Manufactured Home Loan Glossary
Adjustable Rate: Loan where the interest rate adjusts periodically up or down through a set index. Also called a floating rate loan.
Adjustment Interval: The period of time between changes in the interest rate for an adjustable-rate loan. Typical adjustment intervals are five years on a step rate loan.
Amortization: The process of paying the principal and interest on a loan through regularly scheduled installments.
Annual Percentage Rate (APR): This is the actual rate of interest your loan would be if you included all of the other associated costs such as closing costs.
Appraisal: An estimate of the value of a manufactured home, made by a qualified professional called an appraiser.
Closing: The meeting between the buyer, seller and lender (or their agents) where the home and funds legally change hands. Also referred to as "settlement".
Closing Costs: The cost and fees associated with the official change in ownership of the home and with obtaining the loan, that are assessed at the closing or settlement.
Comparative Market Analysis: An estimate of the value of a home based on an analysis of sales of properties with similar characteristics.
Cosigner: Someone who is willing to sign a loan obligation with you in case you default on your monthly payments. Normally, the cosigner is required to go through the same application and approval process as the original signer of the loan.
Credit Company: A lending organization that obtains it source of funds from the commercial market.
Credit Report: A search through your existing credit history by a qualified credit bureau to determine if, and the number of times, you may have been delinquent making monthly payments on previous debts. Even when a credit report is for the most part positive, many lenders require written explanation for any negative comments within the credit report. This type of report is usually required to obtain a manufactured home loan.
Debt Ratio: One of several financial calculations performed by your lender to determine if you can afford a particular monthly payment. The debt ratio (also known as the obligations ratio) is the sum of all your monthly debt payments including your total monthly loan payment divided by your total monthly income. Typically acceptable debt ratios for Chattel Loan are under 43%.
Down - Payment: The amount of money you put down, normally anywhere from 5% - 25%.
Due Diligence: The legal definition: a measure of prudence, activity or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent person under the particular circumstances. In CMBS: due diligence is the foundation of the process because of the reliance securities investors must place on the specific expertise of the professionals involved in the transaction.
Equity:
1.The difference between the fair market value and current indebtedness, also referred to as "owner's interest".
2. The difference between the amount owed on the loan and the current purchase price of the home.
Escrow:
1. A special account set up by the lender in which money is held to pay for taxes and insurance.
2. A third party who carries out the instructions of both the buyer and seller to handle the paperwork at the settlement.
Fair Market Value: An appraisal term for the price which a home would bring in a competitive market, given a willing seller and willing buyer, each having a reasonable knowledge of all pertinent facts, with neither being under any compulsion to buy and sell.
Fixed Rate Loan: A loan with an interest rate that remains constant for the life of the loan. The most common fixed-rate loan is repaid over a period of 20 years; 15, 10, and 5 year fixed-rate loans are also available.
Foreclosure: The process by which a lender takes back a property on which the borrower had defaulted. A servicer may take over a property from a borrower on behalf of a lender. A property usually goes in to the process of foreclosure if payments are no more than 90 days past due.
Gross Income: Total income, before deducting taxes and expenses. The scheduled (total) income, either actual or estimated, derived from a business or property.
Housing Ratio: One of several financial calculations performed by your lender when applying for a conventional loan to determine if you can afford a particular monthly payment. The housing ratio(also known as the income ratio) is your total monthly payment including taxes and insurance divided by your total monthly income. Typically acceptable housing ratios for manufacured homes are 34%.
Interest: The sum paid for borrowing money, which pays the lender's costs of doing business.
Interest Rate: The sum charged for borrowing money, expressed as a percentage.
Loan origination Fee: The fee charged by a lender, to prepare all the documents associated with your loan.
LTV: Loan to Value: Proposed loan amount divide by the value of the home.
Mortgage Broker: An entity that arranges loans for borrowers.
PITI: Principal, interest, taxes and insurance. Your calculated estimated of monthly payments.
Prepayment Penalty: A Change for paying off a loan before it is due.
Pre - Qualification: The process of determining the amount of money a particular lender will let you borrow. You should strive to obtain pre-qualification with at least two lenders.
Principal:
1. The amount of debt, not including interest, left on a loan.
2. The face amount of the loan.
Property Appraisal: A report showing exactly how much the particular home
Property Tax: Taxes based on the market value of a home. These taxes vary from state to state.
Refinance: The renewal of an existing loan by the same borrower.
Term: The length of a loan.
Title: The actual legal document conferring ownership of a manufactured home.
Underwriting: The process of deciding whether to make a loan based on credit, employment, assets and / or other factors.
Underwriter: The underwriter is the lender or company who actually provides the money for you loan. A mortgage broker "brokers" and represents several different underwriters and depending on your situation they choose the "best" underwriter for you and your lender.
Upfront Fees: Generally refer to fees charges to pay for third party costs like appraisals.
