Home Ownership

Title insurance is a policy issued by a title insurance company insuring that the borrower has clear title to the property and that the lender has a valid mortgage subject only to potential liens, claims and exceptions disclosed in the title insurance policy.

A Wraparound mortgage is a additional junior mortgage taken back by the seller for the amount of the property's purchase price less the buyer's down payment. The existing loan is retained and combined with a new, bigger loan and the interest rate is set between the old rate and the current market rate. A typical wraparound is an interest only loan with a five year balloon or less.

A Simple Interest loan is a loan on which interest is calculated and charged on the actual balance each day, instead of on a monthly accrual basis where interest is charged from one scheduled payment due date to the next payment due date.This is without regard to the date on which the borrower actually pays it. The interest paid on Simple Interest loans will be more if the borrower's payments are made later than scheduled and lower if the borrower's payments are made earlier than scheduled.

The Payment to Income ratio is the ratio of the borrower's total housing payment including the principal, interest, taxes, insurance, additional fees, special assessments, and subordinate financing divided by the borrower's income. It is used to measure the borrower's capacity to manage the housing expense. This is also known as the "Housing Debt to Income ratio."

A home equity loan is a mortgage on the your principal residence or second residence or vacation home.
You are tapping into the built up equity in your house. It usually is for the purpose of making home improvements or other non-housing expenditures such as credit card debt consolidation or tuition.
This is a closed end loan repayable in accordance with a fixed payment schedule.

The annual percentage rate, sometimes referred to as the APR is the cost of credit expressed as a yearly rate. It takes into account interest, points, and the other finance charges. Disclosure of the Annual Percentage rate is required by the Federal Truth in Lending Act. It allows borrowers to compare the costs of different mortgage loans and make an educated decision.

An adjustable rate mortgage is a variable rate mortgage with an interest rate that adjusts periodically according to the financial index it is based upon plus a margin. To limit the borrower's risk, the Adjustable rate mortgage may have a payment or rate cap. An example of this is if the mortgage has a annual cap of 2 % and a total cap of 13%. This means the mortgage can only increase by 2% maximum each year and could never exceed the 13% maximum ceiling.

Currently, there is no set 20% amount that you must put down. Some first time home buyer programs require as little as 5% down. In the past, mortgage lenders most often did require a 20% down payment. Generally, in the last 10 years many loan programs have been designed to help more people buy homes. Mortgage loans can now be tailored to fit each home buyer’s needs and financial resources. *For down payments of less that 20%, mortgage insurance (MI) will be required and associated costs will apply.