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Saturday, November 18, 2017

APR, ARM, FSBO, PITI: Home-Related Acronyms You Should Know


by Carson Buck

FHA, LTV — What Does It All Mean?

In many cases and especially for first-time home buyers, purchasing a home means that you need to learn a lot of new vocabulary words. This can be made even more challenging if all the vocabulary you need to learn is made up of
confusing acronyms, and often enough, much of the home-buying terminology does have a shorthand version. So how can anybody figure it all out?

Start by reading through our glossary of commonly used home-related acronyms. We’ve handpicked and defined the most important words you need to know about buying or selling a home.

Common Home Buying Acronyms Defined

APR – Annual Percentage Rate. The APR is the total rate the borrower is paying to borrow money for a home. The rate is shown as a percentage and it includes the mortgage interest rate and other fees or costs.

ARV – After Repaired Value. If you purchase a home that needs to be flipped or fixed up, the ARV is the amount the home is estimated to be worth after the remodel has been finished.

AMORT – Amortization. Amortization is when the borrower pays off the debt using a fixed repayment schedule over time in regular installments.

ARM – Adjustable Rate Mortgage.
The ARM is a mortgage loan with a variable interest rate adjusted periodically based on market interest rate.

CD – Closing Disclosure. The CD contains all final costs for the borrower’s mortgage, including proper disclosure from the lender. It must be presented at least three days before the close of the sale.

DTI – Debt to Income Ratio. The DTI is a percentage based on your minimum monthly debt divided by your gross monthly income. This helps to determine your mortgage eligibility.

ECOA – Equal Credit Opportunity Act
. The ECOA is a law that was enacted in the 1970s that “makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract).”

FHA – Federal Housing Administration. The FHA provides mortgage insurance on loans and is the largest insurer of mortgages in the world.

FSBO – For Sale By Owner. When a home is FSBO, the property is sold without the representation of a real estate agent.

HELOC – Home Equity Line of Credit. The HELOC is a loan that the borrower can take out based on the equity in the home. A HELOC is normally a second mortgage that functions like a line of credit.

LE – Loan Estimate. The loan estimate is a form provided by the lender to disclose information that will help the borrower understand the costs and risks of the mortgage.

LTV – Loan to Value. The LTV describes the balance of the mortgage in relation to the appraised value of the property.

PITI – Principal, Interest, Taxes, and Insurance. The PITI is the borrower’s entire monthly payment that includes the principal amount, the interest, any taxes, and insurance.

PMI – Private Mortgage Insurance. PMI is normally required when a borrower’s LTV is less than 80%. It is meant to protect the lender in case the borrower defaults on their mortgage payment, but also benefits homebuyers by offering a down payment of less than 20%.

VA – Veterans Affairs. A VA loan is a mortgage loan guaranteed by the US Department of Veterans Affairs. It assists veterans and their families obtain financing.

The Complete Glossary of Home-Buying Acronyms

Try not to be overwhelmed by the slew of confusing letters that you inevitably have to face when you begin investing in property and buying a home. If you need help finding more definitions for commonly used acronyms, check out Investopedia, or ask a local real estate agent. If you feel prepared, start searching for your dream home today.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Re/Max Preferred Choice is embracing these new mediums of communication to better serve our customers. We have created our company to better place important information in your hands to help you with your housing needs. For a personal consultation please contact me at my Website.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

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