Debt to Income Ratio (DTI)
Compares the amount of gross monthly income a borrower makes to the amount the borrower will owe each month with their mortgage payment (including taxes and insurance) and other debts.
Credit Score (FICO)
A credit evaluation score developed by Fair, Isaac, and Co., used by lenders as one factor in making a loan decision. Scores are determined by analyzing credit history and current standing.
Loan to Value Ratio (LTV)
The relationship between the amount of the mortgage loan and the value of the real property expressed as a percentage. For purchase loans the value of the property is the appraised value or the purchase price, whichever is less.
Adjustable Rate Mortgage (ARM)
These loans have rates that are fixed for a specified period of time and then adjust once per year thereafter. An ARM will allow the borrower to get into a loan with a much lower rate and payment than a fixed rate loan. ARMs are the way to go if you plan to be in your home for a short period of time.
No-origination/Closing Cost Pricing
Zero point loans and No closing cost loans.
Zero Closing Costs
There are always closing costs involved in obtaining a mortgage. However, many lenders will add those costs to the loan amount so the borrower doesn’t have to pay them at closing. The increased loan amount will then be paid off during the term of the loan.
Little/No Documentation Loans
Where the lender accepts your stated income with little/no verification. They typically require a higher interest rate, but are ideal for business owners who do not want to provide the extensive documentation necessary to qualify for a full-document loan.
Lump sum payments due at the end of the term of a loan.
Late Payment Penalties
Information provided in your loan closing documents and on the Truth-In-Lending (TIL) disclosure explains these costs. Most lenders allow 15 days to get your payment in or face a penalty of 5% of the amount due.
Fixed Rate and Fixed Term (15 year, 20 year, 30 year, and 40 year)
These loans have rates that are fixed throughout the life of the loan. The rates and payments will not change. Fixed rate loans are recommended for those people who plan to remain in their home for an extended period of time (over 10 years).
Adjustable Rate Mortgages
These loans have rates that are fixed for a specified period of time and then adjust once per year thereafter. An ARM will allow the borrower to get into a loan with a much lower rate and payment than a fixed rate loan. ARMs are the way to go if you plan to be in your home for a short period of time (less than 7 years for example).
Conventional Loan to Value
A Loan to Value (LTV) ratio of 80% or less, which is the amount of the loan divided by the home’s appraised value. The lower the LTV of a loan, the lower the risk for that loan. Most lenders only offer Conventional Loans. Providential provides many Conventional Loans to clients, as well as Jumbo Loans and Government Loans.
High Loan to Value (LTV)
Loans with high LTV are riskier than those with lower LTV. These loans usually require a stronger credit history and stable employment. Providential has many specialists in this area who even help people with low credit scores to obtain ideal mortgage rates and conditions.
Interest only loans allow you to borrow money the way banks borrow money from each other. An interest only loan is a great way to free up monthly cash flow since you will not be required to make principal payments to pay down your loan principle. Presuming you believe the value of your home will continue to grow during the foreseeable future, Interest Only Loans can be a great way to obtain a more expensive home without the burden of high monthly payments.
This type of refinance loan allows a borrower to pay off other debts or finance home improvements by using the equity in their current home as a savings account – of sorts.
Home Equity Loans
Home Equity Loans are usually a Second or Third Mortgage obtained to pay off other debts or pay for additional improvements to your home. They are provided without having to pay off the primary mortgage on your home and can be in the form of either a Line of Credit, or Fixed Amount and Fixed Term.