Here are some more terms that you should be aware of:
80/10/10 - A structured mortgage where the buyer places a 10% down payment on a home and takes a home equity loan on that amount. The result is a total of 20% down which avoids having to pay mortgage insurance or PMI. 80%=mortgage -10%=equity line of credit -10%=down payment, hence the name 80/10/10.
Assumable mortgage - A mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.
Cap - A limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.
Debt-to-income ratio - A comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.
Loan-to-value (LTV) ratio - A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.
