Adjustable Rate Mortgage (ARM)
A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index.

Affordability Analysis
A detailed analysis of the homebuyer’s ability to afford the purchase of a home, and takes into consideration the income, liabilities, available funds, along with the type of mortgage the buyer plans to use, the area where the buyer wants to purchase a home, and the closing costs that the buyer might expect to pay.

Annual Percentage Rate (APR)
The cost of a mortgage as stated as a yearly rate, includes such items as interest, mortgage insurance and loan origination fee (points).

Caps
A provision of an ARM that limits how much the interest or mortgage payments may increase or decrease.

Commitment Letter or Loan
.....Commitment Letter
A formal offer by a lender stating the terms under which it agrees to lend money to a homebuyer.

Conventional Mortgage
A mortgage that is not insured or guaranteed by the federal government

Convertible ARM
An adjustable rate mortgage (ARM) that can be converted to a fixed rate mortgage under specified conditions.

Fixed Rate Mortgage
A mortgage in which the interest rate does not change during the entire term of the loan.

Housing Expense Ratios
The percentage of gross monthly income that goes toward paying housing expenses

Loan-to Value (LTV) Percentage
The relationship between the principle balance of the mortgage and the appraised value (or sales price if it is lower) of the property. Example - $100,000 home with an $80,000 mortgage has a LTV percentage of 80%.

Lock-in
A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing

Mortgage Insurance
A contract that insures the lender against loss caused by a mortgagers default on a government mortgage or conventional mortgage.

PITI
The four components of a monthly mortgage payment Principal refers to the part of the monthly payment that reduces the reaming balance of the mortgage. Interest is the fee charged for borrowing the money. Taxes and Insurance refer to the amounts that are paid in an escrow account each month for property taxes and mortgage and hazard insurance.

Qualifying Ratios
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations:
............ A. Housing expenses as a percent
............ of income ratio (33%).
............ B. Total debt obligations as a
............ percent of income ratio. ( includes
............ monthly housing expenses plus
............ other monthly debts 38%)
Sub Prime Loans
Sub prime loans are a combination of three factors: Credit score, loan to value and debt ratio.
Guidelines: Credit score less than 600, loan value exceeding 80% without PMI, debt ratio exceeding 40%.

Equal Housing Lender

SB Financial Group, Inc.
Home Loans
Residential Loans
Houston Texas