Glossary

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes during the life of the loan according to movements in an index rate. Sometimes called AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).

Amortization Term

The length of time required to amortize the mortgage loan expressed as a number of months. For example, 360 months is the amortization term for a 30-year, fixed-rate mortgage.

Annual Percentage Rate (APR)

The cost of credit, expressed as a yearly rate including interest, mortgage insurance, and loan origination fees. This allows the buyer to compare loans; however, APR should not be confused with the actual note rate.

Equity

The amount of financial interest in a property. Equity is the amount of your home that you own. Fannie Mae A congressionally chartered, shareholder-owned company that is the nation’s largest supplier of home mortgage funds.

FHA Mortgage

A mortgage that is insured by the Federal Housing Administration (FHA), also known as a government mortgage.

FICO Score

FICO® scores are the most widely used credit score in U.S. mortgage loan underwriting. This 3-digit number, ranging from 300 to 850, is calculated by a mathematical equation that evaluates many types of information that are on your credit report. Higher FICO® scores represent lower credit risks, which typically equate to better loan terms.

Housing Expense Ratio

The percentage of gross monthly income budgeted to pay housing expenses.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)

A combination fixed-rate and adjustable-rate loan. A hybrid ARM typically has a lower interest rate (like an ARM) and a fixed payment for a longer period of time than most adjustable-rate loans. For example, a 5/1 loan has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It’s a good choice for people who expect to move or refinance, before or shortly after the adjustment occurs.

Loan-to-Value* (LTV) Percentage

The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.

Points

A point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $165,000, one point means $1,650 to the lender. Points usually are collected at closing and may be paid by the borrower or the home seller, or may be split between them.

Rate Lock

A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.

Private Mortgage Insurance (PMI)

Mortgage insurance provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

Town Square Mortgage

17300 Dallas Parkway Suite 1030 Dallas, TX. 75248

Phone: (972) 292-7600
info@tsmlending.com

Copyright© 2020. All Rights Reserved. Equal Housing Lender. Town Square Mortgage & Investments, Inc. DBA Town Square Mortgage. NMLS 144975. 17300 Dallas Parkway, Ste. 1030, Dallas, TX 75248. 972-292-7600. Licensed by the Texas Department of Savings and Mortgage Lending, SML Mortgage Banker Registration. Expires 12/31/20. Colorado Mortgage Company Registration, Regulated by the Division of Real Estate. Expires 12/31/20. Licensed by the Florida Office of Financial Regulation, Mortgage Lender Servicer License # MLD1309. Expires 12/31/20. Licensed by the Oklahoma Department of Consumer Credit, Mortgage Lender License # ML011816 & # ML011996. Expiration Date 12/31/2020. Licensed by the Nevada Division of Mortgage Lending, Mortgage Broker License #4948, Expiration Date 12/31/2020 Supplemental Servicer License #4949 Expiration Date 12/31/2020. Licensed by the Office of Lieutenant Governor's Office Division of Banking and Insurance, Phone: (340) 774-7166 Expiration Date 12/31/2020. www.tsmlending.com. nmlsconsumeraccess.org.

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