Mortgage Brokers in Pennsylvania
Financial Access, LLC
"Property Ownership Within Reach"
First and Second Mortgages · Purchases · Refinancing · Home Equity Loans · Lines of Credit
Ph: 267-382-0690 Toll Free: 866-636-9300 · Licensed in Pennsylvania
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Glossary of Mortgage Terms
Contact us today for help with mortgage financing in Pennsylvania (PA).

40 Year Mortgage Loan Term: The length of time the borrowers are given to repay a loan. (40 years or 480 months)

Adjustable Rate Mortgage Loans(ARM): Also known as the variable rate mortgage, an ARM is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. An adjustable rate is based on a margin plus and index. The margin is fixed for the life of the loan. The index will adjust based on the market or economic conditions. As a result, the interest rate on your loan will rise and fall with increases and decreases in overall interest rates. If interest rates rise, you can expect to see an increase in what you pay monthly as well. The ARM often comes with an interest rate cap, which limits the amount by which the interest rate can change. Though they do have the potential to raise your monthly payments, an adjustable-rate-mortgage can make a big difference in lowering your monthly payments too.

Amortization Term: The length of time required to amortize, or repay, the mortgage loan, expressed as a number of months.

Appraisal: A home appraisal is a written analysis of the estimated value of your property. A qualified licensed appraiser who has training, experience and insight into the market place prepares the home appraisal report. It demonstrates approximate fair market value based on recent sales in your neighborhood and is required to purchase or refinance your new home or property. A property appraisal like this is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Balance: The dollar amount of the loan that is left to be paid. It is equal to the loan amount minus the sum of all prior payments towards the principal.

Balloon Mortgage: A balloon mortgage is a loan with a fixed-rate and fixed monthly payments for a set number of years followed by one large final balloon payment for all of the remainder of the principal balance. Typically, the balloon payment may be due at the end of five, seven, ten or fifteen years. Borrowers with balloon mortgage loans may have the right to refinance or pay off the loan before or at the time the balloon payment is due depending on the contractual agreement of the mortgage note.

Bankruptcy: Bankruptcy is a proceeding in a federal court to relieve certain debt of a person or a business unable to pay its debts. A bankruptcy will stay on your credit rating for 7 to 10 years acting like a warning to potential lenders. The assets of a person filing bankruptcy are then turned over to a trustee and used to payoff outstanding bills. Personal bankruptcy can provide relief to people on dire financial straits by releasing them from the obligation to repay their debts.

Bank Statement Program: Bank statements are used in lieu of W2's and pay stubs for borrowers who have a difficult time proving their income by traditional means of their earnings. The average deposits will account for their qualifying monthly income. The usual calculation is the average deposits of the recent 12 or 24 months of personal or business bank account statements. Each lender may have their own formula to determine the actual percentage of the average deposits and the specific type of bank statements.

Biweekly Payment Mortgage: A plan to reduce the debt every two weeks instead of making monthly payments. The result is that the equivalent of one additional monthly payment is made each year.

Blanket Mortgage: A mortgage that uses at least two pieces of real estate for security.

Borrower (Mortgagor): The borrower in a mortgage loan transaction.

Bridge Loan: A short-term loan collateralized by the borrower's present home and used to close on a new house before the present home is sold.

Caps: Interest caps are consumer safeguards that limit the rise or fall of interest rates on an adjustable rate mortgage. Interest caps offer borrowers protection from drastically increased interest rate on your loan.

Cash Out: A cash out refinance loan allows you to get a new loan that is larger than the remaining balance of your current mortgage, based upon the equity you have already built up in the house, and receive a cash balance of that lump sum. The cash out amount is calculated by subtracting the sum of the old loan and fees from the new mortgage loan. Several ways to cash out when you refinance are consolidate your credit card debt, make a debt pay off, home improvement loans, auto loan pay offs and any other high-interest bills you may have into one low monthly mortgage payment. The interest rate may be a tax deduction. Consult your CPA or tax consultant for additional information.

