Interest: The cost of borrowing money (paid to the lender).
Interest Rate: The percentage charged for borrowing money.
Fixed Rate Loan: A loan with an interest rate that remains constant for the life of the loan. Common terms are 20 or 25 years, but 10 and 15-year options are available.
Adjustable-Rate Loan: A loan with an interest rate that periodically adjusts up or down based on a set index. Common terms are five years fixed, with a single rate increase for the remaining 15 years of the loan.
Debt Ratio: A financial calculation by your lender to determine your ability to afford a particular monthly payment. It is the sum of all monthly debt payments, including your loan payment, divided by your total monthly income. Typically, acceptable debt ratios for Chattel Loans are under 48%.
Gross Income: Total income before taxes and expenses. Includes all income derived from business or property.
Amortization: The process of paying off the principal and interest on a loan through scheduled installments.
Annual Percentage Rate (APR): The total cost of interest for your loan, including associated costs such as closing fees.
Appraisal: An estimate of the value of a manufactured home, based on recent comparable sales and the condition of the home being purchased.
Closing: The meeting between the buyer, seller, and sales agent where the home and funds legally change hands. Also known as “settlement.”
Closing Fees: The fees associated with transferring ownership of the home and obtaining the loan, assessed at closing.
Cosigner: Someone who signs a loan obligation with you, agreeing to make payments if you default. The cosigner must go through the same application and approval process as the primary borrower. Cosigners can only be used if the primary applicant has limited to no credit history.
Credit Report: A review of your credit history by a qualified bureau to determine your payment history on previous debts.
Down Payment: The money you pay upfront towards the purchase of a home, usually between 5% and 35% of the purchase price.
Escrow: A special account set up by the lender to hold money for taxes and insurance.
Loan Origination Fee: The fee charged by a broker for their services.
LTV (Loan to Value): The proposed loan amount divided by the value of the home
Mortgage Broker: An entity that arranges loans for borrowers.
PITI: Principal, interest, taxes, and insurance—your estimated monthly payments.
Prepayment Penalty: A fee for paying off a loan before it is due. There are no prepayment penalties for our brokered loans.
Pre-Qualification: The process of determining the amount of money a particular lender will allow you to borrow.
Principal:
- The amount of debt remaining on a loan, not including interest.
- The face amount of the loan.
Refinance: The renewal of an existing loan, often for the purpose of reducing the interest rate or monthly payments.
Term: The length of time to repay a loan.
Title: The legal document that confirms ownership of a manufactured home.
Underwriting: The process of deciding whether to approve a loan based on credit, income, assets, and other factors.