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Mortgage Definitions - G-L

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good faith estimate
An estimate of charges which a borrower is likely to incur in connection with a settlement.

hazard insurance
Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

housing ratio
The ratio of the monthly housing payment in total (PITI - Principal, Interest, Taxes, and Insurance) divided by the gross monthly income. This ratio is sometimes referred to as the top ratio or front end ratio.

The U.S. Department of Housing and Urban Development.

A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Some commonly used indeces include the 1 Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI).

An encumbrance against property for money due, either voluntary or involuntary.

lifetime cap
A provision of an ARM that limits the highest rate that can occur over the life of the loan.

loan to value ratio (LTV)
The ratio of the amount of your loan to the appraised value of the home. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.

A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

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