Definitions of Mortgage Brokerage terms as used by Secure The Funding in Miami, FL. 22 terms defined.
The difference between a home's contracted purchase price and its appraised value when the appraisal comes in lower than expected. In competitive Miami markets, buyers often sign appraisal gap coverage clauses agreeing to pay the shortfall in cash to keep the deal alive.
A mortgage option for self-employed borrowers that uses 12 to 24 months of personal or business bank statements to verify income instead of tax returns. This is especially useful for Miami entrepreneurs, gig workers, and business owners with significant tax write-offs.
A refinance transaction where the homeowner takes out a new mortgage larger than the existing loan balance and receives the difference in cash. This strategy is often used to consolidate debt, fund renovations, or invest in additional properties by tapping accumulated home equity.
Fees and expenses paid at the finalization of a real estate transaction, typically 2% to 5% of the loan amount. These include lender fees, title insurance, appraisal, recording fees, and prepaid items like taxes and insurance required to fund and record the mortgage.
The process of verifying that a condominium project meets lender or agency guidelines regarding financial stability, insurance coverage, and owner-occupancy ratios. Miami's condo market requires careful review, as many buildings must be FHA, VA, or Fannie Mae approved for buyers to obtain financing.
A mortgage not insured or guaranteed by any government agency, offered by private lenders and following Fannie Mae or Freddie Mac guidelines. These loans usually require a minimum 620 credit score and offer flexible terms for buyers with stable income and moderate down payments.
A percentage calculated by dividing total monthly debt payments by gross monthly income, used by lenders to assess borrowing capacity. Most conventional loan programs prefer a DTI below 43%, though some Florida programs allow higher ratios with compensating factors.
State or local programs that provide grants, forgivable loans, or second mortgages to help buyers cover upfront home purchase costs. Florida Housing offers several DPA options, including Florida Assist and the HFA Preferred program, for qualifying first-time buyers.
A Debt Service Coverage Ratio loan qualifies real estate investors based on a property's rental income rather than personal income. If the projected rent covers the mortgage payment by a set ratio, typically 1.0 or higher, the loan can be approved without W-2s or tax returns.
A neutral third-party account that holds funds for property taxes and homeowners insurance, collected monthly with the mortgage payment. Lenders use escrow to ensure these obligations are paid on time, protecting both the borrower's ownership and the lender's collateral.
A government-backed mortgage insured by the Federal Housing Administration, requiring as little as 3.5% down with credit scores of 580 or above. It's popular among first-time buyers in Miami-Dade due to flexible qualification standards and competitive interest rates.
A state-sponsored program offering down payment and closing cost assistance to eligible frontline workers such as teachers, nurses, law enforcement, and firefighters. Qualified borrowers can receive up to 5% of the loan amount, capped at $35,000, as a zero-interest second mortgage.
A mortgage product designed for non-U.S. citizens without Social Security numbers or U.S. credit history who want to buy property in Florida. These loans often require larger down payments, typically 25% to 40%, and use international credit references or asset documentation.
A Home Equity Line of Credit is a revolving credit line secured by the equity in a home, allowing homeowners to borrow, repay, and reborrow as needed. HELOCs typically feature variable interest rates and a draw period followed by a repayment period.
A mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac, often used for luxury properties in areas like Pinecrest and Coral Gables. Jumbo loans typically require larger down payments, stronger credit scores, and higher cash reserves.
A standardized three-page disclosure lenders must provide within three business days of a mortgage application. It outlines estimated interest rates, monthly payments, closing costs, and loan terms, allowing borrowers to compare offers from multiple lenders side by side.
A non-qualified mortgage designed for borrowers who don't fit traditional lending guidelines, such as self-employed professionals or foreign nationals. These loans use alternative documentation like bank statements or asset depletion instead of standard tax returns to verify income.
Private Mortgage Insurance is a monthly premium charged on conventional loans when the down payment is less than 20% of the home's purchase price. PMI protects the lender against default and can typically be removed once the borrower reaches 20% equity.
A written commitment from a lender indicating how much a borrower can qualify to borrow based on verified income, credit, and assets. In competitive Miami markets, sellers often require pre-approval letters before considering an offer, making it a critical first step.
A lender's commitment to hold a specific interest rate for a set period, typically 30 to 60 days, while a loan is processed. Locking protects borrowers from market fluctuations between application and closing, especially important during volatile rate environments.
A one-time premium policy that protects buyers and lenders against financial loss from defects in a property's title, such as liens, fraud, or ownership disputes. In Florida, the seller typically pays for the owner's policy in most counties, while the buyer pays in Miami-Dade and Broward.
A mortgage program guaranteed by the Department of Veterans Affairs for eligible active-duty service members, veterans, and surviving spouses. VA loans offer 100% financing with no down payment or private mortgage insurance, making them highly attractive for military buyers in South Florida.