Adjustable Rate Mortgages (ARMs) are loans with an adjustable interest rate that changes periodically to reflect market conditions. This type of loan can fluctuate above and below your initial rate at closing.

The Annual Percentage Rate, or APR, is the final rate after all points, fees and charges are applied. Since there are other finance costs added to the initial interest rate, the compiled APR allows buyers to compare rates in an apples-to-apples scenario.

An appraisal is the evaluation of a home against nearby homes with similar characteristics that have recently sold. This evaluation is used to establish the market value of the home.

The act of signing the legal documents to transfer ownership and/or acknowledge debt in financing real estate; the end of the loan application process.

These are costs that the buyer of a home has to pay at the end of the home buying process. Closing costs usually include an appraisal fee, title, search, and lawyer fees. They may also include points, one year of homeowner’s insurance or private mortgage insurance, if required. Closing costs are separate from the amount paid toward the down payment.

 A Closing Disclosure is a set of forms that provide final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

The ratio of a buyer’s minimum monthly credit payments (including the mortgage payment) to his/her gross monthly income; the second of the qualifying ratios.

Discount points are fees paid at closing to decrease the interest rate for the life of the loan.

Equity – Equity is the market value of a home minus any mortgage debt on the home.

Escrow is a third-party that holds the funds and documents that change hands during the buying and selling process. An escrow officer will confirm the items in the purchase contract are complete and will pay all appropriate parties from the funds.

The lender uses an escrow account to pay the taxes and insurance on the buyers behalf.  A portion of your mortgage payment gets set aside on a monthly basis to ensure there is sufficient funds to cover your annual taxes and insurance.

 A fixed-rate mortgage will keep the same interest rate for the life of the loan term. This can only change if the buyer refinances or pays off the balance.


Homeowner’s insurance is also known as hazard insurance. Lenders can require buyers to purchase supplemental hazard insurance to protect against damage, fire, and floods.

The Loan Estimate is a set of forms that you will receive after applying for a mortgage. The Loan Estimate tells you important details about the loan you have requested. A lender must provide you a Loan Estimate within three business days of receiving your application.

The loan amount divided by the value of the property, generally expressed as a percentage.

Points are finance charges paid to the lender as part of the closing costs. Each point equals 1 percent of your total mortgage loan. Points can be negotiable and are sometimes tied to your interest rate.

A quick analysis of an individual’s income and debts to determine an approximate loan amount for which the individual would qualify.

(PITI)-Abbreviation for Principal, Interest, Taxes, and Insurance; the mortgage payment.

Private Mortgage Insurance is insurance the buyer carries to guarantee that the lender is paid off if the buyer fails to pay. This is different than homeowner’s insurance and is generally required on all mortgages with less than a 20 percent down payment. For some people, private mortgage insurance may be deductible on federal taxes.

 Fee paid to the lender at closing that represents their fee for making the loan; generally no more than 1% of the loan amount.

A “cooling-off period” between the act of closing a refinance or equity loan by the borrower, and the act of funding the loan by the lender; this is a federal and/or state requirement that runs 3 full business days.

Underwriting is the process of reviewing an individual’s income and credit file, and the property appraisal to determine the ability and willingness of the individual to repay the loan they are requesting. Underwriting will also assess the condition and value of the property they are attempting to finance.

Insurance coverage that precludes a new property owner from being liable for any claims made by anyone against the property and the prior owners.

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This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Dynasty Lending Group, LLC 2550 Pacific Avenue, Ste 700 Dallas, TX 75226 | NMLS ID 2541524


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