Atlantic Building Company

Mortgage Terms
Here are a few mortgage terms that will be helpful in exploring your options.
Adjustable Rate Mortgage (ARM): A mortgage loan in which the market
conditions determine fluxuations in the interest rate. Changes in the interest
rate are determined by a financial index. ARM loans have a cap or a limit on
how much the interest ratecan change.
Amortization: Repayment of a mortgage loan with equal periodic payments
of both principal and interest. The payments are calculated so that the debt is
paid off at the end of a fixed period of time.
Annual Percentage Rate (APR): A term that expresses the cost of a mortgage
as an annual rate. The APR is normally higher than the advertised interest rate
because it includes interest, points, and other finance charges. The APR is used
to compare different types of mortgages.
Balloon Mortgage: a short-term mortgage loan of equal monthly payments in
which a large final payment (balloon) is due on a specified date. The final payment
is equal to the remaining balance of the loan.
Conventional Loan: A mortgage loan made by an approved lender in which the borrower's ability to repay the
debt is not insured by a government agency such as the FHA or VA.
Equity: The amount of the home that you actually own. Equity is the difference between the market value of the
home and what you still owe on it.
Housing-to-Income Ratio: A ratio that compares all your monthly housing expenses to your monthly income.
Normally, housing expenses are equivalent to 28 percent of your monthly income. This ratio is used by the loan
to see if you qualify for a mortgage.
Mortgage: A legal document that pledges you r property as security for repayment of the Mortgage loan.
Mortgage Broker: A real estate financing professional who brings homebuyers and sellers together arrange
funding and negotiate contract.
Total Debt-to-Income Ratio: A ratio which compares all of your monthly debt payments, such as credit cards
and car payments, to your monthly income. Normally, your monthly debt payments are equivalent to 36 percent
of your monthly income. This ratio is used by the loan officer to see if you qualify for a mortgage loan.