Abstract of Title - A summary of recorded transactions concerning the title of a property. Usually prepared by a title insurance company and used to determine any title defects which could affect the property.
Accrued Interest - Interest which has been incurred but not paid.
Amortization - The process of paying off a mortgage in regular monthly principal and interest payments.
Annual Percentage Rate (APR) - An interest calculation that expresses the total cost of a mortgage loan as a yearly rate. The federal government has mandated a procedure for determining the APR. It includes origination fees, projected interest payments, discount points, and other fees paid at origination. It is usually a higher rate than the stated note rate.
Appraisal - A written estimate of a property's value. It can reflect either the "as is" value of a property or a "subject to" value based on projected improvements that are to be made to the property. There are 3 ways of determining a property's value: the sales approach, the cost approach, and the income approach.
Balance Sheet - A statement showing the financial condition of an individual or company at a specific point in time. It includes assets, liabilities, net worth, and stockholder's equity. TOP
Borrower - An individual who requests a loan and agrees to payment terms on the loan. TOP
Cashier's Check - A check issued by a banking institution which is guaranteed by the banking institution. TOP
Certificate of Occupancy - A document issued by a local authority having jurisdiction over a property stating that the property complies with requirements pertaining to building codes and health codes. TOP
Closing - A process during which a buyer, seller, and lender execute documents which change the ownership of a piece of property and during which funds change hands. TOP
Closing Costs - Costs associated with the settlement of a loan. These include origination fees, title fees, taxes, insurance, recording fees, inspection fees, appraisal fees, etc. TOP
Closing Disclosure (CD) - The loan disclosure provided to the borrower no less than 3 days prior to closing which details the closing costs, down payment, taxes, HOA fees, etc. associated with the loan.. TOP
Cloud on Title - Any claim or encumbrance which would impair or affect title to a property. TOP
Collateral - Any asset used to secure a loan. TOP
Debt To Income Ratio [DTI] - An ratio used as a guide to assess if the borrower can afford the home, determined by dividing total recurring debt including the subject property's mortgage payment, by gross household income before taxes. TOP
Deed - A legal document by which title to a property is transferred from one owner to another. The deed contains a description of the property and is signed, witnessed, and delivered to the buyer at closing. TOP
Deed Of Trust - A document creating a lien on a property as security for the payment of a debt. TOP
Default - Failure to meet legal obligations in a contract, including failure to make payments on a loan. A mortgage is generally considered to be in default when a payment is 30 days past due. TOP
Deferred Interest - Amount added to the balance of a loan when monthly payments are insufficient to cover the interest incurred. This results in negative amortization. TOP
Desktop Underwriter (DU) - A program which provides an automated underwriting review based on the loan details using FNMA underwriting guidelines. TOP
Delinquency - Failure to make required payments on time. TOP
Down Payment - The difference between the purchase price and the loan amount. TOP
Draw Request - A request for payment for work completed in conjunction with a construction project. TOP
Earnest Money - A good faith deposit made by a purchaser of property. TOP
Encumbrance - A legal right or interest in a property that affects title to the property. TOP
Equity - The difference between the current market value of a property and the outstanding mortgage balance. TOP
Escrow - The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions. TOP
Escrow Account - An account held by a lender containing funds collected in conjunction with monthly mortgage payments. The funds in this account are held in trust by the lender on behalf of the borrower, and are used to pay expenses such as property taxes and homeowner's insurance. TOP
Fannie Mae (FNMA) - Federal National Mortgage Association. A corporation chartered by Congress that buys and sells residential real estate mortgages. TOP
Federal Housing Administration (FHA) - Federal Housing Administration. A government agency that is a division of the Department of Housing and Urban Development (HUD) which insures residential mortgage loans made by FHA approved lenders. TOP
Federal Reserve - The central bank of the United States which regulates monetary policy through interest rates and supply. TOP
Fee Simple - The absolute ownership of real property. TOP
Fixed Rate - An interest rate that is fixed for the term of the loan. TOP
Flood Insurance - A form of hazard insurance required on residential properties which lie within a flood zone as determined by The Federal Emergency Management Association (FEMA). TOP
Forbearance - A grace period given by a lender who postpones foreclosure on a property to give the borrower time to catch up on overdue payments. TOP
Foreclosure - A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage. TOP
Freddie Mac (FHLMC) - Federal Home Loan Mortgage Corporation. A quasi-governmental corporation chartered by Congress that purchases mortgages from insured depository institutions and HUD-approved mortgage bankers. TOP
General Liability Insurance - A policy that protects owners against any claims of negligence, personal injury or property damage. TOP
Ginnie Mae (GNMA) - Government National Mortgage Association. This agency buys home loans from lenders, pools them with other loans and sells shares to investors. Ginnie Mae differs from its cousins, Fannie Mae and Freddie Mac, in that it only purchases loans backed by the federal government. TOP
Graduated Payment Mortgage (GPM) - A mortgage that requires a borrower to make progressively larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed. TOP
Grace Period - A specified amount of time to make a loan payment after its due date without penalty. TOP
Gross Monthly Income - The total monthly income of a household before taxes or expenses are subtracted. TOP
Guarantee or Guaranty - A promise by one party to pay a debt or perform an obligation contracted by another in the event of that person's default. TOP
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Libra Enterprises, LLC dba Construction Financial Solutions is licensed under the laws of the State of Texas and by state law is subject to regulatory oversight by the Department of Savings and Mortgage Lending. Any consumer wishing to file a complaint against Libra Enterprises, LLC dba Construction Financial Solutions should complete, sign and send a complaint form to the Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78075. Complaint forms and instructions may be downloaded and printed from the Department's web site located at sml.texas.gov or obtained from the Department upon request by mail at the address above, by telephone at its toll-free consumer hotline at 1-877-276-5550, by fax at 1-512-475-1360 or by e-mail at firstname.lastname@example.org.
The Department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed Residential Mortgage Loan Originators. A written application for reimbursement from the recovery fund must be filed with and investigated by The Department prior to the payment of a claim. For more information about the recovery fund, please consult The Department's website at sml.texas.gov.
National Mortgage Licensing System Registry #1771431. Construction Financial Solutions is located at 18568 Forty Six Parkway, Suite 3002, Spring Branch TX 78070.
Lenders are required to provide the "Your Home Loan Toolkit", which has been provided by the Consumer Finance Protection Bureau created to comply with federal law pursuant to 12 U.S.C. 2604, 12 CFR 1024.6, and 12 CFR 1026.19(g). This is for all loan transactions effective 10/3/2015.
Every industry has a set of acronyms and terms not commonly known to the general public, like LTV, DTI, PITI, VOE, VOD, LOE, CD, etc. Below is a list of words you may hear in communications during the loan approval process.
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