FAQ GLOSSARY OF TERMS & LOAN PROGRAMS
Adjustable-Rate Mortgage (ARM)
A mortgage that permits the lender to periodically adjust the interest rate on the
basis of changes in a specified index.
Annual Percentage Rate (APR)
The measure of the cost of credit stated as a yearly rate; includes such items as the
stated interest rate, plus certain charges.
Conforming Loans
A loan that conforms to the guidelines established by Fannie Mae or Freddie Mac.
These guidelines establish the maximum loan amount, down payment, borrower
credit & income requirements, and suitable properties. 2006 Loan limits for single-
family mortgage home loan is currently at $417,000 for the Contiguous States,
District of Columbia and Puerto Rico. Alaska, Hawaii and the Virgin Islands is
currently at $625,000.00.
FICO SCORES
Named after Fair Isaac Corporation. A proprietary credit scoring tools generally
used by lenders. Credit scores most lenders use to determine your credit risk.
There are three major credit bureaus namely: Experian, TransUnion, and Equifax
most lenders use. Each score is based on information the credit bureau keeps on
file about a borrower. As information changes, credit scores tend to change as well.
FICO scores affect both how much and what loan terms (interest rate, etc.) most
lenders will offer you at any given time.
Negative Amortization
Negative amortization occurs when the monthly payments on a loan are insufficient
to pay the interest accruing on the principal balance. The unpaid interest is added
to the remaining principal due. A combination of negative amortization and
depreciation in home prices may result in a loan balance that is higher than the
market value of the home.
Non-conforming Loans or Jumbo Loans
A loan that does not conform to the limits established by Fannie Mae or Freddie
Mac. Second mortgage loans - credit lines, home equity loans, or home
improvement loans are also referred to as non-conforming loans.
Prepayment Penalty
If you pay off your entire mortgage balance before it is due, you may be charged a
fee -- this is referred to as a prepayment penalty. Any amount that is paid to reduce
the principal balance of a loan before the due date -- such as the sale of the
property, the owner's decision to pay the loan in full, or the owner's decision to pay
additional money every month to lower the principle or interest -- is considered
prepayment.
Loan Programs
Stated Income Verified Assets Loan: (SIVA) - Approval on this type of loan is based
on borrower's stated income, credit history, and verified liquid assets. The Verified
Assets should be consistent with the income claimed.
Stated Income Stated Assets Loan (SISA) - This loan features no assets being
verified. Borrower only state their income and state their assets on the application.
This program carries a slightly higher rate because the assets are not verified
No Income No Asset Loan (NINA). There is no income or asset information provided
or verified. The NINA loan approval is based on the borrower's down payment, credit
history, and property value. This program still requires employment documentation
and verification of two years employment. NINA loans may go to 100% loan to
value or 20% down/equity depending on credit scores. Alternate credit is allowed.
This flexible program allows foreign nationals with no income and no credit in United
States to buy property. Underwriting factors can vary with different lenders.
General Requirements for SIVA or SISA Loan Programs
Lenders generally require a minimum of two years of self-employment history or
employment history in the same profession. Evidence of two years employment
history for self-employed borrowers may be established by obtaining a letter from a
CPA to verify the borrowers self employment income. If a CPA is not available, two
years of business operation or confirmation from three disinterested business
associates may be required. Your ability to qualify for this loan is based on the
income stated on the application. The income must be consistent with your
profession.
Credit & Reserves
Generally, the borrower should at least have 2 to 4 months of the mortgage
payment in liquid cash reserves on a purchase or refinance in order to obtain a
better rate plus a combination of high FICO score and fully documented income.
Liquid Cash Reserves may be from the following sources: cash, bonds, CD's,
checking, IRAs money market accounts, savings, stocks or 401Ks
Option ARM Programs
The Negative Amortization product line consists of Option ARMs tied to either the 12-
MTA ,11th District Cost of Funds Index (COFI) or the LIBOR index. Some Option
ARM's have "No Negative Amortization" and have low start rates from 1.50%.
12-MTA index is based on yields published in the release entitled the “Selected
Interest Rates-H15” which is published by the Federal Reserve Board on the first
Tuesday of each month.
COFI The most common cost of funds index (COFI), 11th District COFI, is
determined by the monthly weighted-average cost of savings, borrowings, and
advances for member institutions of the 11th District Federal Home Loan Bank
(FHLB). This district includes Arizona, California, and Nevada. The FHLB of San
Francisco reports this index on the last business day of the month.
London Interbank Offered Rate (LIBOR) indexes: An index used to determine
interest rate changes for certain ARM plans, based on the average interest rate at
which international banks lend to or borrow funds from the London Interbank Market.
© 2006 Gold Fortune Realty
Adjustable-Rate Mortgage (ARM)
A mortgage that permits the lender to periodically adjust the interest rate on the
basis of changes in a specified index.
