Glossary Terms
- Refinance
- Purchase
- General Home Loan
- Closing Costs
- Fico Score
- Fannie Mae/Fredie Mac
- Credit Score
- Private Mortgage Insurance
- Pre-qaulify/Pre-approve
- Fixed Rate Mortgage
- Balloon
- Annual Percentage Rate
- Interest Rate
- VA Loans
- Lock Your Rate
- Adjustable Rate Mortgage
- FHA Loans
- FHA Streamline
- FHA Cashout
Refinance
A refinance decision, is when you decide to get a lower interest rate on your home mortgage.
By applying with us to refinance, you could wind up dramatically reducing your monthly mortgage payment, and saving yourself thousands.
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Purchase
A purchase is a term referring to an initial mortgage loan, which is originated to the lendee first hand from the mortgage lender. It is not a refinanced loan, but instead is only available to new buyers, or someone getting a new loan.
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General Home Loan
A Home Loan AKA Mortgage is a loan type designed for residences. The most popular home loan is a fixed rate
mortgage, in which you pay a monthly fee to a mortgage banker, until you build enough equity to purchase the home, or if you choose to refinance.
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Closing Costs
Frequently when you are offered a loan, you might see yourself paying up to 5 percent of your homes purchase value immediately go out of the window from the start.
These additional expenses usually include fees associated with; points and origination, credit reports, first month interest charges, mailing, notary, and etcetera.
An advantage of refinancing or purchasing through Lenox Financial is that you will save on these costs. As advertised Lenox Financial is the official "Home of the No Closing Cost Loan".
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FICO Score
Your FICO score is determined by your credit history, which helps lenders figure out whether or not you are credit worthy
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GSE's Fannie Mae/Freddie Mac
Fannie & Freddie Mac are the two largest Government Sponsored Enterprises in the country. Freddie Mac helps stabilize residential mortgage markets and helps keep homes affordable. Fannie Mae also helps with this, and is more focused on providing single family mortgages. They both participate in the secondary mortgage market by purchasing non securitized loans.
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Credit Score
Credit Scores help lenders determine your eligibility for a home loan. With credit score solutions mortgage brokers are able to analyze your current financial standing based on your payment history, credit card history, and etc.
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PMI
Private Mortgage Insurance, or PMI, is insurance to protect your lender in the case that you're unable to pay your loan.
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Pre-qualify/Pre-approval
This means that based on information that the borrower has retained, whether it be your Credit Score or income,
the lender is able to tentatively determine your credit worthiness, however, this is not necessarily 'set in stone' yet.
The difference between this and a preapproval is if the lender has all of your application information, and are able to fully prove your financial status at the moment,
inwhich they can determine your eligibility for a specific loan.
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Fixed Rate Mortgage
This is usually the most common type of mortgage, opposed to Adjustable Rate mortgages,
Fixed Rate’s keep the same interest and principle over your loan period. Fixed Rate mortgages are usually available for 7, 10, 15, 20 & 30 years.
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Balloon
A balloon mortgage payment is when your loan does not fully pay off (or amortize) over the course of your mortgage term. The amount left over is usually very large, which is why it is called a 'balloon' payment.
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Annual Percentage Rate
APR Stands for Anual Percentage Interest. This is the annualized some total of your monthly mortgage payments interest rate. This rate includes any additional costs, such as for a mortgage loan this would be the closing costs.
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Interest Rate
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VA Loans
This is a mortgage loan intended for American veterans and their spouses. This helps veterans find affordable housing. VA loans allow for 103.15 % financing, and do not require private mortgage insurance. The funding fee is usually between 0 to .15%, and this is paid to the VA.
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Rate Lock
When you lock your rate, it means that you are closing your loan, and have consented to fix an interest rate.
Adjustable Rate Mortgage
An Adjustable Rate mortgage, is the counterpart to Fixed Rate mortgages. Instead of fixing a rate for a set amount of time, (usually between 10 - 30 Years) you're agreeing to a variable rate, in which the interest rate is subject to change periodically based on an index.
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FHA
Federal Housing Administration loans account for 20% of US mortgages, the government insures FHA loans so that you can still find an affordable home mortgage.
In most cases when your FICO score is below 620, it may be very hard to obtain a loan, and that loan may not necessarily be easily available unless your FICO score is above 680.
This is why FHA loans are designed to help low income households apply for home loans. FHA has been a strong backbone to the American economy
since 1934, and to this day continues to be a primary source for mortgages.
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FHA Streamline
only available to homeowners who are currently using their home as a primary residence. Your home loan must be an already approved FHA loan in good standing. Streamlining can wind up saving you because it eliminates costs in appraisal, and closing costs.
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FHA Cash-Out Refinance
This can allow you to refinance your mortgage for more than you currently owe, allowing you to keep the difference in cash. Traditionally, you can take up to 85% of your homes appraised value with a Cash-Out Refinance. If you’re in need of cash and need a quick fix for such reasons as home improvement, an investment, or any other large purchase, this could be the best decision for you!
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