By Chris Hunt
There are many terms associated with lending but these are the basics for processing your loan. More definitions of mortgage terms can be found in the glossary of our mobile mortgage app, information on the app can be found here.
Subject Property – This is the property you are purchasing or refinancing.
Wet Signatures – These are simply the borrower’s actual signatures. Most lenders allow e-sign signatures on majority of their documents although a few documents still require wet signatures.
Credit Card Authorization (CCA) – The CCA is completed by the borrower and used for payment to; the appraisal company, employers or their vendors for verification of employment forms and condominium questionnaires if applicable. These fees must be paid prior to the loan closing.
Rate Lock – Rates must be locked in for a certain time periods. Typically these periods are in 15 day increments. Your loan must fund within the specified lock period. Rates are lowest by shorter time period; for example a 15 day lock has a lower rate than a 60 day lock.
Seasoning of Funds – If the lender requires seasoning of funds this is simply the time the funds have been in the bank. Typical time frames for seasoning requirements are 30 or 60 days.
Sourcing of Funds – Lenders require funds to be sourced. Sourced funds are simply showing or proving the paper trail of where money came from. If you have a large deposit showing on your bank statement the lender wants it sourced. For example, if you sold a car in order to produce the down payment on your loan, the lender would require a copy of the title, a bill of sale, a copy of the cancelled check and a transaction history or bank statement showing the funds are in your account. Complete paper trails are required.
LOE – (letter of explanation) Lenders require letters of explanation for certain circumstances. These letters are directed from the borrower to the lender written on a letterhead from the borrower explaining the circumstances. They can be used to explain; address discrepancies, gaps in employment, job transfers etc. LOE’s must be dated and wet signed by the borrower.
Escrows – When you include taxes and insurance within your monthly payment and the lender holds those funds until there due, that process is called escrowing. Those funds are held in an escrow account by the loan servicer and paid directly to the county and insurance company when due.