Annual Percentage Rate (APR)
The measure of the cost of credit stated as a yearly rate; includes such items as the
stated interest rate, plus certain charges.
Conforming Loans
A loan that conforms to the guidelines established by Fannie Mae or Freddie Mac.
These guidelines establish the maximum loan amount, down payment, borrower
credit & income requirements, and suitable properties. 2006 Loan limits for single-
family mortgage home loan is currently at $417,000 for the Contiguous States,
District of Columbia and Puerto Rico. Alaska, Hawaii and the Virgin Islands is
currently at $625,000.00.
FICO SCORES
Named after Fair Isaac Corporation. A proprietary credit scoring tools generally
used by lenders. Credit scores most lenders use to determine your credit risk.
There are three major credit bureaus namely: Experian, TransUnion, and Equifax
most lenders use. Each score is based on information the credit bureau keeps on
file about a borrower. As information changes, credit scores tend to change as well.
FICO scores affect both how much and what loan terms (interest rate, etc.) most
lenders will offer you at any given time.
Negative Amortization
Negative amortization occurs when the monthly payments on a loan are insufficient
to pay the interest accruing on the principal balance. The unpaid interest is added
to the remaining principal due. A combination of negative amortization and
depreciation in home prices may result in a loan balance that is higher than the
market value of the home.
Non-conforming Loans or Jumbo Loans
A loan that does not conform to the limits established by Fannie Mae or Freddie
Mac. Second mortgage loans - credit lines, home equity loans, or home
improvement loans are also referred to as non-conforming loans.
Prepayment Penalty
If you pay off your entire mortgage balance before it is due, you may be charged a
fee -- this is referred to as a prepayment penalty. Any amount that is paid to reduce
the principal balance of a loan before the due date -- such as the sale of the
property, the owner's decision to pay the loan in full, or the owner's decision to pay
additional money every month to lower the principle or interest -- is considered
prepayment.
Loan Programs
Stated Income Verified Assets Loan: (SIVA) - Approval on this type of loan is based
on borrower's stated income, credit history, and verified liquid assets. The Verified
Assets should be consistent with the income claimed.
Stated Income Stated Assets Loan (SISA) - This loan features no assets being
verified. Borrower only state their income and state their assets on the application.
This program carries a slightly higher rate because the assets are not verified
No Income No Asset Loan (NINA). There is no income or asset information provided
or verified. The NINA loan approval is based on the borrower's down payment, credit
history, and property value. This program still requires employment documentation
and verification of two years employment. NINA loans may go to 100% loan to
value or 20% down/equity depending on credit scores. Alternate credit is allowed.
This flexible program allows foreign nationals with no income and no credit in United
States to buy property. Underwriting factors can vary with different lenders.
General Requirements for SIVA or SISA Loan Programs
Lenders generally require a minimum of two years of self-employment history or
employment history in the same profession. Evidence of two years employment
history for self-employed borrowers may be established by obtaining a letter from a
CPA to verify the borrowers self employment income. If a CPA is not available, two
years of business operation or confirmation from three disinterested business
associates may be required. Your ability to qualify for this loan is based on the
income stated on the application. The income must be consistent with your
profession.
Credit & Reserves
Generally, the borrower should at least have 2 to 4 months of the mortgage
payment in liquid cash reserves on a purchase or refinance in order to obtain a
better rate plus a combination of high FICO score and fully documented income.
Liquid Cash Reserves may be from the following sources: cash, bonds, CD's,
checking, IRAs money market accounts, savings, stocks or 401Ks
Option ARM Programs
The Negative Amortization product line consists of Option ARMs tied to either the 12-
MTA ,11th District Cost of Funds Index (COFI) or the LIBOR index. Some Option
ARM's have "No Negative Amortization" and have low start rates from 1.50%.
12-MTA index is based on yields published in the release entitled the “Selected
Interest Rates-H15” which is published by the Federal Reserve Board on the first
Tuesday of each month.
COFI The most common cost of funds index (COFI), 11th District COFI, is
determined by the monthly weighted-average cost of savings, borrowings, and
advances for member institutions of the 11th District Federal Home Loan Bank
(FHLB). This district includes Arizona, California, and Nevada. The FHLB of San
Francisco reports this index on the last business day of the month.
London Interbank Offered Rate (LIBOR) indexes: An index used to determine
interest rate changes for certain ARM plans, based on the average interest rate at
which international banks lend to or borrow funds from the London Interbank Market.
© 2006 Gold Fortune Realty
GOLD FORTUNE REALTY
 |
 |
 |
 |
 |
 |
 |
 |
CONTACT US NOW
| (707)334-7988 |
We are totally focused on
our client's needs, and we
work hard to realize their
dreams as if they were
our own.
GOLD FORTUNE REALTY
our client's needs, and we
work hard to realize their
dreams as if they were
our own.
GOLD FORTUNE REALTY
