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Acronyms to Know When Buying a Home

Buying a home can be a stressful event.  From the mountain of paperwork to the New Lingo your Plattsburgh mortgage Lender is using to explain your mortgage and terms.  Although here at the Plattsburgh Mortgage Center we try our best to simplify the process and language used a little extra knowledge can go a long way.  Below are some Acronyms to keep in mind when you become a First Time Home Buying in Plattsburgh NY.

ARM-Adjustable Rate Mortgage
An ARM is a mortgage option that interest rate changes after a set period, usually 5-7 Years.  After this period the Rate will adjust to reflect the current market conditions.  ARM’s are usually a good loan program if you don’t plan on being in the Home for more than 5 years.

APR-Annual Percentage Rate
AN APR is the standardized method of Calculating the cost of a mortgage, It is stated a yearly rate which takes into account interest, mortgage insurance, and certain points or credit costs.  It lets you compare loans side by side with any additional fee’s.

DTI- Debt-to-Income
The DTI
ratio is the percentage of your monthly income that goes towards paying your current monthly bills (credit card, car payment, ect) along with your mortgage payment(including escrows).   The best way to explain it for me is if you get paid $100 a month, your car payment is $10 your credit cards total to $10 and your proposed mortgage payment is $22.  That would make your DTI ratio 42%.   ($10+$10+$22/100)

FHA-Federal Housing Authority
The FHA agency of the U.S. Department of housing and Urban Development insures that quality residential mortgages are available to consumer’s through private lenders.  They are a benchmark of the 3.5% down loan programs.  They also set the standards for construction and underwriting but does not lend money.

FSBO- For sale by Owner
A method of selling a property without the use of an agent or Broker.

HOA-Home Owners Association
 This nonprofit association manages the common areas of a condominium or planned unit development. Unit owners pay an association fee to maintain areas owned jointly such as exteriors, Lawns, pools, ect.  . These dues are not part of your mortgage payment but will be considered as part of your debt-to-income ratio. If you are buying a condo, your mortgage lender will require information from the association to calculate the payment.

HOI- Homeowner’s Insurance

An HOI policy is the insurance that combines personal liability insurance and hazard insurance coverage for a residence and its contents.  You are always required to have home owners insurance before the closing.

MLS-Multiple Listing Service
The MLS is a service used by real estate brokers and agents to distribute information on properties for a sale on the internet.  Sites like Zillow or Realtor.com get there information from the MLS.

PMI-Private Mortgage Insurance
Insurance that protects lenders against default on loans.  Usually required on loans that have less than 20% down.

TRID – TILA RESPA Integrated Disclosures (Know Before You Owe)
The new rule replaces and integrates several disclosures into two separate, distinct, and easy to understand disclosures known as the Loan Estimate and the Closing Disclosure.   By law you must be provided with the Loan Estimate within three days of the initial application and Closing Disclosure at least three days in advance of closing.   Make sure you hold on to it because you will need it when you refinance, sell your home or try to get another mortgage.

CD

The Closing Disclosure can also be referred to as the “CD”. The Closing Disclosure is the final document you will receive at least 3 days before closing. This document explains how much money you will need at closing, where the money is going, and other final details of the transaction. All other documents received before the CD is only considered an estimate.

 

Check back soon as the dictionary will be updated regularly!

 

 

 

 

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