citibank mortgage basics overview

8/8/2019 Citibank Mortgage Basics Overview

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Mortgage Basics Overview

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Citibank Home Lending

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Mortgage Terminology Mortgage- a legal document indicating that a

specific amount of money will be loaned at aspecific interest rate

Equity-The difference between the presentvalue of the property and the mortgage amounton that property


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Mortgage Terminology LTV (Loan to Value)- The ratio of the amount of

the loan to the lower of the appraised value orsales price of real property (expressed as a

percentage) CLTV(Combined Loan to Value)- The ratio of the

amount of the loan and any subordinatefinancing (like home equity loans) to theappraised value or sale price of real property


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Calculating

LTV and

CLTV

The appraised price of the home is $200,000and the mortgage amount is $160,000

LTV= $160,000 divided by $200,000 = .80 or

80% Now assume there is a Home Equity loan with a

$10,000 balance as well

CLTV= ($160,000+10,000) divided by

$200,000 = .85 or 85%


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More Mortgage Terminology Conforming- A mortgage loan which meets all

requirements (size, type, and age) to be eligiblefor purchase or securitization by outside

agencies (ex. Fannie Mae) Non-Conforming- A mortgage loan in which the

loan amount, the loan-to-value ratio, the term, orsome other aspect of the loan exceedspermissible limits as specified in agencyregulations


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MortgageL

oan Types and Sizes

Property Type Maximum Loan Size

1-Family $333,700

2-Family $427,150

3-Family $516,300

4-Family $641,650

Conforming Loan Size Limits

Check Daily Rate Sheet for updates, excludes Alaska and Hawaii


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MortgageL

oan Types and SizesNon-Conforming Loan Size Limits

Loan Type Maximum Loan Size

Jumbo $333,701-$700,000

Super Jumbo $700,001-$1,000,000+

Check Daily Rate Sheet for updates


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More Mortgage Terminology Conventional- Mortgage financing which is

not insured or guaranteed by a governmentagency

Non-Conventional- Mortgage financingwhich is insured or guaranteed by agovernment agency


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More Mortgage Terminology Lock period- The number of days during which

a lender guarantees a borrower a specificinterest rate and terms on a mortgage

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loat- A loan application in which the lender hasnot committed to lend at a particular interest rate

Rate Cap- On an adjustable rate mortgage, thelimit on interest rate increases and/or decreasesduring each interest rate adjustment (adjustment

period cap) or over the term (life cap) of themortgage


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More Mortgage Terminology Point- An amount equal to one percent of the

principal amount of a mortgage. Loan discountpoints are a one-time charge assessed at closing

by the lender in return for a lower note rate


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MortgageR

atiosHousing or front end debt ratio

Monthly housing costs, including mortgagepayments, property taxes, insurance and monthlymaintenance fees (if applicable) as a percentage of

monthly gross incomeTotal or back end ratio

Monthly housing costs plus monthly payments onconsumer credit and other long term debt as apercentage of monthly gross income

Front End Back End

Standard Financing Options 28% 36%

Affordable Mortgage Options 33% 38%


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More Mortgage Terminology Mortgage Insurance- Insurance which protects

mortgage lenders against loss in the event ofdefault by the borrower. This allows lenders to

make loans with lower down payments. Thefederal government offers MI through HUD/FHA;private entities offer MI for conventional loans

Premium Pricing- a higher interest rate chargedto the borrower in exchange for receiving a dollar

amount credit that reduces their closing costs


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More Mortgage Terminology Escrow account- 1) the deposit by a borrower

with the lender to pay taxes and insurancepremiums when they become due or 2) the

deposit of funds or documents with an attorneyor escrow agent to be disbursed upon theclosing of a sale of real estate (also calledimpounds)


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Refinancing

Rate and term refinance- The refinance of anexisting mortgage balance solely to lower theinterest rate or change the terms of the loan

Cash Out refinance- The refinance of anexisting mortgage at a higher dollar amountresulting in cash back to the borrower. Alsorefers to the refinance of 1st and 2nd mortgageswhen the 2nd mortgage was not originated anddrawn on simultaneous with the purchase of theproperty

citibank mortgage basics overview

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