5 Mortgages Terms You Should Know

Buying a home can be a very confusing time. With all of the mortgage terms that are used, it can be easy to get lost. To make sure you know what is going on throughout the process, keep these common mortgage definition in mind.

  1. GFE – good faith estimate. These is a document that lenders are required to provide any prospective borrowers that details the estimated costs of the mortgage loan.
  2. DTI – debt to income ratio. This is how a lender will determine how much a borrower can afford to pay each month.
  3. LTV – loan-to-value. The ratio of the mortgage divided by the purchase price or appraised value of a property. It is used to assess the risk of the loan.
  4. PMI – private mortgage insurance. Paid by the borrower to protect the lender’s investment if they make a down payment that is less than 20 percent of the home purchase price.
  5. ARM – adjustable-rate mortgage. A loan which the interest rate can change based on an agreed index.

Contact Avis Lending for all of your loan needs in the Irvine, California Area.

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