Closing
Credit worthiness
Consumer Financial Protection Bureau
Credit history
Compensating factor
Conforming mortgage
Conventional mortgage
Consumer reporting agency
Concession amount
Credit score
Credit repair
Collateral
Credit report
Closing costs
Cash-out refinance
This comprehensive record of a borrower's financial activity includes details about timely or late payments, credit card records and any negative history, such as bankruptcies, foreclosures or short sales.
Credit reporting agencies assign these to borrowers, summarizing each borrower's risk. Lenders consider these as a critical indicator to creditworthiness and look at them to decide whether to approve a loan and, to a large degree, the interest rate it will charge. Various companies calculate these for borrowers, the most popular being FICO
Property a borrower uses to secure a loan by granting the lender the right to seize the property in the event the borrower defaults on the loan repayment obligation. For example, a borrower uses real estate property in this concept for the loan it takes out from a lender to purchase the property.
In this final step of a real estate transaction, the seller delivers the deed transferring title of the property to the buyer, the mortgage lender releases the loan funds enabling the purchase and the buyer signs all necessary loan documents, including the loan note and mortgage, which officially confirms the property as collateral.
Also known as CRAs or credit bureaus, these companies collect financial information about a borrower, produce a credit score from a complex mathematical formula as an indicator of the borrower's creditworthiness and sell the information or credit report detailing the borrower's financial history. The three major CRAs are Experian, Equifax and TransUnion.
This is a detailed rundown of a borrower's financial holdings, behaviors and history, compiled by a credit reporting agency. It is used by lenders to examine the assets, debts, defaults and financial health and habits of a borrower, as a way to assess the risk of lending to a borrower. Consumers are entitled under federal law to obtain one free report per year.
Any mortgage loan that is not made or guaranteed by the U.S. government is in this category; therefore, FHA, VA and USDA loans are not this type.
Under the Fair Credit Reporting Act, consumers have the right to dispute inaccurate information appearing on their credit report or reports at no cost. These specialized companies charge consumers a fee to handle this task, unscrupulous companies promise to remove accurate derogatory information from credit reports.
The FHA sets this amount — currently capped at six percent of the sales price —that allows a seller to contribute to a borrower's prepaid expenses, discount points and closing costs, such as mortgage insurance premium and buy-down fees. These amounts cannot be used to pay condo fees or mortgage interest.
Fees and ancillary expenses involved in the lending process are paid at the closing. They are also known as settlement costs. Examples include the origination fee, appraisal fee, title insurance premium, recording fees and points.
An estimation by an underwriter of the borrower's likelihood of repaying or defaulting on a loan. An underwriter will look at a borrower's income history, amount of existing debt, and history of repaying previous loans. One factor when measuring this is the borrower's credit score.
Established in 2010 by the U.S. Congress, it carries out consumer financial laws. It's primary mission is to provide consumers with essential information so they can understand financial agreements they enter. It requires lenders to provide certain disclosures to all borrowers at specified points during the financing process.
Mortgage loans that meet all Fannie Mae and Freddie Mac guidelines conform to those guidelines, and therefore are eligible for purchase by them. One of the most well-known of these guidelines is the maximum loan amount, currently $417,000 in most counties.
When a borrower refinances his or her mortgage for more than the current balance, and gets money back, he or she has completed one of these operations. The borrower essentially takes out equity in the property to pay off other debt or to pay for improvements to the property.
The Consumer Financial Protection Bureau created this underwriting standard to enable loan approvals for borrowers who may not meet certain underwriting standards for FHA, VA, Fannie Mae or Freddie Mac loan approval. For example, a borrower whose debt to income ratio exceeds 43 percent, the threshold for these loans, might still obtain approval by citing a factor such as a larger down payment percentage than typically required.
