Key Mortgage Terms & abbreviations

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By FirstSource (charles):

Here is a list of common abbreviations and what they mean.
APR: Annual Percentage Rate. If you are purchasing a home, this will be the same rate as your loan rate. If this is a refinance, it will be the same if you are paying all of the closing costs up front, if you are financing all or some of them into the loan, then this rate will be higher than the loan amount. Because you are paying for the closing costs over time, so if you add up all of the payments made, and divide it out, that gives you the true rate.

DTI: Debt To Income ratio. Take your total minimum payments, plus if this is a purchase, the proposed PITI, and divide that into your pre tax income, that gives you your DTI. The lower the better.

HELOC: Home Equity Line Of Credit. This is a credit line, so you are approved for a certain dollar amount, and you get checks to write. As you "take out money" by writing a check, you pay interest on that money, and you can pay back and take out again as you wish. There are two types of HELOC's, one is fixed rate, the other is adjustible rate, typically rate changes every month-based on a margin plus the prime rate.

LTV: Loan To Value: What percentage you are borrowing, of the total appraised value of the home. If this is a purchase, then you can borrow based on the lower of the sales price or the appraised value.

MI: Mortgage Insurance. (Sometimes called by a brand name PMI) Loans are packaged into 80% LTV or less loans. If you exceed this percentage, you will pay MI. Either hidden in the rate or upfront.

PITI: the total housing cost. Principal Interest Taxes Insurance.