You know what a mortgage is, how it works, and what to watch. But when you ask for help mortgage, your lender about words to do as much sense as alien jokes. That's what makes the process of loan modification of confusion for many property owners and why many of them simply give up. But you do not need to be a financial expert to make the right decisions. A knowledge of the loan modification and loan industry can help you better understand your situation, and know exactly what your lenders. Here is a list of terms you're likely to encounter in a loan modification, and what they mean for you.Here are Loan Modification loan modification glossary of terms.
Amortization: The repayment of a loan (typically a mortgage) through regular payments. Payments are determined by the duration of the loan, the remaining capital and interest rates.
Annual Percentage Rate (APR): The total cost of the loan, including interest, mortgage insurance, points, and other related costs.
Adjustable-Rate Mortgage (ARM): A type of mortgage loan whose interest rate varies depending on market conditions. This means that your payments in May to increase or decrease from month to month. Most weapons have a stopper that prevents the payment of the amount of the increase beyond certain levels.
Debt-to-income ratio (DTI): The relation between the amount you pay on the loan to your total income. Lenders use to determine whether or not you can easily pay the loan. According to the Federal Housing Administration (FHA) mortgage payments should not exceed 29% of your monthly income before taxes, and your total debt (including credit cards and other loans) should not go over 41% .
Deed-in-lieu : An act that goes into your property to your lender and the settlement of your debt. It does not allow you to keep your house, but it helps you to avoid foreclosure proceedings and the associated costs.
Equity: The amount of interest you have in your property. It is calculated by subtracting the amount you still have your house at fair market value.
Fair market value (FMV): A price for your home to discuss the current market conditions. FMV assumes that the buyer and seller acting freely and have all relevant information on the deal.
Fixed-rate mortgage: a type of mortgage that uses an interest rate fixed for the life of the loan. This gives you more stability as a borrower, as your payments remain the same irrespective of the numbers.
Foreclosure: A process that your property is sold and the proceeds to your lender, which allows them to recoup their losses if you default on the loan.
Forbearance: An agreement that your lender modifies your payment plan to help you progress and avoid foreclosure. This means reducing your monthly payments in May or suspend for a period of time. Contrary to the amendment of the loan, this is usually temporary and is often used as a loss mitigation option.
Good faith estimate (GFE): An estimate of the total cost of the loan, including all closing costs, lender fees and insurance costs. All lenders are required to give you a GFE within three days after your loan application.
Sarah Anderson is author of Direct Software.For more information about Loan Modification visit http://www.directcapitalsoftware.com
