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Mortgage Terms

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Abstract (of title)

A written summary of the title history of a particular piece of real estate.

Acceleration Clause

A provision of a mortgage or note which provides that the entire outstanding balance will become due and payable in the event of default.

ARM (Adjustable Rate Mortgage)

A mortgage in which the interest rate is adjusted periodically, based on the movement of a financial index.

Amortization

Repayment of loan by installment payments. As the payments are made, the debt is reduced so that at the end of fixed period or term, no money will be owed.

APR (Annual Percentage Rate)

The annual percentage rate refers to the total cost of the loan, expressed as a yearly rate.

Application Fee

That part of the closing costs pre-paid to the lender at time of application to cover initial expenses.

Appraisal

A report made by a qualified person as to the value of a property as of a given date.

Assessed Value

The value placed on a piece of real estate by the taxing authority for the purpose of taxation. Also called an assessment.

Assumption of Mortgage

The purchaser takes over mortgage payments for the balance of the loan, assuming primary liability. Unless specifically released by the lender, the seller remains secondarily liable.

Balloon Mortgage

A mortgage with periodic payments that do not fully amortize the loan. The outstanding balance of the mortgage is due in a lump sum at the end of the term.

Bridge Loan

A short-term loan secured by the equity in an as-yet-unsold house, with the funds to be used for a down payment and/or closing costs on a new house. There is no payment of principal until the house is sold or the end of the loan term, whichever comes first. Interest payments may or may not be deferred until the house is sold.

Broker

The person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Buydown

Money advanced by an individual (e.g. builder, seller, buyer, lender, developer) to lower monthly mortgage payments for a few years or the whole term.

Cap (interest rate)

The maximum interest rate increase allowable on an adjustable rate mortgage. Does not result in negative amortization. See Negative amortization.

Cap (payment rate)

The maximum payment amount increase allowable on an adjustable rate mortgage. May result in negative amortization. See Negative amortization.

Certificate Of Title

A statement that shows ownership of property, stating that the seller has clear legal title.

Closing

The concluding day of the real estate transaction, when title and deed pass from seller to buyer, the buyer signs the mortgage and pays the purchase price and closing costs.

Closing Costs

Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called "settlement costs."

Closing Disclosure

Replaces the HUD-1 Settlement Statement. It is the final disclosure generated by the lender for use in comparing the Loan Estimate against the final costs and fees for the loan scenario. It includes any credits and charges associated with the particular loan transaction.

Closing Statement

A financial disclosure giving an account of all funds received and expected at closing, including the escrow deposit for taxes, hazard insurance and mortgage insurance for the escrow account.

Commission

An agent's or broker's fee for bringing the principals together and helping to negotiate a real estate transaction, often a percentage of the sales price or flat fee.

Commitment

An agreement, frequently in writing, between a lender and a borrower to loan money at a future date, subject to certain conditions.

Comparables

Refers to similar properties used for comparison purposes in the appraisal process. These properties will be reasonably the same size and location, with similar amenities and characteristics, so that the approximate fair market value of the subject property can be determined.

Condominium

Ownership of a single unit in a multiunit building or complex of buildings. Along with this goes a share of ownership of the common areas.

Contingency

A condition that must be met for a contract or a commitment to remain binding.

Conventional Mortgage

Any mortgage loan that is not insured by FHA, guaranteed by VA, of funded by a government authorized bond sale or grant.

Convey

To transfer real estate from one person to another.

Credit Report

The report to a prospective lender on the credit standing of a prospective borrower.

Deed

A legal written document by which title to property is transferred.

Default

Failure to fulfill the terms as agreed to in the mortgage of note.

Down Payment

The difference between the sale price of a property and the mortgage amount.

Due-On-Sale

A clause in a mortgage which gives the lender the right to require immediate repayment of a mortgage balance if the property changes hands.

Earnest Money

The deposit money given to seller or his agent by the potential buyer at the time of the purchase offer. If the offer is accepted, the money will become part of the down payment.

Easement

A right to the limited use of land owned by another. An electric company, for example, could have an easement to put up electric power lines over someone's property.

Encumbrance

Anything that affects or limits the title to a property, such as outstanding mortgages, easement rights or unpaid property taxes.

