Glossary of Financial Terms  

Amortization - Aperiodic reduction of a mortgage by making specific payments over a stated period of time.
Annual Percentage Rate - The entire cost of borrowing funds, regardless of who pays the charge, stated as a percentage rate.  There is a prescribed procedure for this calculation as stated by the Federal Government.
ARM - An Adjustable Rate Mortgate where the reate can change at specific intervalls as stated by the note.  The payment is subject to change throughout the term of the loan.
Cash Flow - The amount of cash derived from an investment.  Cash flows can vcome from operation, disposition, or refinancing of an investment.
Closing -  sometimes called settlement, this is where all of the necessary documents are signed and consideration made in order to transfer title to the property.
Conventional Loan - Generally speaking, any loan which is not a government insured loan, such as a FHA or VA, is considered a conventional loan.
Debt Ratio - An allowable percentage of monthly gross income which includes the proposed mortgage payment and any recurring debt.
FRM - A fixed Rate Mortgage where the interest rate stays constant throughtout the ter of the loan.
Income ration - An allowagble percentage of monthly gross income which the proposed mortgage payment canot exceed.
Index - A reference oint used to determine if rates on ARMs can change.  Commonly used indices are the 11th District Cost of Funds and the One Year Treasury Index.
Loan to Value Ration - The ratio between the mortgage loan and the appraised value of a property.  Typical LTVs could be 80% or 90%.
Mortgage Insurance Premium - This term specifically refers to mortgage insurance required by FHA which insures the lender in case the borrower defaults.
Points - a point is equal to one percent of the mortgage amount.  This is a charge by the lender which will increase the yield of the mortgage.
Private Mortgage Insureance - Mortgage insureance guaranteeing the top portion of a loan in case of foreclosure required by lenders of conventional loans in excess of usually 80% loan to value.
Yield - The rate of return an investment generates over a period of time.

I hope that this information has been helpful to you.  If you have questions about anything at all, don't hesitate to contact me.

Angela Burdick CRS, GRI

Call Me: 
Office: (303) 738-1380
Direct: (303) 886-1900
Email: angela@DenverRealEstateNow.com
Angela Burdick
Realty Innovations
5753 S. Prince St. Unit 753
Littleton, CO 80160

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