COMMON INVESTMENT TERMS EXPLAINED: Part 20

More investment terms for you! Please contact us if you ever have questions about your REI journey.

Good Faith Estimate (GFE): This estimate is required by law to be provided to a potential mortgage customer within three days of applying for a loan. The GFE must include an itemized list of all fees and costs associated with that particular loan. These fees include things like inspections, title insurance and taxes.

Home Equity Loan: A loan secured against a property that allows the borrower to obtain money drawn against home’s equity. Usually such a loan is in second position (after the first mortgage).

Loan-to-Value Ratio (LTV): The amount of the loan divided by either the appraised value or sales price (whichever is lower). This value is one of the factors used to determine if a loan would be approved.

Note: Any legal document which obligates a borrower to repay a mortgage loan at a specified interest rate over a specified period of time.

PITI (Principal, Interest, Taxes and Insurance): Your mortgage payment may include all of these, depending on the terms of the loan. Taxes are frequently placed into an escrow account, and the lender applies the funds towards property taxes.

Points: Points are essentially fees that the borrower must pay to receive a home loan. One point would equal one percent of the loan amount. By paying more points upfront, a lower interest rate can usually be obtained.

Thanks for reading! We’re nearing the end of this lengthy series, but we’ve got more great content heading your way next week.