Introduction to Mortgage and It's Parameters

2. lender over time, typically in a
series of regular payments that are divided into principal and
interest

3. • A legal agreement by which a bank, building society, etc. lends
money at interest in exchange for taking title of the debtor's
property, with the condition that the conveyance of title
becomes void upon the payment of the debt.
• A borrower must apply for a mortgage through their preferred
lender and ensure they meet several requirements, including
minimum credit scores and down payments. Mortgage
applications go through a rigorous underwriting process
before they reach the closing phase.

4. •
•
•

5. •The Mortgage/Loan balance is what you have left to pay on the
mortgage
•The Home Equity is what you have already paid left to pay on the
mortgage’

6. For example, if your home is worth $150,000 and the principal balance
remaining on your mortgage is $50,000, then your home equity – the part of
your home that you own free and clear – is $100,000
In the simplest terms, your
home’s equity is the difference
between how much your home is
worth and how much you owe on
your mortgage

7. (1980)
CMV: 100,000- MB: 90,000 = Equity: 10,000
(2006)
CMV: 200,000- MB: 30,000 = Equity: 170,000
The 100,000 increase in equity was due to an increase in the CMV.

8. CMV: 250,000 - MB: 230,000 = Equity: 20,000
CMV: 200,000- MB: 250,000 = Negative Equity: -
50,000
THE CMV OF A HOUSE CAN DECREASE DUE TO
CERTAIN REASONS, SUCH AS AN EARTHQUAKES,
FLOODS, HURRICANES IN THE AREA.
SINCE WE ARE CALLING ON BEHALF OF LENDERS, WE
CANNOT HELP A PERSON WHO HAS NEGATIVE EQUITY
BECAUSE THERE ISN’T A COLLATERAL FOR THE LOAN.

9. Appraisal

10. AN APPRAISAL IS THE BEST WAY TO
ESTIMATE YOUR PROPERTY'S FAIR
MARKET VALUE BASED ON THE
LOCATION, CONDITION AND RECENT
SALES OF SIMILAR HOMES IN THE
SURROUNDING AREA
BEYOND AN ESTIMATE OF HOW MUCH
YOUR PROPERTY IS WORTH, AN
APPRAISAL ALSO INDICATES THE
AMOUNT A LENDER WILL LET YOU
BORROW FOR A PROPERTY

11. The fee charged for borrowing money
the amount charged on top of the
principal by a lender to a borrower for the use of assets

12. A fixed-rate mortgage is a mortgage loan
where the interest rate on the note
remains the same through the term of the
loanType

13. 3/1 ARM
Your interest rate is set for 3 years then adjusts annually for 27 years
5/1 ARM
Your interest rate is set for 5 years then adjusts annually for 25 years
7/1 ARM
Your interest rate is set for 7 years then adjusts annually for 23 years
10/1 ARM
Your interest rate is set for 10 years then adjusts annually for 20 years

14. Conventional Loan

15. FHA Loan (Federal Housing
Administration)

16. VA Loan (Veteran’s Administration)
A VA loan is a mortgage loan available through a program established by the U.S. Department of
Veterans Affairs (VA) (previously the Veterans Administration). With VA loans, customers can get
homes with little to no down payment and no private mortgage insurance and generally get a
competitive interest rate

18. The combined loan-to-value (CLTV) ratio is the
ratio of all secured loans on a property to the value
of a property. This includes not only the primary
mortgage used in LTV but also any second
mortgages, home equity loans or lines of credit, or
other liens

19. Calculating
LTV
An LTV ratio is calculated by dividing the amount borrowed by
the market value of the property, expressed as a percentage. For
example, if you buy a home appraised at $100,000 for its appraised
value, and make a $10,000 down payment, you will borrow $90,000. This
results in an LTV ratio of 90% (i.e., 90,000/100,000).

20. A Loan against the Equity
in the house is a Home
Equity Loan.
It is also called A Second
Mortgage.
It has a higher interest rate
then the first mortgage. A secured line of credit
based on the equity in the
home. “Like a credit card”
that uses your home as
collateral.

21. S.Loan Car E-
Bill
U.Loan H.Loan
40
30
20
10
0
1.Payment History
2.Amount Owed
3.Length of credit history
4.New credit
5.Types of credit in use
Paying off existing debt will improve your credit
score

22. Single Family Regular Home Condo (Condominium)
Townhouse Multi-Family House

23. Condos
Duplex
Single Family Regular House
Townhouse

24. Manufactured housing is a
type of prefabricated
housing that is largely
assembled in factories and
then transported to sites of
use which indicates mobility

26. A disability is any condition of the body or
mind (impairment) that makes it more difficult
for the person with the condition to do certain
activities (activity limitation) and interact with
the world around them (participation
restrictions

27. self-employed individuals, new
immigrants, or temporary worker
In order to qualify for a mortgage, borrowers are normally required to submit proof of income. This
includes providing lenders with W2s, pay stubs, employment letters, and/or recent tax returns. Lenders
want to see that borrowers are able to afford payments on the loan by proving they have a stable and
reliable source(s) of income. This is, of course, in addition to other factors such as a down payment and
a suitable credit score

28. PMI can be
removed once a
borrower pays
down enough of
the mortgage's
principal
PMI can be a costly
necessity for
homebuyers who don't
have enough money
saved for a 20% down
payment overall
mortgage payment to
the lender,
PMI is usually paid
monthly as part of
the
When you apply for a mortgage, the lender will typically require a down
payment equal to 20% of the home's purchase price. If a borrower can't
afford that amount, a lender will likely look at the loan as a riskier
investment and require that the homebuyer take out PMI, also known as
private mortgage insurance, as part of getting a mortgage