Equity

The value in which the owner has in real estate over and above the mortgages against it. When the mortgage and all other debts against the property are paid in full, the owner has 100% equity in his property.

Escrow

Funds and/or deed left in trust to a third party. Generally, a portion of the monthly mortgage payment is held in escrow by the lender to pay for taxes, hazard insurance and yearly mortgage insurance premiums.

First Mortgage

A mortgage that has a primary lien against a property.

Fixed-Rates Mortgage

A mortgage with an interest rate and monthly payments that remain constant over the life of the loan.

Fixture

Property, such as a hot water heater or plumbing fixture, that has become permanently attached to piece of real estate and goes with the property when it is sold.

Flood Certification

An independent agency report required by the lender to determine whether a property is located in a flood hazard zone, which would then require a federally mandated flood insurance policy.

Foreclosure

A legal procedure in which property mortgaged as security for a loan is sold to pay the defaulting borrower's debt.

Graduated Payment Mortgage

A fixed rate loan with monthly payments that start low, increasing by a fixed amount for a specific number of years. After that period, the payments typically remain constant for the duration of the loan.

Gross Income

Normal income, including overtime, prior to any payroll deductions, that is regular and dependable. This income may come from more than one source.

Hazard Insurance

Insurance protection against damage to a property from fire, windstorms, and other common hazards.

Homeowner's Insurance

An insurance policy that covers the dwelling and its contents in case of fire or wind damage, theft, liability for property damage and personal liability.

HUD-1 Form

See Real Estate Settlement Statement.

Income Property

Real estate that is owned for investment purposes and not used as the owner's residence.

Interest

A charge paid for the use of money.

Interim Financing

See Bridge Loan.

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Land Contract

When the buyer agrees to make payments directly to the seller at pre-negotiated terms. The seller agrees to deed the property to the buyer upon completion of the agreement. The buyer becomes the owner of equity in this type of sale. (Also see Owner Financing.)

Lien

A legal claim on a property used as security for a debt.

Loan Estimate

Disclosure required within 3 days of loan application that lists all of the costs and fees associated with a particular loan scenario. The Loan Estimate replaces the Good Faith Estimate (GFE).

Loan-To-Value Ratio

The relationship between the amount of the mortgage and property value, usually shown as a percentage.

Market Value

The price at which a property will sell, assuming a knowledgeable buyer and seller, both operating without undue pressure.

Mortgage

A contract in which a borrower's property is pledged as security for a loan which is to be repaid on an installment basis.

Mortgage Note

A written promise to pay a debt at a stated interest rate during a specified term. The agreement is secured by a mortgage.

Mortgagee

The lender in a mortgage contract.

Mortgagor

The borrower in a mortgage contract.

Negative Amortization

A loan in which the outstanding principal balance goes up instead of down because the monthly payments are not large enough to cover the full amount of interest due. Also called deferred interest.

Offer to Purchase

A written proposal to buy a piece of real estate that becomes binding when accepted by the seller. Also called a sales contract.

Origination Fee

A fee charged for the work involved in the evaluation preparation and submission of a proposed mortgage loan.

Owner Financing

A purchase in which the seller provides all or part of the financing.

PITI

An acronym for payments to lender that cover principal, interest, taxes and insurance on a property.

Plat

A map of a piece of land showing boundary lines, streets, actual measurements and easements.

Point

A fee paid to the lender on closing day to increase the effective yield of the mortgage. A point is one percent of the amount of the mortgage loan. Also called a discount point.

Prepayment Penalty

A charge paid to the lender by the borrower if a mortgage loan is repaid before its term is over.

Pre-Approval

A commitment by a lender to extend credit provided that specific conditions are met.

Pre-Qualification

A preliminary assessment of a buyer's ability to secure a loan, based on a specific set of lending guidelines and buyer representations made. This is not a guarantee or commitment by a lender to extend credit.

Prime Rate

The interest rate charged by banks to their preferred corporate customers, it tends to be an estimator for general trends in short term interest rates.

Principal

The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.

PMI (Private Mortgage Insurance)

Insurance written by a private mortgage insurance company to protect the lender against losses caused by mortgage default. This is commonly required on loan transactions involving less than a 20% down payment or equity position.

