Mortgage Terminology

1003 Form – The 1003 form is the standard mortgage loan application form aka, the Uniform Residential Loan Application.

2-1 Buydown – *See “Buydowns” below for details.

AMC – An Appraisal Management Company (AMC) is an independent real estate appraisal company hired by a lender to perform valuations on potentially mortgaged properties. AMCs maintain a pool of state-licensed or state-qualified appraisers to meet requests from lending institutions. An appraiser is then assigned to provide an appraisal report for the property. AMC appraisers are not provided with any prior information regarding the property or put in contact with the lending institution. The appraiser’s assessment must meet the Uniform Standards of Professional Appraisal Practice (USPAP) guidelines. If there are any issues, the AMC can legally assist.

Acceleration – The right of the mortgage (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.

Adjustable-Rate Mortgage (ARM) – An adjustable-rate mortgage (ARM) is a type of loan for which the interest rate can change, usually in relation to an index interest rate. Your monthly payment will go up or down depending on the loan’s introductory period, rate caps, and the index interest rate. With an ARM, the interest rate and monthly payment may start out lower than for a fixed-rate mortgage, but both the interest rate and monthly payment can increase substantially.

Annual Percentage Rate (APR) – An annual percentage rate (APR) is a broader measure of the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees, and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate.

Appraisal – An appraisal is a walk-through and a general assessment of a home, analyzed with the help of nearby comparable sales. The goal of an appraisal is to determine the fair market value of a property. It is conducted by a licensed professional appraiser. While an appraiser will visit a home in person, the majority of the work will be done in their office, as they compare the home’s features, location, and finishes with other comparable recent sales in the area. An appraisal will usually cost around $400-$800, depending on where you live and the size of your home.

Appraisal vs Inspection – The main difference between an appraisal and an inspection is that an appraisal deals with the value of a home, while an inspection deals with the condition of the home.
When you order an Appraisal, an Inspection is sometimes part of the Appraisal.
An Appraisal is for the Lender. An Inspection is for the Buyer.

Appraisal Fee – An appraisal fee is the cost of a home appraisal of a house you plan to buy or already own. Home appraisals provide an independent assessment of the value of the property. In most cases, the selection of the appraiser and any associated costs is up to your lender.

Appraisal Gap – An appraisal gap is the difference between the appraised value of a home and the contracted price of the home. A gap occurs when a homebuyer has agreed to a price but an independent appraiser determines that the home’s value is lower than that price.

Appraisal Waiver – An appraisal waiver allows qualified home buyers to skip the in-person appraisal process when buying a home. Instead, lenders use data generated by an Automated Underwriting System (AUS) to determine the value of the home based on the information it has collected from other recent home sales in the area.
The challenge is that not all buyers and homes will qualify for an appraisal waiver. And lenders are under no obligation to grant their buyers one. One of the reasons why an appraisal waiver can be denied is if the lender has any reason to believe that an in-person appraisal is needed. That gives lenders wide discretion in determining who qualifies for an appraisal waiver and who does not.

AUS – Automated Underwriting System. Which system is used is determined by the investor and the product being originated – although multiple systems are not used on a single loan. Fannie Mae and Freddie Mac not only provide AUS capabilities to their lenders (DU and LP, respectively), but also incentivize their use.

AVM – In real estate, AVM stands for “Automated Valuation Model.” AVMs use market data to estimate the value of a piece of real estate. While AVM models vary in terms of both what factors they use and how they weigh them, you can usually expect an AVM to factor in a property’s tax-assessed value and comparable sales in the area.

Bank Statement Loan – Bank statement loans are a type of loan that allows you to get a mortgage without the documents that most loans need to prove your income. They are also known as “self-employed mortgages” or “alternative documentation loans.” Bank statement loans can be used if you work for yourself or own a business. They can also be used if you do not have a steady income or have more than one employer who can prove your salary.

Benefit Verification Letter – The Benefit Verification letter, sometimes called a “budget letter,” a “benefits letter,” a “proof of income letter,” or a “proof of award letter,” serves as proof of your retirement, disability, Supplemental Security Income (SSI), or Medicare benefits. You may use your letter for loans, housing assistance, mortgage, and for other income verification purposes. You can also use it to prove that you don’t receive benefits, have applied for benefits, or that you have never received Social Security benefits or SSI.

