1. SM Mortgage Basics Overview Brought to you by and SM

2. Citibank Home Lending SM 2 Mortgage Terminology Mortgage- a legal document indicating that a specific amount of money will be loaned at a specific interest rate Equity-The difference between the present value of the property and the mortgage amount on that property

3. Citibank Home Lending SM 3 Mortgage Terminology LTV (Loan to Value)- The ratio of the amount of the loan to the lower of the appraised value or sales price of real property (expressed as a percentage) CLTV(Combined Loan to Value)- The ratio of the amount of the loan and any subordinate financing (like home equity loans) to the appraised value or sale price of real property

4. Citibank Home Lending SM 4 Calculating LTV and CLTV The appraised price of the home is $200,000 and 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%

5. Citibank Home Lending SM 5 More Mortgage Terminology Conforming- A mortgage loan which meets all requirements (size, type, and age) to be eligible for 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, or some other aspect of the loan exceeds permissible limits as specified in agency regulations

6. Citibank Home Lending SM 6 Mortgage Loan Types and Sizes Property TypeMaximum 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

7. Citibank Home Lending SM 7 Mortgage Loan Types and Sizes Non-Conforming Loan Size Limits Loan TypeMaximum Loan Size Jumbo$333,701-$700,000 Super Jumbo$700,001-$1,000,000+ Check Daily Rate Sheet for updates

8. Citibank Home Lending SM 8 More Mortgage Terminology Conventional- Mortgage financing which is not insured or guaranteed by a government agency Non-Conventional- Mortgage financing which is insured or guaranteed by a government agency

9. Citibank Home Lending SM 9 More Mortgage Terminology Lock period- The number of days during which a lender guarantees a borrower a specific interest rate and terms on a mortgage Float- A loan application in which the lender has not committed to lend at a particular interest rate Rate Cap- On an adjustable rate mortgage, the limit on interest rate increases and/or decreases during each interest rate adjustment (adjustment period cap) or over the term (life cap) of the mortgage

10. Citibank Home Lending SM 10 More Mortgage Terminology Point- An amount equal to one percent of the principal amount of a mortgage. Loan discount points are a one-time charge assessed at closing by the lender in return for a lower note rate

11. Citibank Home Lending SM 11 Mortgage Ratios  Housing or front end debt ratio  Monthly housing costs, including mortgage payments, property taxes, insurance and monthly maintenance fees (if applicable) as a percentage of monthly gross income  Total or back end ratio  Monthly housing costs plus monthly payments on consumer credit and other long term debt as a percentage of monthly gross income

12. Citibank Home Lending SM 12 More Mortgage Terminology Mortgage Insurance- Insurance which protects mortgage lenders against loss in the event of default by the borrower. This allows lenders to make loans with lower down payments. The federal government offers MI through HUD/FHA; private entities offer MI for conventional loans Premium Pricing- a higher interest rate charged to the borrower in exchange for receiving a dollar amount credit that reduces their closing costs

13. Citibank Home Lending SM 13 More Mortgage Terminology Escrow account- 1) the deposit by a borrower with the lender to pay taxes and insurance premiums when they become due or 2) the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate (also called impounds)

14. Citibank Home Lending SM 14 Refinancing Rate and term refinance- The refinance of an existing mortgage balance solely to lower the interest rate or change the terms of the loan Cash Out refinance- The refinance of an existing mortgage at a higher dollar amount resulting in cash back to the borrower. Also refers to the refinance of 1 st and 2 nd mortgages when the 2 nd mortgage was not originated and drawn on simultaneous with the purchase of the property