|
Adjustable Rate Mortgage (ARM)
A mortgage whose interest rate changes over time based on an index and a margin. Rate changes are made at prescribed times and within prescribed limits (caps) as defined in the mortgage contract. |
|
Debt ratio or Debt-to-Income Ratio
The ratio, expressed as a percentage, is calculated by dividing the monthly payment of long-term debts by gross monthly income. |
|
Origination Fee
The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan. Origination fees are paid by the lender or included in the loan as part of the closing costs. Lender's can also charge an origination fee to the borrower, when funding the mortgage with a table lending mortgage broker. Origination fees are considered tax deductible points. |
|
Underwriting
Underwriting involves an analysis of the borrower's creditworthiness (debts and assets, employment history, property evaluation, and other factors to determine an appropriate rate, term & loan amount. |
|
