Mortgage Basics
This loan program typically requires a minimum 3.5% down payment and is insured by the federal government
What is FHA
This loan program is designed specifically for eligible military service members, veterans, and certain surviving spouses
What is a VA Loan
This score is commonly used by lenders to evaluate a borrower's creditworthiness
What is FICO
This is the first step many buyers take to determine how much home they can afford before shopping
What is getting pre-qualified
Paying off this debt can often improve a borrower's debt-to-income ratio before applying for a mortgage
What is credit card debt?
This ratio compares a borrower's monthly debt payments to their gross monthly income
What is debt to income ratio (DTI)
This government-backed loan program helps finance homes in eligible rural areas
What is the US Rural Development Program
This insurance is generally required when a conventional borrower puts down less than 20%
What is Private Mortgage Insurance (PMI)
This person represents the buyer or seller during the purchase of a home
Who is a real estate agent
This document verifies a borrower's annual income and employment history and is commonly requested during underwriting
What is a W2
This document outlines the estimated costs, interest rate, and terms of a mortgage loan
What is a loan estimate
This conventional loan option allows borrowers to put down as little as 3% if they qualify
What is Home Possible, Home Ready & Home One
This three-letter acronym refers to the yearly cost of borrowing, including certain loan fees
What is APR (annual percentage rate)
This period allows the buyer to investigate the condition of the home before finalizing the purchase
This mortgage term describes paying points upfront to obtain a lower interest rate
What is buying down the rate
This type of mortgage keeps the same interest rate for the entire loan term
What is a fixed rate mortgage
This loan is often used to purchase homes that exceed conventional conforming loan limits
What is a jumbo loan
This day marks the official transfer of ownership from seller to buyer
What is the closing date
This amount of money is submitted with an offer to show the buyer is serious about purchasing the home
What is earnest money deposit?
This department reviews the borrower's financial profile and determines whether the loan meets lending guidelines before issuing final approval
What is underwriting
This process determines the market value of a property before closing
What is the appraisal
The maximum seller contribution percentage when a buyer is putting down 20%
What is 6%
This legal claim is recorded against a property to secure repayment of the mortgage loan
What is a lien?
This final step is when loan documents are signed, funds are disbursed, and ownership officially changes hands
What is closing (or settlement)
This condition means a borrower has met all underwriting requirements and the lender is ready to fund the loan
What is clear to close