Closing costs are funds, in addition to a loan down payment, paid at settlement. Although many of the costs are associated with financing, others are independent of the mortgage loan. Some charges are normally associated with either the buyer or the seller, but anything is negotiable. In a buyer’s market, when properties are slow to sell, anxious sellers frequently agree to pay part of the buyer’s closing costs.
YSP - Yield Spread Premium
YSP is also known as a Rebate, or a Lender Credit. YSP is a credit that you the borrower received from the lender when you opt to take a higher interest rate.
PMI - Private Mortgage Insurance
PMI is an extra expense you pay if your loan-to-value (LTV) is over 80%. The mortgage insurance you are paying for covers the lender. If you stop making your payments and the lender has to foreclose on you, the Mortgage Insurance company will reimburse the lender for any loss they take.
LTV - Loan to Value
Your new loan amount divided by your appraised value.
APR - Annual Percentage Rate
APR is the interest rate charged on the amount borrowed. It reflects the annual cost of borrowing money. APR makes it easier to compare different loans and credit cards because you can easily see which loan/credit card would be cheaper. For example, a loan with a 10% interest rate is less expensive than a loan with a 15% interest rate (assuming other things are equal)
Centerpointe Financial, Inc. Education
HOA - Home Owners Association
Homeowners Association dues are typically paid by condominium owners and homeowners in a planned urban development (PUD) or town home. HOA dues are paid monthly, semi-annually, or annually; and, are paid separately to a management company or governing body for the association. HOA dues cover common services for tenants and residents. These services may include landscaping, elevator maintenance, maintenance and upkeep, and legal costs. Homeowners association dues vary by building and neighborhood.
Financing Your home with less than 20% down
- Piggyback mortgages options. No PMI payments.
- Lender paid mortgage insurance. No monthly PMI payments.
- Single and split premium mortgage insurance. Can be paid by seller.
- Borrower paid, traditional, mortgage insurance up to 97% loan-to-value.
Impound / Escrow Account
An impound account is when your mortgage payment includes your property taxes & home insurance. The annual property tax & insurance bill is divided into 12 payments, which are included in your mortgage payment amount each month. The money set aside in each payment is held in a separate account and those funds are used to pay your insurance & tax bill when they become due. Impound accounts can also be called escrow accounts (not to be confused with escrow companies).
Title insurance companies provide title insurance. Title insurance is an insurance policy that guarantees the property title is free from the problems of hidden liens and claims.
DTI - Debt to Income Ratio
DTI is determined by dividing the sum of your monthly debts into your verifiable monthly income. Monthly debts include your new mortgage payment including your property taxes & insurance, any payments showing on your credit report, and any alimony or child support payments. Your income is your gross monthly income.
HARP, homepath and additional Fannie MAE Solutions
- HARP refinance loans. Underwater properties OK.
- Fannie Mae Homepath purchase loans.
- RPM’s direct Fannie Mae access permits up to 10 financed properties.
- Delayed purchase financing option for cash buyers. Recover your investment through a mortgage, within first 6 months.