Mortgage Broker Acronyms Explained

Mortgage Broker Acronyms Explained

Have you ever found yourself in a conversation with a real estate specialized that leaves you dumfounded at their industry’s jargon? As consumers in any field in which we do not function in ourselves; industry jargon can be confusing and frustrating. When buying a new home this scenario is more than likely to occur multiple times. When a specialized like a Mortgage Broker commonly uses certain terms and acronyms on a daily basis, it is simply an oversight on their part to assume you are privy to the definitions of these words. While mortgage brokers may be the biggest ‘offenders’ of this kind of misconception, they are also the first to take a step back and explain them to you to equip you with the knowledge needed to getting a loan and most importantly, feel confident in obtaining one. To give you a jump start, listed below are a few of the shared acronyms used by mortgage brokers.

EMD: Earnest Money place
A mortgage broker will refer to your EMD at the beginning of the loan course of action. EMD stands for Earnest Money place. Your Earnest Money place is the down payment that is placed on a real estate character to make the offer to buy authentic.

LTV: Loan To Value
Mortgage Brokers will typically request that an appraisal is done on a seller’s character in order to analyze its Loan To Value ratio (LTV). Loan To Value ratios are presented as percentages. For example, a loan for $50,000 on a character appraised at $100,000 has an LTV of 50%.

TIL: Truth In Lending
Mortgage Brokers are required by law to provide any prospective mortgagor a Truth In Lending disclosure (TIL). The TIL includes pertinent loan information such as the amount financed, annual percentage rate (APR), finance charges, in addition as an outline of the period required to pay off the loan.

APR: Annual Percentage Rate
Annual Percentage Rate can be hard to explain to those who are not fluent in mathematical and financial equations. Simplified, it is the rate that will be charged on a certain loan amount based on; including but not limited to, the amount of the loan, the life of the loan, in addition as any additional costs associated with the loan.

GFE: Good Faith calculate
A Good Faith calculate is a document your mortgage broker will provide to familiarize you with the costs associated with the closing of the loan. These fees will include, title closing costs, mortgage and deed recording costs, lender fees, and any prepaid figures. An example of a prepaid figure is your danger insurance premium.

It is next to impossible to know and memorize the many acronyms that are used in the financial industry. Amazingly, however, your mortgage broker not only has them memorized but fully understands each of them. So instead of being baffled during your next conversation hopefully the short list of explained acronyms above will promote a confident rapport between you and your mortgage broker.

leave your comment