Ceiling: The maximum allowable interest rate of an adjustable rate mortgage.

Closing Cost: Expenses over and above the price of the property incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance, and escrow cost, appraisal fees, etc. Closing cost will vary according to the area of the country and the lenders used.

Co-Borrower: A person who along with the primary borrower accepts responsibility for repaying the mortgage also referred to as co-applicants. The co-borrower is most cases are required to live in the secured property as the borrower. A co-borrower is often added to the application to help the primary borrower qualify for a loan.

CODI (Certificate of Deposit Index): The Certificates of Deposit Index is a 12- month moving average of the monthly yields on 3 month certificates of deposit as published by Federal Reserve Board. The CODI is announced the first business Monday of each month and remains effective from that day until the first business Monday of the following month. Historically, CODI does not move up or down as rapidly as market interest rates such as the Bank Prime, Federal Funds rate or Treasury bill rates because of the method used to calculate the index.

Collateral: Assets (such as your home) pledged as security for a debt.

Combined Loan-To-Value Ratio (CLTV): The percentage of the property value borrowed through a combination of more than one loan. (Example- the balance of the first mortgage and the balance of the home equity loan or line of credit dividing the total into the current market value of the property.)

COSI (Cost of Savings Index): The COSI is a very stable and slow-moving index. World Savings calculates COSI at the end of every month using the weighted average rate paid on their deposits, including certificates of deposit, and savings and checking accounts. COSI does not move up or down as rapidly as other market interest rates such as the Treasury, LIBOR, or Prime.

Credit Score: Your credit score is technically a statistical method of assessing your creditworthiness. Credit scores are based on several different factors including your credit history, amount of outstanding debt and the type of credit you use. Negative information, such as bankruptcies or late payments, is also used to calculate your credit report score as well as collection accounts and judgments. Insufficient credit history and/or too many credit lines with the maximum amount borrowed are also included in credit-scoring models to determine your credit score.

Deferred interest: When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding to the loan balance.

Delinquency: The state of having failed to make payments on time. This can lead to foreclosure.

Down Payment: Money paid towards the purchase price of a home that is not financed.

Due-on-Demand Clause: A provision of a mortgage or deed of trust that allows a lender to demand immediate payment of the balance of the loan if very specific criteria relating to fraud and misrepresentation are met.

Equity: The difference between the fair market value and current indebtedness referred to as the owner's equity. The value an owner has in real estate over and above the obligation against the property.

Escrow: The escrow accounts are special accounts that a lender uses to hold a borrower's monthly payments towards property taxes, homeowner's insurance and mortgage insurance if applicable. By distributing these annual fees as components of monthly mortgage payments paid by the borrower, you don't have to worry about getting an exorbitant bill in the mail that you can't afford. Instead, you pay a portion of the expected fee into an escrow account throughout the year and the lender disburses payment for these fees when they become due.

Escrow Account: An account held by the lender into which the homebuyer deposits money for taxes and/or insurance payments. Escrow accounts may also hold other funds related to a real estate purchase such as earnest money.

Escrow Payment: The part of a mortgagor's monthly payment that is held by the loan servicer to pay for taxes, hazard insurance, mortgage insurance, and other expenses related to the loan.

Family Gift of Equity: The seller (family member of the buyer) will gift a portion or all of the equity of the house they are selling to the buyer. The gift can be used for both the down payment and the closing cost depending on the agreement between the seller and buyer who must be close relatives to qualify.

FHA: Federal Housing Authority

FHLMC (Freddie Mac): The Federal Home Loan Mortgage Corporation

FICO Credit Score: FICO refers to the Fair Isaac & Co. credit score method. Credit scores are calculated by using models that assign points for various pieces of information which predict how likely someone is to pay their bills. The higher your FICO score, the more likely you will show good credit worthiness on your credit report.

FNMA (Fannie Mae): The Federal National Mortgage Association - A federally chartered and privately owned corporation, organized and existing under the Federal National Mortgage Association Charter Act or any successor thereto.

