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 Mortgage where the rate can change at specific intervals 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 come 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 stay constant throughout the term of the loan. Income Ratio - An allowable percentage of monthly gross income which h the proposed mortgage payment cannot exceed.