Bridge Loan – A bridge loan is a home loan designed for people who have an existing home and want to buy a new one. It bridges the gap between selling a house and purchasing a new one. Loan terms are usually between six and 12 months.

Broker – An individual in the business of assisting in arranging funding (or negotiating contracts) for a client. The broker does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.

Buy-Downs – Example: In a 2-1 buydown, the interest rate will increase from one year to the next until it settles into its permanent rate in year three. To make up for the interest that they will not be receiving in those early years, lenders will charge an additional fee. Suppose a real estate developer is offering a 2-1 buydown on its new homes. If the prevailing interest rate on 30-year mortgages is 5%, a homebuyer could get a mortgage that charged just 3% in the first year, then 4% in the second year, and 5% after that.

3-2-1 Buydown – The interest rate is reduced by 3% in the first year, 2% in the second year, and 1% in the third year.
2-1 Buydown – The interest rate is reduced by 2% in the first year, and 1% in the second year.
1-0 Buydown – The interest rate is reduced by 1% in the first year.

CAIVRS – Credit Alert Verification Reporting System is a database created by the U.S. Department of Housing and Urban Development (HUD) in 1987 to track defaults, delinquencies, and foreclosures related to other federal loan programs. DOE (Student Loans), SBA, VA, DOJ and USDA all report to the CAIVRS system.

CLTV – Combined Loan to Value. The combined loan-to-value (CLTV) ratio is the ratio of all secured loans on a property to the value of a property. Lenders use the CLTV ratio to determine a prospective home buyer’s risk of default when more than one loan is used. In general, lenders are willing to lend at CLTV ratios of 80% and above to borrowers with high credit ratings. The CLTV differs from the simple loan to value (LTV) ratio in that the LTV only includes the first or primary mortgage in its calculation.

CMA – (For Realtors) A Comparative Market Analysis, commonly abbreviated as CMA, is a report prepared by a real estate agent to help a client determine the value of a home. The report analyzes three or more recently sold properties similar to the home in question, usually chosen based on their similarities in size, location, age and quality. CMAs are a valuable tool that buyers can use to ensure they are making a competitive offer on a home. CMAs are also used by sellers to help determine an accurate listing price.

CTC – Clear to Close. A clear to close means the mortgage underwriter has fully vetted the borrower and the property. The underwriter issues a clear to close after she feels comfortable to instruct the closing department to prepare closing docs and wire the funds. Sometimes mortgage underwriters can issue fresh conditions after reviewing the initial conditions from the conditional loan approval. There are instances where mortgage underwriters and processors can go back multiple times with updated conditions back and forth before the underwriter feels satisfied to issue the CTC. The great news is the mortgage process leading to the home closing is quick and fast after the clear to close. As soon as the mortgage underwriter issues the CTC, the file is then transferred and assigned to the lender’s closing department and a closer is assigned to the file.

CYA – Cover Yourself Adequately. CYA is an activity done by an individual to protect themselves from possible subsequent criticism, legal penalties, or other repercussions, usually in a work-related or bureaucratic context.

Closing – The meeting between the buyer, seller, lender, and agents where the property and funds legally change hands. Also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge, and other costs assessed at settlement. The cost of closing usually is about 2-5% of the mortgage amount.

Closing Costs – Closing costs are the expenses over and above the property’s price that buyers and sellers usually incur to complete a real estate transaction. Those costs may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges. Closing costs are fees due at the closing of a real estate transaction in addition to the property’s purchase price. Both buyers and sellers may be subject to closing costs.

Closing Disclosure – A Closing Disclosure is a required five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage.

Conventional Loan – A conventional loan is any mortgage loan that is not insured or guaranteed by the government. Such as under Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or Department of Agriculture loan programs (USDA).

Credit Report – A report documenting the credit history and current status of a borrower’s credit standing (worthiness). Credit bureaus use several factors to determine the score and profile from your history of loans, payments, debts, balances, and length of time you have had a line of credit.

Credit Score – A credit score predicts how likely you are to pay back a loan on time. Companies use a mathematical formula—called a scoring model—to create your credit score from the information in your credit report. There are different scoring models, so you do not have just one credit score. Your scores depend on your credit history, the type of loan product, and even the day when it was calculated.

DPA – Down Payment Assistance.