Fixed Rate Mortgage Loans: A fixed rate mortgage has the same interest rate and monthly payment throughout the term of the mortgage. The payment is calculated to pay off the mortgage balance at the end of the term.

Fixed Rate versus Adjustable Rate: A fixed rate mortgage has the same payment for the entire term of the loan. An adjustable rate mortgage (ARM) has a rate that can change, causing monthly payments to increase or decrease.

Full Income Verification: Documented income that is verified by the underwriter to qualify for a loan. Documented income is the actual income from a wage earner providing current pay stubs and W-2's for the last two years, self employed individuals providing the last two year's compete tax returns with business schedules, and fixed income such as retirement, pension, social security, and permanent disability.

Fully Indexed Rate: The interest rate used to accrue interest on the Negative Amortization Mortgage after the initial fixed period has ended.

Home Equity: The difference between the current market value of a property and the total debt obligations against the property. On a new mortgage loan (purchase), the down payment represents the home equity in the property.

Home Equity Line of Credit (HELOC): A home equity line of credit is a credit line that is kept open and restored as you pay off what is owed. A home equity line of credit also has a high credit limit similar to a credit card that you are allowed to draw( write checks) upon as needed. In most cases, a home equity line of credit rate is lower than the interest rates on credit cards. Plus, a home equity credit line can offer additional savings due to tax advantages.

Home Equity Loan: A home equity loan is based on the equity of the secured property. The equity is determined on the difference of the appraised market value of the property minus the balance of all secured mortgages on the property. The home equity loan is typically used for home improvements, debt consolidation on credit cards, cash for personal reasons, or to pay off other high monthly debts into one low monthly payment. The interest paid on the loan is usually tax-deductible but should consult with your tax advisor for a definite explanation.

HUD: The Department of Housing and Urban Development - A governmental entity responsible for the implementation and administration of housing and urban development programs.

Interest Only ARM: An interest only ARM only requires monthly interest payments. Since you are not paying off the principal each month, the monthly payment is typically lower because it will cover only the interest portion of the loan. An interest only ARM will often have a period where the interest rate is fixed, and then it is adjusted according to the program. The rate of the interest only ARM will vary by lender.

Interest Only Payments: Interest only payments is a specific loan program at which the borrower agrees to pay the minimum monthly due (interest) for a limited period usually up to 10 years. During that time, the principal balance doesn't decrease unless you pay an additional amount higher than your minimum monthly payment. When the limited period ends, the monthly payment will increase to cover the fully amortized payment (interest and principal) until the end of the term.

Interest Rate: Annual interest rate for each mortgage type.

Interest Rate Cap: The maximum interest rate for the mortgage. The mortgage's interest rate will never exceed the interest rate cap.

Lender: A person who in the ordinary course of business extends credit to borrowers.

Lender-Paid Mortgage Insurance (LPMI): Lender-Paid Mortgage Insurance is based on the same concept as mortgage insurance (MI). If the borrower finances over 80% of the loan, they are subject to paying mortgage insurance. However, instead of paying an additional mortgage insurance payment each month, the lender pays the MI premium and charges a slightly higher interest rate. Homebuyers may find LPMI offers advantages over the more traditional borrower-paid MI. Click here for more in-depth information.

Limited Documentation (Low Documentation): Limited doc program requires minimal paperwork to apply for a loan. Limited doc is popular for applicants who are interested in supplying the least amount of paperwork to qualify for a loan. Typically, the program requires verifying the assets to equal 3 to 4 months of the monthly housing expense (principle, interest, taxes and insurance) and bank statements, and employment. The guidelines may vary depending on the lender. Limited documentation attract individuals such as waitresses, bartenders, sales people who don't draw a regular salary but receive the majority of income by cash or commission.

