Starting off the mortgage process can be confusing, especially if you’re not familiar with the terminology and features of a mortgage. Here are 4 mortgage terms you should be familiar with before you apply for your first mortgage.
What is PITI?
Your monthly mortgage payment is your Principal, Interest, Taxes, and Insurance. This is known as PITI for short. You can find more about it here:
What is an FHA mortgage?
FHA mortgages are loans the Federal Housing Administration insure. FHA loans can assist those with lower credit scores and/or those who need to place a lower down payment on their homes achieve their dreams of homeownership.
What is debt-to-income ratio?
Debt-to-income ratio (DTI) is all your monthly debt payments divided by your gross monthly income. This ratio is one of the things lenders consider when they underwrite your loan application. It helps them determine your ability to repay your loan. Generally, borrowers are held to a maximum total debt to income ratio of 43%, including their new mortgage payment, due to Qualified Mortgage regulations.
What are closing costs?
Closing costs are the fees and expenses that you incur when obtaining a mortgage. At least 3 days before closing, your lender will provide an initial Closing Disclosure for your review. The Closing Disclosure is a statement that details all of the costs involved in the loan closing.
If you’re ready to apply for your mortgage, make sure you check out our online Mortgage Engine application to make the application process quick and easy!