Frequently Asked Questions and Helpful Guides to understanding the Mortgage Industry.
Glossary
APR - Annual Percentage Rate; The total cost to finance as reflected in a percentage rate.
ARM - Adjustable Rate Mortgage; A mortgage with an interest rate that is subject to change based upon upward or downward movement of a particular index.
- Index - The initial rate upon which all features interest rate adjustments are based for an ARM.
- Margin - The amount added to the index to determine the new interest rate at the time of adjustment.
- Caps - Limits on the adjustment that can be made to the interest rate on an ARM, which provides some degree of predictability for the borrower.
- COFI - Cost Of Funds Index; one of the indexes used to determine the rate of ARM.
- LIBOR - One of the indexes used to determine interest rate for an ARM.
- 1 Year T-Bill - One of the indexes used to determine interest rate for an ARM.
CLTV - Combined Loan to Value; the percentage of the total of the 1st and 2nd mortgages versus the value of the property.
DTI - Debt to Income ratio; used to determine whether or not a borrower can afford monthly mortgage payments based on current income.
- 4 - |
 |
