortgage rate.

Annual division Rate (Apr)

The Apr is a numeric representation of all costs related with a mortgage offer expressed as a annual interest rate. Mortgage lenders all have different ways of calculating the annual division Rate and it ordinarily does not accurately relate third party charges. You're much best off requesting a Good Faith evaluation when comparison shopping instead of relying on the Apr.

Fixed Rate Mortgage Loan

Home loans that have an interest rate set at conclusion that does not change for the duration of the mortgage's term distance are fixed rate mortgages.

Good Faith evaluation (Gfe)

Mortgage lenders are required by law to provide you with a copy of this document within three days of receiving your application; however, most mortgage companies will provide you one on request. The Gfe outlines all estimated costs related with your loan and is a useful tool for comparing loan offers.

Loan to Value Ratio (Ltv)

Your Loan to Value Ratio is the derived from the appraised value of your home and how much you're borrowing. This ratio is typically expressed as a division and most lenders do not like Ltv ratios higher than 80%. High Ltv ratios can lead to hidden Mortgage Insurance, which is something you want to avoid paying at all cost.

Points (Discount & Origination)

Points come in two flavors. There are allowance points you pay in transfer for something like a lower interest rate or more suitable terms and origination points you pay for your loan representative's services. One point is the equivalent of one percent of your mortgage amount. Unless you plan on holding your mortgage for a very long time it is ordinarily not worthwhile paying points if you can avoid them.

Term Length

The term you choose is the number of time you have to repay the loan. The most base choices for term distance are 15 or 30 years. The longer term distance you choose the lower your payment will be; however, you will pay much more to the lender for your financing.

Third Party community Charges

These are fees that you will be required to pay at conclusion that appear on your Good Faith Estimate. Mortgage companies often low-ball these costs to make their loan offer appear more attractive. always collate line-by-line using the Good Faith evaluation when comparison shopping for a new mortgage.

You can learn more about refinancing your mortgage without being taken advantage of with a free mortgage tutorial.

Refinance Mortgage Basics - Terminology You Need to Know

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FHA Lending Basics to Know As an FHA Lender Or Broker - Maximum Loan to Value Limitations

Since you are reading this you likely already know that gaining FHA knowledge is crucial to your success in FHA Lending. Learn as much as you can about the FHA lending program. To do this, read as much as you can online, review some FHA home study training courses, and even consider taking a live Training course.

One area that would benefit you to get your arms around are the specialized rules involving maximum Loan to Value (LTV) limits on FHA loans. This article gives you some insight into these max LTV rules.

Loan To Value Ratio Calculator

What are the maximum Loan to Value Limitations on FHA Loans?

On Purchase loans and Rate and Term Refinance, the amount of any insured mortgage cannot exceed 97.75% of the appraised property value excluding costs or 98.75% if the value if ,000 or less. This rule applies to purchase 1-4 units and no cash out refinance.

Maximum LTV on Cash Out Refinance FHA Loans Owned for More than One Year

For cash out refinance loans, the maximum LTV is 95% and such is permitted only if the following requirements are met:

• Borrowers must own and occupy property over the last 12 months
• Borrowers cannot have any 30 days late payments on credit report in last 12 months
• Must be 1-2 units properties
• All co-borrowers must be an occupant of the property

Maximum LTV on Cash Out Refinance FHA Loans Owned for More than One Year

For cash out refinance loans, the maximum LTV is 85% and such maximum LTV is applicable in the following circumstances:

• Property owned or occupied for less than 12 months
• Property need not be 1-2 units (can be 1-4 units)
• Max LTV will be determined by using the lesser of 85% of appraised value or 85% of the original sales price.

Learn More About FHA Lending Online

Maximum LTV on FHA Loans is one of the areas of FHA Lending that you should know as you begin to offer FHA loan products to your customers. To learn more, download this: FHA Lending Basics

FHA Lending Basics to Know As an FHA Lender Or Broker - Maximum Loan to Value Limitations