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| GLOSSARY: P-Z |
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Points - One point equals 1% of the loan amount. Total points on a loan include origination points, used to offset the cost of making a loan, and discount points, which can be paid to reduce the loan's interest rate.
Pre-approval - A written commitment from a lender, subject to a property appraisal and other stated conditions, that lets you know exactly how much home you can afford.
Prepaids - That portion of your loan closing costs which must be collected at closing to cover taxes, interest and insurance.
Principal - The amount of a loan, excluding interest; or the remaining balance of a loan, excluding interest.
Private Mortgage Insurance (PMI) - A mortgage insurance policy on a conventional mortgage loan issued by a private insurance company.
Processing - The completion of a mortgage loan application and supporting documents.
Processor - The Bay Financial Savings Bank, F.S.B. employee responsible for collecting the completed application and all supporting documents before the entire loan packet is submitted to underwriting. Also known as a processor.
Rate Cap - The limit of how much the interest rate may change on an ARM at each adjustment and over the life of the loan.
Rate Lock - The borrower and the lender agree to protect the interest rate, points and term of the loan while it is processed.
Sub-prime Loan - A home financing program that accommodates borrowers with special qualifying factors, including poor credit histories.
Truth-in-Lending Statement - Required by federal regulations, this statement tells purchasers the costs of financing their loan expressed as the annual percentage rate (APR). Do not confuse the APR with your interest rate, which is used to determine your monthly principal and interest payment.
Underwriting - The process of a lender reviewing the application, documentation and property prior to rendering a loan decision.
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