Lines of Credit also known as Home Equity Line of Credit (HELOC): A home equity line of credit is a credit line that is kept open and restored as you pay off what is owed. A home equity line of credit has a pre determined approved high credit limited similar to a credit card that you are allowed to draw (write checks against) upon as needed. Your monthly payments are based on what was used on the line. In most cases, the program has a pre determined draw period and interest only payments.

Loan Term: The number of years over which you will repay the mortgage.

Margin: A margin is the percentage difference between the index for a particular loan and the interest rate charged. It is a number predetermined by the lender. The margin is a fixed percentage point that is added to the index to compute the interest rate. The margin remains fixed for the entire term of the loan.

Monthly Payment Options ("Pick a Pay"): In today's industry, most lenders have designed programs that offer monthly payment options for their borrowers. The popular terminology is "pick a pay" and "payment option". You'll enjoy the flexibility and financial freedom that come with having extra money every month to address other pressing financial concerns. The payment options that are listed on your billing statement every month vary depending on the programs available from the lender. Simply choose the payment that best fits your needs. The most popular options are minimum payment (negative amortization), interest only, 15 year amortization, and 30 year amortization. Contact Annamarie for more details.

Months Rate Fixed: The number of months the rate is fixed for an ARM. During the specific period of the loan, the interest rate and the monthly payment will remain fixed.

Mortgage Amount: Expected balance for your mortgage.

Mortgage Broker: A mortgage broker is an individual or company that arranges financing for borrowers. The mortgage broker matches lenders with borrowers who meet the lenders criteria.

Mortgagee: The lender in a mortgage transaction.

Mortgage Note or "Note": A real estate mortgage note is a legal document obligating a borrower to repay a loan at a stated interest rate during a specific period of time. The agreement is secured by a mortgage or a deed of trust. The note will contain the important loan elements such as your loan amount, interest rate, due dates, late charges and the terms of your mortgage.

Negative Amortization: An amortization method in which the monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the balance of the loan.

No Documentation (No Employment, No Income, and No Assets Verification): Information regarding income, employment, and assets are omitted from the mortgage application and are not verified.

No Income, No Assets (NINA): The income and assets information on the application is omitted and are not verified. The applicant must show employment for the last two years.

Principal and Interest Payment (P & I): A monthly principal and interest payment is a mortgage payment where the borrower has agreed to pay specific interest rate, term, and loan amount. You can estimate your monthly principal and interest payment using the page called calculator on this site. Just enter your expected loan amount, term, and interest rate. It will automatically calculate the monthly mortgage payment excluding real estate taxes and home owner's insurance.

Private Mortgage Insurance (PMI): PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership. PMI makes it possible for the borrowers to buy a residential home with as little as 3 percent to 5 percent down payment. You can buy a home now without waiting years to save for a larger down payment. PMI also applies to homeowners who are interested in refinancing their existing loan with a loan amount over 80% of the current property value. The premium is an additional amount to be paid every month with the regular mortgage payment of principal, interest, taxes and insurance. Click here for more in-depth information.

Reverse Mortgage: A form of mortgage in which the lender makes scheduled periodic payment to the borrower using the borrower's equity in the house as security for the loan with repayment deferred until the occurrence of certain events such as death or the selling of the home.

Seller concession: AKA seller contribution and seller assist - The process where the seller agrees to pay towards the buyer's closing cost at settlement. The seller concession is negotiated between the buyer and seller at the time of selling their property. The percentage can range from 3% to 6% of the purchase price.

Stated Income Loans (Self Employed and Wage Earners): Stated Income programs are mostly used by self employed people and wage earners who can not verify income or choose not to disclose income. The income stated on the application must appear reasonable to the applicant's location, occupation, and length of experiences. Linked to case studies.

Sweat Equity: Equity created by a purchaser performing work on a property being purchased.

Financial Access, LLC
440 Auburn Court, Souderton, PA 18964
Phone: 267-382-0690 · Toll Free: 866-636-9300 · Fax: 267-382-0634

Licensed by Pennsylvania Dept. of Banking
Pursuant to the First and Secondary Mortgage Loan Act