DSCR – The Debt Service Coverage Ratio is a ratio of a property’s annual net operating income and its annual mortgage debt, including principal and interest. Lenders use DSCR to analyze how much of a loan can be supported by the income coming from the property as well as to determine how much income coverage there will be at a specific loan amount. Allows a borrower to qualify for a mortgage based on cash flow generated from an investment property – through a rental, for example – as opposed to their personal income.

DU – Desktop Underwriter, which is a mortgage program used to analyze a borrower’s application to see if it meets criteria in Fannie Mae’s automated underwriting system. The DU program allows lenders to quickly assess whether a borrower is qualified for the selected mortgage product. It is one of the first steps in the mortgage loan process. DU can offer several results for a borrower’s application, with the most favorable being an accept/eligible and the least being ineligible/deny. DU is a good tool for mortgage lenders to use to decide which loans are worthy of a second look and further processing.

Debt-to-Income Ratio – The ratio expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her gross monthly income.

Discount Points – Discount points are a form of prepaid interest or fee that mortgage borrowers can purchase to lower the amount of interest on their subsequent monthly payments—spending more up front to pay less later, in effect. Discount points are tax deductible.

Discount points are a one-time fee, paid up front either when a mortgage is first arranged or during a refinance.
Each discount point generally costs 1% of the total loan and lowers the loan’s interest rate by one-eighth to one-quarter of a percent.
Points do not always have to be paid out of the buyer’s pocket; they can sometimes be rolled into the loan balance or paid by the seller.
Discount points are a good option if a borrower intends to hold a mortgage for a long period of time, but are less useful if a borrower intends to sell their property or refinance before the loan matures.

Down Payment – A down payment is the amount you pay toward the home upfront. You put a percentage of the home’s value down and borrow the rest through your mortgage loan. Generally, the larger the down payment you make, the lower the interest rate you will receive and the more likely you are to be approved for a loan.

EMD – Earnest Money Deposit. The Earnest Money Deposit given to the seller demonstrates the buyer’s good faith intention to buy the home. It shows the buyer is serious about the offer to buy the home. Also, known as a good faith deposit. It proves commitment. Earnest money deposits are usually 1 percent to 3 percent of a home’s purchase price, depending on local custom and the pace of current market conditions (the faster the market pace, the higher the deposit). So, if you were buying a $300,000 home, the deposit would be $3,000 to $9,000.

EPO – Early Pay Off

Earnest Money – Earnest money is a deposit a buyer pays to show good faith on a signed contract agreement to buy a home. The deposit is held by a third party like a title company. If the home sale is finalized or “closed” the earnest money may be applied to closing costs or the down payment. If the contract is terminated for a permissible reason, the earnest money is returned to the buyer. If the buyer does not perform in good faith, the earnest money may be forfeited and paid out to the seller.

Equity – Equity is the amount your property is currently worth minus the amount of any existing mortgage on your property.

Escrow – In a home purchase, the buyer of the property deposits the payment amount for the house in an escrow account held by a third party (The Title Company). The seller can proceed with house inspections confident that the funds are there, and the buyer is capable of making payment. The amount in escrow is then transferred to the seller once all the conditions for the sale are satisfied.

Escrow can also refer to an escrow account that is set up at the time of mortgage closing. With this, the escrow account houses future homeowners’ insurance and property tax payments. A portion of the monthly mortgage payment is deposited into the escrow account to cover these payments. Thus, mortgagees that set up an escrow account (in some cases it is required by the lender) will have higher payments than those who do not; however, they will also not have to worry about paying the yearly premiums or property tax bills as they’re already paying it monthly into their escrow account.

FHA Loan – FHA loans are loans from private lenders that are regulated and insured by the Federal Housing Administration (FHA). FHA loans differ from conventional loans because they allow for lower credit scores and down payments as low as 3.5 percent of the total loan amount. Maximum loan amounts vary by county. A loan insured by the Federal Housing Administration is open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately-priced homes almost anywhere in the country.

FHFA – Federal Housing Finance Agency – The Federal Housing Finance Agency (FHFA) is U.S. regulatory agency that oversees the secondary mortgage market and players within it. Established in 2008, the FHFA’s responsibilities include supervising Fannie Mae and Freddie Mac, as well as the 11 banks that comprise the Federal Home Loan Bank (FHLB) System and the Office of Finance (OF), a joint office of the FHLBanks.

Fixed-Rate Mortgage – The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

Forbearance – In the context of a mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure.

