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Terminology
Appraisal - A report ordered by the
bank to determine the current market value
of a property. The borrower is generally
responsible for the fee associated with an
appraisal report.
A.R.M. (Adjustable Rate Mortgage) -
This means the interest rate is not fixed
for the full term of the loan. An Option
A.R.M. may be as short as one year, at a
very low interest rate, and other A.R.M.’s
may last up to 10 years at a more moderate
interest rate.
Beneficiary - The lender under a
trust deed. A.K.A. the bank. If you default
(90 days) on the terms of your loan, the
bank will begin to repossess your property
through foreclosure (120 days). |
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C.L.T.V. (Current Loan to Value Ratio) -
How much is the property worth vs. how much
money the borrower wants to borrow. The standard
loan is up to 80% of the property’s value. When
people have 100% financing, they usually have a
second loan for the additional 20% at a higher
interest rate.
D.T.I. (Debt To Income Ratio) - How much
debt you are carrying in relationship to your
income. This also affects your credit score. A
general thought is that your monthly home loan
payment should not exceed 30% of your gross
monthly income.
Impounds - Tax and home owner’s insurance
payments prorated as part of your monthly loan
payment. No impounds would assume you pay taxes
and home owner’s insurance in a lump sum every 6
months.
Mortgage - A legal document used as
security for a debt. In California we do not use
mortgages. Yes, that is correct. Mortgages
require litigation for foreclosures. Trust
Deeds, which are what California uses to
transfer property, require no litigation for
foreclosure.
Trustee - A neutral third party that
holds naked legal title to a property where
there is a deed of trust.
Trustor - You, or the borrower, in a deed
of trust.
Trust Deed - A document where title to
property is held by a neutral third party
(trustee) as security for a debt owed by a
trustor (borrower) to the beneficiary
(bank/lender).
*Any other terms you would like defined or
explained further? Call or e-mail us, we’re here
to help. |
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