Qualifying Ratios

Guidelines used by lenders to determine how much of a loan a home buyer qualifies for. Often referred to as debt-to-income ratios (or DTI).

Realtor

A real estate broker or sales associate affiliated with the National Association of Realtors.

Recording Fee

The charges made by the register of deeds to record the legal documents.

Refinancing

Repaying a debt with the proceeds of a new loan, using the same property as collateral or security.

Second Mortgage

A loan issued on property that is already encumbered by an existing mortgage (ie: the first mortgage). The second mortgage is subordinate to the first.

Secondary Mortgage Market

The market wherein home loans are sold by the lender after closing to Fannie Mae, Freddie Mac or a variety of other institutional investors.

Survey

A map prepared by an engineer or surveyor charting a particular piece of real estate.

Title

Ownership of a property. A clear title is one without any outstanding liens or encumbrances. A cloud on title refers to any outstanding liens or encumbrances which could impair the title.

Title Insurance Policy

A policy designed to protect the buyer or lender after closing from financial losses arising from any defects in the title that may have occurred prior to purchase.

Title Search

A check of public record to disclose the past and current facts regarding ownership of a particular piece of property.

Transfer Tax

In some areas city, county or state taxes imposed when property passes from one person to another.

Truth-In-Lending

Federal law that requires lenders to disclose the terms and conditions of a mortgage, including the APR, based on certain charges incurred by the borrower. If the charges were $0, the APR would be equal to that actual interest rate on the loan.

Underwriting

The process of evaluating a loan application to determine the risk involved for the lender.

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Your Experience is Our Priority


Your local lending partner, our team strives to exceed your expectations before, during and after the mortgage process.

Gee came recommended from my real estate agent and I'm glad I reached out. Tidewater was able to provide a loan that was far and away the best available, nearly a full point lower than the best rate from one of the major national lenders at the time. Gee and her team were knowledgeable and professional every step of the way. I was also impressed at how prompt they were in communication. This made navigating a few interesting situations that arose during my purchase much easier.
If I find myself in the market for another loan in the area, I will absolutely be reaching out to Gee again.

Matt

Working with Michelle Phillips was easy because she has great communication and knowledgeable on everything. All around 5 stars

Ilia Walker-Randall

I had an exceptional experience from the meet and greet to closing.

Catherine

Jennifer was friendly and informative throughout our Mortgage process. She is the BEST!

Allen B

Let Jennifer handle everything.

Scott P

Everything went well. My husband and I’s experience was fantastic. Jennifer was super helpful and explained everything to us that we didn’t understand. She made the process so easy and quick. I never felt confused or didn’t understand anything. Jennifer was always quick to explain
everything and break it down for us. I don’t think we could have made it through the process of buying our home without her!

James and Tracy

Everything was great.

Dalton and Eleanor

It was perfect.

Kristin

The team I was working with were amazing and so Knowledgeable. If they didn’t know the answer they were quick to find it. I would
definitely recommend Jennifer to anyone that is looking to purchase a home especially first time homebuyers because I didn’t know
what I was doing and she got me through every step of the way. Thank you so much for being there.

Cassi

Thank you very much for a smooth and seamless transition. It was great working with you and your staff. Thanks for outstanding
customer service.

John

Michelle Phillips was very hands on from the beginning to the end. This was our second house we bought with her assistance and both times they were stress free. Whenever I had a question and reached out to her she was quick to respond. The whole office is full of hard friendly workers. In my opinion they’re the best.

Mark Skyles

I was able to ask all of my questions and if I was to forget an answer my loan officer was more than willing to answer them again. I
never had to worry about if something was wrong, and directions were clear through the whole process. I had a wonderful experience overall.

R. Lewis

We are so happy we chose Farmers Bank Home Mortgage to do our refinance. We were very fortunate that we had the opportunity to
work with Jennifer Simpson, who is an amazing loan officer. She went above and beyond every step of the way right up to closing
day. Thank you!