Foreclosure – Foreclosure is when the lender or servicer takes back property after the homeowner fails to make mortgage payments. Generally, borrowers must be notified if the lender or servicer begins foreclosure proceedings. Federal rules may apply to when the foreclosure may start.

GUS – Guaranteed Underwriting System. The automated underwriting system (AUS) to automate the process of approving USDA Guaranteed Loans. GUS is a tool that helps evaluate the credit risk of the loan request. It complements, but does not replace the judgement of experienced underwriters.

HCLTV – High Credit Loan To Value. Original loan amount, full amount of any HELOCs, whether or not the funds have been drawn, and the unpaid. principal balance of all closed-end subordinate financing divided by lessor or sales price or appraised value for purchase transactions* Fannie Mae.

HFA – Housing Finance Agencies. State Housing Finance Agencies (HFAs) are state-chartered authorities established to help meet the affordable housing needs of the residents of their states. Although they vary widely in characteristics such as their relationship to state government, most HFAs are independent entities that operate under the direction of a board of directors appointed by each state’s governor. They administer a wide range of affordable housing and community development programs.

Hard Money Loans – Hard money loans have terms based mainly on the value of the property being used as collateral, not on the creditworthiness of the borrower. Since traditional lenders, such as banks, do not make hard money loans, hard money lenders are often private individuals or companies that see value in this type of potentially risky venture. Hard money loans may be sought by property flippers who plan to renovate and resell the real estate that is used as collateral for the financing—often within one year, if not sooner. The higher cost of a hard money loan is offset by the fact that the borrower intends to pay off the loan relatively quickly – most hard money loans are for one to three years

Hazard Insurance – A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm, and the like.

Hazard Insurance Declaration Page – When buying homeowners insurance, your provider will give you a declarations page. This document acts as a summary of your protection, including hazard insurance. The elements provided on the declarations page include: Policyholder and Account Number; Named Insured (You and anyone else living on the property).

Home Equity Line of Credit (HELOC) – A home equity line of credit (HELOC) is a line of credit that allows you to borrow against your home equity. Equity is the amount your property is currently worth, minus the amount of any mortgage on your property. Unlike a home equity loan, HELOCs usually have adjustable interest rates. For most HELOCs, you will receive special checks or a credit card, and you can borrow money for a specified time from when you open your account. This time period is known as the “draw period.” During the “draw period,” you can borrow money, and you must make minimum payments. When the “draw period” ends, you will no longer be able to borrow money from your line of credit. After the “draw period” ends you may be required to pay off your balance all at once or you may be allowed to repay over a certain period of time. If you cannot pay back the HELOC, the lender could foreclose on your home.

Home Equity Loan – A home equity loan (sometimes called a HEL) allows you to borrow money using the equity in your home as collateral. Equity is the amount your property is currently worth, minus the amount of any existing mortgage on your property. You receive the money from a home equity loan as a lump sum. A home equity loan usually has a fixed interest rate – one that will not change. If you cannot pay back the HEL, the lender could foreclose on your home.

Homestead Exemption – The homestead exemption is a way to minimize property taxes for homeowners. It is also a legal provision offered in most states that helps shield a home from some creditors following the death of a homeowner’s spouse or the declaration of bankruptcy.

The completed application and required documentation are due no later than April 30 of the tax year for which you are applying. A late residence homestead exemption application, however, may be filed up to two years after the delinquency date, which is usually Feb. 1.

Homestead Exemptions are to be filed at the Appraisal District or Recorder’s office
Once you close on the sale of your new house it will take at least 2 weeks for the records to be updated so that you can file for your exemption
In order to file for your exemption, you will need to update your State issued ID or Driver’s License with your New Address.

Inspection – An inspection is a deeper dive into the condition of the specific home. A licensed home inspector will spend multiple hours doing a comprehensive review of the home’s condition, both visually and by testing functionality of major systems. After completing the inspection, they will provide recommendations to the buyer on items in the home that should be repaired or replaced before closing. A home inspection costs on average, between $250 and $700, depending on where you live and the size of your home.

Appraisal vs Inspection – The main difference between an appraisal and an inspection is that an appraisal deals with the value of a home, while an inspection deals with the condition of the home.
When you order an Appraisal, an Inspection is sometimes part of the Appraisal.
An Appraisal is for the Lender. An Inspection is for the Buyer.

