10 Mortgage Terms Defined

Like any industry, there will be a specific set of terms and abbreviations that are used to quickly communicate something important. If you are not a part of the “club,” though, it can seem hard to keep up. The Lasson Team doesn’t expect you to learn the mortgage lingo - so we take time to explain everything to you. We want you to understand exactly what your vacation home mortgage at Lake of the Ozarks will mean and how it will affect your finances afterward. If you like to learn about new terms - we’ve explained a few of them here so you can show off at our next appointment together!

ARM (Adjustable Rate Mortgage)

This is a mortgage in which the interest rate is adjusted up or down. The time frame that it is adjusted by is based on a pre-selected index. ARM products have interest rates that may increase after loan consummation.

Amortization

This is the repayment of debt with periodic payments that include both the principle and the interest. The loan is to be paid off at the end of a fixed period of time.

DTI (Debt-to-income ratio)

This ratio is explained as a percentage, and it explains what a borrower’s monthly payments will be on long-term debts divided by his or her gross monthly income.

Escrow

This may also be called “impounds” in some areas. It is the money that is collected by a lender as part of the monthly mortgage payment. It is then used for the purpose of paying a homeowner’s real estate taxes and insurance obligations.

Loan Estimate

This summarizes the terms of your loan and the estimated costs and is issued after your loan application. The processing of your loan starts when you submit the Intent to Proceed form that is issued along with the loan estimate.

Closing Disclosure

This provides the actual costs and terms of your loan. You will receive it at least three business days before closing.

LTV (Loan to value ratio)

The ratio is expressed as a percentage, and it results from dividing the amount being borrowed by the appraised value or selling price of the house.

PITI (Principal, Interest, Taxes & Insurance)

This is pretty self-explanatory. The principal, interest, real estate taxes, homeowner’s hazard insurance, and if applicable, private mortgage insurance or flood insurance. This is also known as your monthly housing expense.

PMI (Private Mortgage Insurance)

PMI is an insurance policy that allows a mortgage lender to recover part of its financial losses if a borrower defaults on a loan.

Underwriting

The underwriting department is responsible for approving mortgage loan applications. The underwriting procedure includes evaluating and verifying the information provided on the applications and supporting documentation to determine if the client has the capacity to repay the mortgage loan.

Ready to Buy a Home at the Lake of the Ozarks?

Now that you understand some of the lingo, it’s time to get you pre-approved at the Lake of the Ozarks! Buying a vacation home at Lake of the Ozarks is a great way to invest some money, but also enjoy it in the process. What may start as purely investment could become the best money you ever spent. If you are ready to join the thousands of homeowners at Lake of the Ozarks, we would like to help. Visit our website, or give us a call at (573) 746-7211 to learn more about home buying at the Lake of the Ozarks.


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Michael Lasson

Senior Loan Officer

NMLS #: 493712

4655 B Osage Beach Parkway

Osage Beach, MO 65065

Direct: (573) 746-7211

Cell: (573) 216-7258

e-Fax: (866) 397-0318

Email: mlasson@fsbfinancial.com

Website: www.YourLakeLoan.com

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.