Davis;

Jennifer was the absolute BEST when it came to ALL parts of the mortgage process. As a young, first time home buyer, I had a lot of
questions and uncertainties. Every question I had, she was able to answer. We had a few obstacles to overcome, but Jennifer was
quick to react and never let me stress over it. I have and will continue to refer my friends and family to Jennifer for any future needs.
She is THE BEST!!!

Cole

My experience was great! Jennifer was very professional and very helpful from start to finish.

Amanda

I refinanced my house with Jen then I got qualified to buy my dream beach house and I bought it and couldn’t be any happier with Jen
she was awesome and I will definitely recommend her all day everyday

H. M.

Very satisfied. Jennifer was on point, fast and worked hard to give me the best loan.

Ashley

Everything was great. We loved working with Jennifer. Jennifer was the absolute sweetest. She was always there to answer any questions and never felt like we were bugging her. She made sure we fully understood everything.

Mike and Brooke

Excellent experience honestly. From my first interaction with Jennifer I was treated with respect and was given any information I requested. I was running late on a few documents and Jennifer didn't once get negative or lose her patience. I appreciate the amount of time and respect Farmers and Jennifer gives to it's customers.

S. Sellers

Jennifer made everything nice and smooth. Looking forward to doing more business with Jennifer and send her all the business I can.

H.M.

Jennifer Simpson was excellent! I have already started referring friends. She was great to work with. She was very knowledgeable and guided me through the entire
process. I would highly recommend Farmers Bank!

T, Smith

Jennifer was amazing! She truly made us feel like we were her main priority and our success was her utmost priority. Loved working with her

C and J

Working with Jennifer Simpson thru Farmers Bank has been a great experience. She was always available and was there to answer my 1,000 questions I had. She was very eager to be sure we closed even with all the limitations due to the virus. I would definitely recommend her and Farmers Bank Home Mortgage to anyone. Can not thank her enough!

White

Paul Branch and Farmers Bank took great care of me and quickly found a loan and great rate to meet my needs. They were very personable and easy to work with. Best home loan experience I've ever had!

Lauren S

I highly recommend Farmers Bank Home Mortgage. Jennifer Simpson made my home refinance process as simple as possible from start to finish. She kept me updated every step of the way. Thank you, Jennifer for an excellent experience.

Lisa S

After shopping around for a mortgage lender, I decided to go with Farmers Bank Home Mortgage because of Jennifer's exceptional customer service. I truly felt like I was working with a friend that had my best interests in mind

Daniel T

Jennifer made me feel like she cared about helping. I had gone with another company at first. They were promising low rates and no fees. At the nd of their process all the promises disappeared and the fees were triple what Farmers Bank Home Mortgage was.

William E

She goes above and beyond for all of her clients! The best there is!!

Shea J

Paul was absolutely great to work with. He was extremely Clear, thorough and patient as he guided us through the process. He was also very timely and worked hard to make sure everything was ready to go before closing. Thank You so much.

Babb

She is a very hard working young lady!! I can't think of anyone else I would choose to handle my next mortgage loan!!! She has been in the mortgage business for many years and has attained a vast knowledge which will benefit anyone needing her assistance!

Gale B

Deb Olmstead at Tidewater Home Funding is prompt, professional, and personable. She went out of her way to make sure everything was as
smooth as silk.

Anonymous

Closing went awesome and smooth as can be.. Thank you so much for the basket of goodies.. Between you guys and Martha we were spoiled.. Just got water n power on and believe it or not half of the house is packed and moved to the new house already..  We were very blessed to have had you as our loan officer and doesn't hurt that you have an awesome staff like Linda  and all..  Thank you thank you so much again Paul for being so patient and considerate you have made our dreams of being home owners true.
 

Mrs. W

Good experience. Enjoyed working with Paul.

J. Foshee

We first applied for a loan at our financial institution. The experience with them was horrible, we felt like we were nobody to them. So down the road we went. Found Paul Branch as a recommendation from a friend. Our lives changed. Paul sat down and explained everything to us like he was a very good friend. Huh? We were not used to this considering what we just had experienced. When we had a question and left a message he promptly called us back. To our surprise Paul helped us get the very best interest rate, better than our bank!! If I know anyone looking for a loan I know who to send them to. HAD TO DO IT!

Barbara H.

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