Interest Rate – An interest rate on a mortgage loan is the cost you will pay each year to borrow the money, expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan. For example, if the mortgage loan is for $100,000 at an interest rate of 4 percent, that consumer has agreed to pay $4,000 each year he or she borrows or owes that full amount.

IRS Form 4506-T – Use Form 4506-T to request tax return information. Taxpayers using a tax year beginning in one calendar year and ending in the following year (fiscal tax year) must file Form 4506-T to request a return transcript. Financial data will remain fully visible to allow for tax preparation, tax representation or income verification.

LOS – Loan Origination System

LP – Loan Prospector is Freddie Mac’s automated underwriting system. See DU above.

Loan Estimate (LE) – A loan estimate is a standard, three-page document from a lender containing details about a mortgage, such as the closing costs, interest rate and monthly payment. The information in the document is just an Estimate – in other words, it is Not Final – but it can assist you with making decision about which loan offer to commit to.

MCC – Mortgage Credit Certificate MCCs are issued to qualifying borrowers by lenders who partner with the state HFAs. Once you have an MCC, you are then entitled to take a nonrefundable federal tax credit equal to a specified percentage of the interest paid on your mortgage loan each year.

These tax credits can be claimed when you file your yearly tax returns with the IRS. If you don’t want to wait until then, another option is to lower your federal income tax with holdings on your W-4 through your employer. That way you will receive the benefit sooner on a monthly basis.

Many Benefits, but some downsides:

Mortgage and homeownership counseling. Many HFA programs require you to go through some form of pre-purchase homebuyer education course. These requirements vary by state, and usually involve educating you on the mortgage application and home-purchase process.
The IRS. You might have to repay some of the tax credit back to the IRS if you meet all three of the following conditions:

You sell the home within 9 years of buying it. (You will not owe anything to the IRS if 9 years have passed before you sell the property.)
You now earn much more in income than when you initially bought the home.
You make a profit from selling the home.
The maximum amount that the IRS can claw back—payable upon the sale of the home—is 6.25% of the original principal loan balance, or 50% of your gains from the sale, whichever is less.

Full details here: https://www.forbes.com/advisor/mortgages/what-is-mortgage-credit-certificate/

Mortgage – A mortgage is an agreement between you and a lender that allows you to borrow money to purchase or refinance a home and gives the lender the right to take your property if you fail to repay the money you have borrowed.

Mortgage Insurance Premium (MIP) – FHA mortgages require every borrower to have mortgage insurance. Each FHA loan requires both an upfront premium of 1.75% of the loan amount and an annual premium of 0.45% to 1.05%. Payment of upfront premiums is at the loan issuance. Determination of the exact yearly cost comes from the term of the loan, amount borrowed, and loan-to-value ratio. The only way to remove the qualified mortgage insurance (MIP) on an FHA loan is to refinance it into a non-FHA product. The purpose of mortgage insurance is to protect the lender, not the borrower. With FHA loans, the insurance is to protect the federal government in the event a borrower defaults on the mortgage.

Owelty Lien – According to Webster Dictionary, an Owelty Lien is a lien created or a pecuniary sum paid by order of the court to affect an equitable partition of property (as in divorce) when such a partition in kind would be impossible, impracticable, or prejudicial to one of the parties. This type of loan can be used for probate as well, where multiple children a gifted a house or land after their parents have passed on. An owelty lien is a tool to utilize when the equity of a home needs to be split.

Owelty liens are a type of deed that allows divorcing couples to divide the existing equity in the marital home. This action is commonly utilized in divorces to “buying out” the remaining spouses’ interest in a home. The party giving up their interest in the home obtains a lien against the property through a divorce decree, called an Owelty Lien. A very important fact is that an Owelty Lien must be filed at the courthouse in the county records. When the party retaining their interest in the house refinances or sells the home, the other party is paid the value of their Owelty Lien. This solution allows one person to obtain the full interest in the home while removing the out spouse from the mortgage, while also providing them with some of the equity in usable cash.

In Texas, the Owelty Lien is more valuable than in any other state. It is the only way a divorcing couple can access more than 80% of the home’s current value without violating the Texas A6 law, or cash-out law. Without the Owelty Lien, borrowers will pay cash out rates that can be higher than a traditionally lower rate and term rates.

PITI – Principal, Interest, Taxes, and Insurance, known as PITI, are the four basic elements of a monthly mortgage payment.

