Hi, this is Dave Holland with Veterans National Mortgage. I wanted to talk to you a little bit about Mortgage Acronyms today. We have a few here, let’s go through them.
This is not necessarily mortgage based, but you will see it a lot. You see it on the websites. Maybe you’ve seen some documentation that has DBA in it.
This stands for doing business as, and it’s very common in our industry. So you’ll see the company name and then doing business as this doesn’t mean much to you. It just says that the company is going to be using another name to do business for their corporation.
This is your contract. So when you purchase a home, this is what you’re going to write to the listing. As far as what your purchase entails, this is the contract. So when you go to purchase a home, this is your offer to the seller. Everything breaks down how much your deposit is going to be. What type of loan you’re going to do, inspections, time periods, everything. We will go through contracts in another video, but the RPA is very common across the country. It’s got a lot of different names, but contract is the most common. If you purchase a condo or a condominium, you’re going to see HOA, allot, HOA documents. You’re going to see bylaws.
“I wanted to talk to you a little bit about mortgage acronyms today. We have a few here, let’s go through them.”
You’re going to see a lot of information about the HOA. This is a homeowners association, most condominiums have it with an homeowner’s association. This is where you get your maintenance. You get your trash water. Um, all of the things, when you purchase a car, that they look after.
Another really common acronym is PMI. PMI is private mortgage insurance. A lot of people mistake this one for hazard insurance or fire insurance for your home. It’s not the same. PMI protects the lender from default. So essentially if you do not put down 20% on your home, then there’s going to be PMI of some sort private mortgage insurance.
We’ll talk about in another video, what PMI costs and what causes PMI to go up or down and how much it is. But PMI is very, very common in the mortgage industry. Okay. There’s two here for you that are very, very common than one is that first your escrow COE. This is close of escrow. That’s the most exciting part that we all look forward to.
That’s when everything has been complete, all the paperwork has been sent in the seller signs. They’re part of the paperwork, the buyer signs they’re part of the paperwork. Everybody agrees. The money has been put in. Escrow says, okay, we’re good to go. And then they allow title to disperse funds, and everybody goes and gets keys and everybody walks away happy.
Hopefully the other one, COE is one of the most important for VA loans. This is your certificate of eligibility. If you do not have a certificate of eligibility, you are not purchasing a home with your VA loan. It’s very, very, very critical that you get this up. As one of the first things that you do before you even start to look at a home, the certificate of eligibility tells you if you have the ability to purchase a home, using your VA benefits, it’s going to tell you how much benefit that you have available to purchase.
And it’s going to tell you all of the information that you need as far as the VA funding fee, first time use, or second time use of the VA. Everything is going to be on that. So you want the lender or the professional that you’re working with to order that for you first, because if it doesn’t come automatically from the department of veterans affairs, it can take a little bit to get, and there’s more documentation.
So you want to make sure that you get that upfront. Very, very, very important. After the COE for VA loans, we have arm. The arm is a very common acronym in mortgage as well. This is an adjustable rate model. There’s a lot of different mortgages that we can get. We can get a 30 year fixed 10 year five-year 15 year.
You can get adjustable rate mortgages that go at different gears as well. They have five years, one year tenure. What this means is that your loan will actually adjust interest rates that goes in line with the market. At that time, the timeframe varies, and it may depend on your own situation, whether this is a good option.
“The money has been put in. Escrow says, okay, we’re good to go. And then they allow title to disperse funds, and everybody goes and gets keys and everybody walks away happy.”
Definitely talk to your professional about the adjustable rate mortgage, the GFE, the HUD, the CD, these all go in line. The GFE is extinct. If you hear somebody talk about the GFE, um, they haven’t done loans for a long, long time. So the GFE is the good faith estimate. Along with the HUD, these were replaced by the CD.
The CD is your closing disclosure. So the closing disclosure is at the end of the deal as well. So this is very exciting part that has all of your fees and everything that is on the transaction as far as credits, or as far as debits. So, you know exactly how much cash to close, how much you’re going to spend, how much monthly, how much your interest rate is.
The CD has all of that information. We’re going to do a video later that will break down the closing disclosure and the loan estimate. So we can see exactly what those two lines.
The Earl is specific to VA loans, and this is a streamline mortgage. So that means that you’re going to have limited documentation. You don’t have to have income documentation. You don’t have to have an appraisal. It is basically just to lower your interest rate on your VA loan. That’s all it’s for. So it was very limited documentation, very easy to complete, but you cannot get cash out.
That’s another type of VA loan that you would have to have additional documentation for the LTV or C LTV. You’ll see this one. Okay. LTV is loan to value. It goes along with CLTV, which is combined loan to value both of these, essentially tell you what percentage that you put down and how much that you’re financing.
The CLT CLTV is most commonly used. When you have a piggyback or a hilar, a second loan on your mortgage. So you have your first for this amount, and then you have a hilar. Both of those together would be your combined loan to value. It’s a very important term. Um, and you’ll see that a lot in mortgage P and I is principal and interest.
“We’re going to do a video later that will break down the closing disclosure and the loan estimate. So we can see exactly what those two lines.”
This is the one that everyone’s looking for. How much am I going to be paying for this house? That’s what they want to know. This does not include taxes and insurance, when you include taxes and insurance, it’s impounded in your payment. So, P and I is only going to be your principal and interest payments.
Most likely it’s going to be a conventional loan that you see that on because on VA or other government loans, a lot of times it’s all wrapped into one on conventional. You have the ability to not impound your taxes and insurance. What that means is you have the ability to not include them in your payment.
You can pay them by the way. Okay sub this one is not an acronym, but it is part you’ll see it a lot. Subordination. So subordination is when you have a first and a second loan. We’re seeing this a lot right now with refinances because people have solar loans or they have seconds, or he locks.
This is very, very, very important to tell your loan officer upfront, Hey, I have a second or I have a solar we’re going to have to subordinate. That, that means you’re going to put it back in second place. So if you have a first and then you have a solar, the first wants to know that if you stop paying for that house or something, right.
They’re going to get paid first. If the subordination is not in place, the second is essentially saying, Hey, we want our money first.
“This is very, very, very important to tell your loan officer upfront, Hey, I have a second or I have a solar we’re going to have to subordinate.”
And that just doesn’t work for most loans, especially VA VNM is the most important Mortgage Acronyms that you can learn today. This is Veterans National Mortgage. We are an independent mortgage brokers that specializes in VA loans.
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