The mortgage process can be a little confusing if you aren't familiar with the terms used in the process. To help you out, here is a list of terms with corresponding mortgage definitions.

Before we get started, here’s a list
of the parties involved in the loan
process and some common mortgage
terms for your reference:

• Broker — Great Western Mortgage
and your Loan Consultant. We handle
and oversee the entire process.

• Lender — provides the financing. As
a broker, we can be the lender and
finance your loan to expedite the process.
If we can’t bank the loan, we have
access to over 150 different lending
institutions.

• Processor — prepares your loan for
underwriting. The Processor makes
certain your income is properly documented
and verified, that the appraisal
is being performed, and title and escrow
are opened.

• Escrow — works with title to certify payoff
demands for all existing liens. Escrow
is an independent group which disburses
monies to all parties in the loan transaction
and ensures full payment.

• Title — ensures both the borrower and
the lender have a clean title on the home,
guaranteeing to both parties there are no
mistaken liens and that all existing liens
on the home are scheduled to be paid and
removed.

• Underwriters — make the decision to approve
or deny the loan. Hired by the lender, their job
is to review all aspects of the loan based on
the lender’s approval guidelines.

• Automated Underwriting — A computer generated loan
approval. This automated process only takes minutes and
is the quickest path to approval.

• ARM — Adjustable Rate Mortgage. An ARM has a fixed
rate for a specified amount of time. After the initial term,
the loan becomes adjustable and the rate can fluctuate
depending on market conditions. ARM payments are initially
lower than fixed rate payments. This is an excellent
option for people with damaged credit, those who plan to
sell their homes short term, or who simply want to save
money on their monthly payment.

• DTI — Debt to Income Ratio or your total monthly debt
in relation to your gross monthly income. For example
if you have $2,500 in total monthly debts with a total
income of $5,000, your DTI is 50%. The higher the DTI,
the higher the lender’s risk and 50% is typically the
maximum allowable DTI.

• Equity — The amount of vested or owned interest in
your property. Subtract the total balance owed on
the property from the appraised value to determine
your equity.

• FICO Scores — Most lenders use the FICO scoring
system to qualify borrowers. The FICO score is a
number assigned from each of the three main
credit repositories (Experian, Trans-Union, and
Equifax). This number is calculated based on your
complete credit profile and takes into account late
payments, balances on trade lines, inquiries for additional
credit, judgments, bankruptcies, total debt,
length of credit history, and more. The lower the
FICO score, the higher the lender’s risk.

• LTV — Loan to Value Ratio. For example: a loan
amount of $75,000 on a home valued at $100,000
equals an LTV of 75%. Your equity would equal
$25,000, or 25%. The higher the LTV ratio, the
higher the lender’s risk.

• Stated Income — Your own statement of income
on the application versus income that can be
independently verified. Use of stated income is
an excellent option for self-employed individuals
or those with hard to prove income.