Mortgages

Amortization - A schedule which shows the gradual repayment of debt through regular installments. The amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining principal balance after each payment is made.

Annual Percentage Rate (APR) - A measure of the total cost of credit (interest as well as other charges) expressed as a yearly percentage rate. Because all lenders should apply these rules in calculating the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans.

Adjustable Rate Mortgage (ARM) - Expressed as 3/1 or 5/1 meaning that the interest rate is fixed for an initial period and is subject to change every year thereafter. The changes in the interest rate may vary up or down at fixed intervals and are tied to a financial index such as one-year Treasury note. ARMs are popular to buyers who know their income will rise in the future or who don’t plan to own the home for many years.

Bridge Loan - A loan that "bridges" the gap between the purchase of a new home and the sale of the borrower's current home. The borrower's current home is used as collateral and the money is used to close on the new home before the current home is sold. Some are structured so they completely pay off the old home's first mortgage at the bridge loan's closing, while others pile the new debt on top of the old. They usually run for a term of six months.

Closing - A meeting, typically held at a title company or attorney's office, where the borrower finalizes a sale or refinances a property by signing the mortgage documents, paying closing costs, and other costs as applicable. Also called the “settlement.”

Construction Loan - Money for the construction of a new home. Six month term. Interest only. Borrower/builders welcome.

Conventional - This mortgage is a contract between the lender and the borrower, at the lender’s risk. The borrower’s property is security and it may be insured with a private mortgage insurance company. Conventional mortgages usually require larger down payments than FHA or VA loans.

Earnest Money Deposit - A deposit made by the potential homebuyer to show that he or she is serious about buying the house. The earnest money may be applied toward the down payment at closing. If the sale does not go through, the earnest money deposit will be forfeited to the seller unless the purchase contract expressly provides conditions for its return to the buyer.

Escrow - The deposit of funds by the borrower to the lender in order to pay taxes and insurance premiums when they become due. Escrow could also be a deposit of funds to an attorney or escrow agent which are disbursed once certain requirements are met.

Fixed Rate Mortgage - The most popular type of mortgage loan. As the name suggests, fixed rate mortgages are loans on which the interest rate remains the same for the life of the loan. The terms range from 10-30 years. The interest rate on a fixed rate mortgage can never change as long as you hold the mortgage and regardless of changes in the financial market. You will always know exactly how much you will pay in principal and interest on your home each month. Your total monthly payment can change if it also includes property taxes and insurance (e.g., homeowners, hazard, flood or mortgage insurance), which may increase or decrease.

Typically, the shorter the term, the less interest you pay over the life of the loan. For example, with a 20-year term on a loan amount of $100,000 at a 6.5% interest rate, you save roughly $48,000 in interest costs compared to a 30-year term loan with the same loan amount and interest rate. However, the longer the term, the lower the monthly payment because you stretch out repayment of the loan principal over a longer period of time. For example, the monthly payment on a 30-year term loan of $100,000 at a 6.5% interest rate is roughly $632 versus a monthly payment of roughly $745 for the same loan with a 20-year term.

Hazard Insurance - Insurance coverage which compensates for physical damage to a property from fire, wind, vandalism, or other hazards.

Home Inspection - A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser (not to be confused with the appraisal of the property).

Interest - A percentage rate used to calculate the monthly payment.

Interest-Only Loan - A loan where the principal is paid back at the end of the term and only interest is paid during the term. The loans are usually for a short term of one to five years.

Jumbo - Fixed or adjustable rate loans from $417,000 to $2,000,000.

Lot Loan - 1 year ARM. Minimum of 10% down payment required. Payments are based on a 30 year loan. Loan balloons in 5 years.

Mortgage - A legal document that pledges a property to the lender as security for payment of a debt.

Mortgage Insurance - Insurance which is required for a loan-to-value ratio above 80% which insures the lender against loss caused by a mortgagor's default on a conventional mortgage. Mortgage insurance is issued by a private mortgage insurance (PMI) company. Depending on the type of mortgage insurance, the percentage of coverage will/may vary. For Government loans such as FHA and VA, mortgage insurance is in the form of MIP for FHA loans and VA funding fee for VA loans.

Origination Fee - A fee or charge for work involved in the evaluation, preparation, and submission of a proposed mortgage loan.

PITI - Abbreviation for Principal, Interest, Taxes, and Insurance which make up your monthly mortgage payment.

Refinance Transaction - The process of paying off one loan with the proceeds from a new loan using the same property as collateral.
Stated Income is not verified. Approval is based on credit, assets, and collateral information.

Title Insurance - Insurance against loss or damage resulting in defects or failure of title to a particular property. Title insurance is not required by the borrower but could be useful.

Title Search - A review of the public records generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner. The title search also verifies there are no liens, overdue special assessments, other claims, or outstanding restrictive covenants in the records, which would adversely affect the marketability or value of title.

Underwriting - The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

Since 1926, generations of St. Louisans have trusted us for their mortgage loans.  We adhere to the highest standards in lending, customer satisfaction, loyalty, and trust. And we offer many types of mortgage products to suit your needs — all competitively priced.

It's fast and easy. Pre-qualification allows you to shop with confidence and gives you added bargaining power with your Realtor and the seller. Joanne Miller began her banking career with St. Johns  in 1982 and has been originating mortgages since 2004.

She is a previous Member, Director and President of the National Association of Professional Mortgage Women; Greater St. Louis region. Joanne's National Mortgage Licensing System (NMLS) number is 631661. Joanne's attention to detail means you'll have an outstanding loan experience. To discuss mortgage solutions with Joanne, please call her at (636) 939-3495 ext. 3923 or email her at jmiller@stjohnsbank.com.

If you’re a developer or independent builder, St. Johns Bank offers customized financing for your homebuyers. Contact Joanne for more information.