Residential Mortgage Application: 3 Key Terms

When you are filling out a residential mortgage application, there are a number of things that you are going to need to know about your mortgage. Here are some of the key terms to look out for.

1. Loan-to-Value Ratio

One of the terms that you might see is loan-to-value ratio. This is a ratio that is commonly used by lenders in order to determine if they can lend on a particular property. For example, if the lender requires an 80 percent loan-to-value ratio, this means that they would loan only $80,000 for a property that is worth $100,000.

2. Adjustable-Rate Mortgage

Another term that you might hear is adjustable-rate mortgage. This means that the interest rate is going to fluctuate from one year to the next on your mortgage. The interest rate is going to be tied to a financial index that can move up and down depending on market factors.

3. Re-amortization

Re-amortization is another term that you might see on your loan documents. This means that at a certain point in the loan, the loan payment is going to be recalculated based on the current balance and how much time is left in the mortgage term.

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