PIW – Property Inspection Waiver

Private Mortgage Insurance (PMI) – Private Mortgage Insurance (PMI) is a type of mortgage insurance that benefits your lender. You might be required to pay for PMI if your down payment is less than 20 percent of the property value and you have a conventional loan. You may be able to cancel PMI once you’ve accumulated a certain amount of equity in your home, usually around 20%.

Property Taxes – Property taxes are taxes charged by local jurisdictions, typically at the county level, based upon the value of the property being taxed. Often, property taxes are collected within the homeowner’s monthly mortgage payment, and then paid to the relevant jurisdiction one or more times each year. This is called an escrow account. If the loan does not have an escrow account, then the homeowner will pay the property taxes directly.

Refinance – Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property.

RLA – A Residential Listing Agreement is an employment contract between a property owner and a real estate broker (Realtor). The agreement allows the broker (Realtor) to act as an agent and find a buyer for the property on the seller’s terms. This agreement will include the commission, or broker’s fee, the real estate receives once the sale of the property is complete.

Seller Concessions – AKA Seller Credit, Seller Contribution and Closing Cost Credit – When buying a house, you pay fees, called closing costs, to cover the costs of getting the mortgage. Closing costs usually range from 2% – 5% of the home price. In some cases, you may be able to get the seller to pay for some of these closing costs. *SEE Seller Concessions in Loan Book Documents.

Servicer – Your mortgage servicer is the company that sends you your mortgage statements. Your servicer also handles the day-to-day tasks of managing your loan. Your loan servicer typically processes your loan payments, responds to borrower inquiries, keeps track of principal and interest paid, and manages your Escrow account (if you have one). The loan servicer may initiate foreclosure under certain circumstances. Your servicer may or may not be the same company that originally gave you your loan.

Survey – A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.

Title Company – A title company is a firm that researches legal ownership claims on real estate. Title companies come into the homebuying process after an offer has been made and the property is under contract. They work to protect the buyer from fraud by making sure there are no outstanding liens or mortgages on the house so the buyer can be confident in their purchase.

Title companies also often maintain escrow accounts, these contain the funds needed to close on the home, to ensure that this money is used only for settlement and closing costs, and may conduct the formal closing on the home. At the closing, a settlement agent from the title company will bring all the necessary documentation, explain it to the parties, collect closing costs and distribute monies. Finally, the title company will ensure that the new titles, deeds, and other documents are filed with the appropriate entities.

URLA – Uniform Residential Loan Application – also known as the Freddie Mac Form 65/Fannie Mae Form 1003

Underwriting – The decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.

USDA Loan – The Rural Housing Service, part of the U.S. Department of Agriculture (USDA) offers mortgage programs with no down payment and generally favorable interest rates to rural homebuyers who meet the USDA’s income and home location eligibility requirements. USDA loans typically take longer to aquire because they require two separate Underwriting procedures.

VA Loan – A VA loan is a loan program offered by the Department of Veterans Affairs (VA) to help servicemembers, veterans, and eligible surviving spouses buy homes. The VA does not make the loans but sets the rules for who may qualify and the mortgage terms. The VA guarantees a portion of the loan to reduce the risk of loss to the lender. The loans generally are only available for a primary residence.

VOE – Verification of Employment – A VOE is part of the process. It may cost some money to get if a borrower’s employer uses something like “The Work Number” or a similar service. Could cost $50, so let folks know about that.

VVOE – Verbal Verification of Employment – There is nothing we can do on our own to solve this as the Broker. We need the Borrowers Employer and Lender to assist us. We can only request either the information for a Point of Contact (POC) at the borrowers Employer for the Lender to contact them OR have the Employer Call or Email the Lenders VVOE team to clear this condition.

Lender can contact Borrowers Employer for a VVOE
Borrowers Employer can contact the Lender for a VVOE

*If the Employer is calling the Lender, they need to call from a Company Landline, ask for the VVOE Team and have the Loan Number

*If the Employer is sending an email, it Must come from a Company email address and have the Loan Number

“We need to get a Verbal Verification that you are in fact employed by your company. To do this you will need to ask your companies HR department or your boss to contact the lender either by phone or email and reference the Loan number (See above for requirements). Or, you can let you HR department or boss know that you are purchasing a home and to expect a call from the lender for the Verbal Verification of Employment.”

VOI – Verification of Income

VVOI – Verbal Verification of Income

WVOE – Written Verification of Employment.