Required Documents
- Signed Borrowers’ Authorization
- Most recent two years W-2 statements from each borrower
- Pay stubs for the last 30-day period
- 3 months of bank statements
- Most recent statements of 401K, IRA or Mutual fund accounts
- Copies of any investment accounts or stock accounts
- Copy of mortgage statement
- Homeowner’s insurance information
- Copy of driver’s licenses
If you are purchasing a new home we will also need:
- A copy of the Real Estate Purchase contract for the new home
- If you just sold a home we will need a copy of your settlement statement
Mortgage Glossary
ARM (Adjustable Rate Mortgage)A
A Mortgage in which the interest rate is adjusted periodically, based on the movement of a financial index.
APPLICATION FEEA
Diversified Financial Services will never charge an application fee.
ASSESSED VALUEA
The value placed on a piece of real estate by the taxing authority for the purpose of taxation. Also called an assessment.
CAP (PAYMENT RATE)A
The maximum payment amount increase allowable on an adjustable rate mortgage. May result in negative amortization. (see negative amortization)
CLOSING COSTSA
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called “Settlement Costs”
EARNEST MONEYA
The deposit money given to seller or his agent by the potential buyer at the time of the purchase offer. If the offer is accepted, the money will become part of the down payment.
APR (Annual Percentage Rate)A
The annual percentage rate refers to the total cost of the loan, expressed as a yearly rate.
APPRAISALA
A report made by a qualified person as to the value of a property as of a given date.
CAP (INTEREST RATE)A
The maximum interest rate increase allowable on an adjustable rate mortgage. Does not result in negative amortization. (see negative amortization)
CLOSINGA
The concluding day of the real estate transaction, when title and deed pass from seller to buyer, the buyer signs the mortgage.
DEEDA
A legal written document by which title to property is transferred.
ESCROWA
Funds and/or deed left in trust to a third party. Generally, a portion of the monthly mortgage payment is held in escrow by the lender to pay for taxes, hazard insurance and yearly mortgage insurance premiums.
HAZARD INSURANCEA
Insurance protection against damage to a property from fire, windstorms, and other common hazards.
LOAN TO VALUE RATIOA
The relationship between the amount of the mortgage and property value, usually shown as a percentage.
MORTGAGEEA
The lender in a mortgage contract.
NEGATIVE AMORTIZATIONA
A Loan in which the outstanding principal balance goes up instead of down because the monthly payments are not large enough to cover the full amount of interest due. Also called deferred interest.
PITIA
An acronym for payments to lender that cover principal, interest, taxes and insurance on a property.
PRE-QUALIFICATIONA
A preliminary assessment of a buyer’s ability to secure a loan, based on a specific set of lending guidelines and buyer representations made. This is not a guarantee or commitment by a lender to extend credit.
PRINCIPALA
The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
HUD 1 - STATEMENTA
See Real Estate Settlement Statement.
MORTGAGE NOTEA
A written promise to pay a debt at a stated interest rate during a specified term. The agreement is secured by a mortgage.
MORTGAGORA
The borrower in a mortgage contract.
ORIGINATION FEEA
A Fee charged for the work involved in the evaluation, preparation and submission of a proposed mortgage loan.
POINTA
A Fee paid to the lender on closing day to increase the effective yield of the mortgage. A point is one percent of the amount of the mortgage loan. Also called a discount point.
PRIME RATEA
The interest rate charged by banks to their preferred corporate customers, it tends to be an estimator for general trends in short term interest rates.
PMI (PRIVATE MORTGAGE INSURANCE)A
Insurance written by a private mortgage insurance company to protect the lender against losses caused by mortgage default. This is commonly required on loan transactions involving less than a 20% down payment or equity position.
QUALIFYING RATIOSA
Guidelines used by lenders to determine how much of a loan a home buyer qualifies for. Often referred to as debt-to income ratios (or DTI).
TITLEA
Ownership of a property. A clear title is one without any outstanding liens or encumbrances. A cloud on a title refers to any outstanding liens or encumbrances which could impair the title.
TITLE SEARCHA
A check of public recored to disclose the past and current facts regarding ownership of a particular piece of property.
UNDERWRITINGA
The process of evaluating a loan application to determine the risk for the lender.
REAL ESTATE SETTLEMENT STATEMENTA
Final settlement statement often referred to as the HUD-1 form, used to itemize buyer, seller, broker, and lender charges and credits at closing.
TITLE INSURANCE POLICYA
A policy designed to protect the buyer or lender after closing from financial losses arising from any defects in the title that may have occurred prior to purchase.
TRUTH IN LENDINGA
Federal law that requires lenders to disclose the terms and conditions of a mortgage, including the APR, based on certain charges incurred by the borrower. If the charges were $0, the APR would be equal to that actual interest rate on the loan.
