USDA Loans Glossary of Terms
Adjustable Rate Mortgage (ARM)
Also known as variable rate mortgage this type of interest rate is periodically adjusted on the basis on an index. However, the rate usually is not adjusted for the first two years of the loan.
Annual Percentage Rate (APR)
This is a figure that states or tells about the cost of the mortgage per annum as which is expressed by the actual rate of interest paid. The annual percentage rate includes points, base interest rate as well as other add-ons.
Done by state licensed appraisers these type of appraisal determine the value of the property that is based on recent sales value as well as information of similar properties.
These are the prices or the fees that is paid by applicant or the loan burrower when the property is either refinanced or purchased.
A documented letter that states in detail the conditions and terms as agreed between the lender and burrower as to how former will lend and the latter will borrow the funds.
The rating that is given by the lender to the borrower based on the credit-worthiness or risk profile.
Report given to the lender informing him about the credit standing of a prospective borrower.
Debt-to-Income Ratio (DTI)
The ratio which tells about the aggregate monthly debt to aggregate monthly income on ones credit report.
The money that is paid by the borrower from his own pocket and not from the funds that which he receives from the bank as loan.
Earnest Money Deposit
A money deposit made by the borrower or the home buyer to show their commitment about buying the property.
Fixed Rate Mortgage
That mortgage where the interest rate can never change and is fixed.
A loan that is backed or guaranteed by the Government and supported by Department of Housing and Urban Development (HUD) and the US FHA.
Insurance where the company providing the insurance protect the insured from losses like storms, fire, vandalism as well as other natural causes.
Department of Housing and Urban Development.
Percentage of an amount of money that is payable for its use over a given time period.
Insurance that is responsible for covering the lender from the incurred losses that may result from a default on a home loan.
The term stands for interest taxes, principal as well as insurance.
Term stating that the borrower has concluded all the loan application and debt, income and savings information.
Properties that have not completed the foreclosure process but are in foreclosure.
Short sale homes are properties that are in foreclosure but do not have the foreclosure
A writer statement by a loan officer stating the chances of the borrower’s for qualifying for the home loan.
The ratio that calculates the borrower’s fixed monthly expenses to his gross monthly income.
A government agency also known as RD that issues final approval on USDA loans.
Concessions that help the buyer to avoid out of pocket expenses in a purchase transaction on a USDA loan.
A document that is legal and states a person’s right or ownership of a property.
Total Debt Ratio
Also known as back-end ratio where the housing payments and monthly debt are divided by gross monthly income.
A licensed person that states whether a person is eligible for a mortgage loan.
Mortgage loan supported by US Veterans Administration and is government backed.