Glossary
Cash Out - The amount of money the borrower will receive after closing the loan. This is more common for refinances than for purchases.
Cash To Close - The amount of money, if any, that the borrower must bring to closing to close the loan. This is more common for purchases than for refinances.
Credit Report - contains detailed history of your use of credit. It includes information concerning any mortgage, loans or credit cards and their payment histories, public records like bankruptcies or judgments and collections. In addition to late payments and other adverse items, the amount of credit, recency and number of credit inquiries and how much of your revolving credit you are utilizing can have an impact.
Credit Score - A number used by lenders to measure the credit risk they would take by loaning money to you. Credit scores can be computed and measure different ways. The most common for mortgages is the FICO score. Higher FICO scores mean lower risk and will help qualify borrowers for better loans at lower interest rates. It is common for lenders to use the middle score of the three provided from the major credit bureaus.
FICO SCORE - the credit score most lenders use. Lenders generally use the scores from each of the three major credit bureaus: Equifax, Experian and TransUnion. The bureaus each have a different name for their FICO scores, but they are developed using the same methods by Fair Issac. Bureaus refer to their scores as follows: Equifax - Beacon, Experian - Experian/Fair Isaac Risk Model and TransUnion - EMPIRICA.
Fixed Rate Loan - A loan that has an interest rate that does not change.
Interest Rate - The percentage of the loan amount that is charged as interest. It may vary or remain constant depending on the type of loan you have.
Principal and Interest Payment - The portion of your mortgage payment that includes interest and principal to pay down your balance. This does not include any portion due to taxes or insurance.
Principal Balance - The amount of money you currently owe on your loan.
Term - Length of time associated with the loan. The amortization term is the length of time that the payments are spread out over for the purpose of calculating your minimum payment. The Balloon term is the length of time till any remmaing balance is due. Mortgages where the balloon term is shorter than the amortization term are called balloon mortgages.
Total Interest - The total amount of interest paid over the life of the mortgage.