primelending, a look inside 2012

Mortgages without obstacles.

AA LOOK INSIDE

Honesty and Integrity | People Centric Culture | Agile | Service Beyond Expectations | One Team One Purpose

Core Convictions

Honesty and Integrity

People Centric Culture

Agile

Service Beyond Expectations

One Team One Purpose

Core PurposeWorking together to have a profound and positive impact on the lives of all we serve.

1A LOOK INSIDE


PrimeLending, A PlainsCapital Company

About PrimeLendingHeadquartered in Dallas, Texas, and established in 1986 by Roseanna McGill, PrimeLending has grown from a sta! of 20

producing $80 Million in annual closed loan volume to a sta! of over 2,300 producing in excess of $8.7 Billion annually.

In addition to the corporate o#ce located in North Dallas, PrimeLending has expanded to over 200 branches across the

United States and is licensed to originate and close loans in all 50 states.

The goal at PrimeLending is to provide unsurpassed quality service and support throughout the entire mortgage process

for every client and referral source. This proactive sales and operational philosophy simpli%es and accelerates the loan

process at all levels. The company’s experienced mortgage professionals are dedicated to making every customer’s

home loan experience a positive and successful one.

PrimeLending takes pride in being recognized as a premier mortgage lender o!ering a wide array of loan products.

Mortgage loan options include %xed and adjustable rate FHA and VA, JUMBO loans, permanent construction %nancing,

re%nancing options, and relocation programs -- just to name a few.

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About PlainsCapital BankTheir Story

Since opening its %rst bank in Lubbock, Texas in 1988, PlainsCapital Corporation has experienced phenomenal growth in

the highly competitive %nancial services industry. Today, with primary locations in Austin, Dallas, Fort Worth, Lubbock,

and San Antonio, PlainsCapital builds solid, long-term relationships with its customers throughout Texas to help them

achieve %nancial success. PlainsCapital’s diverse service o!ering, backed by the strength of PlainsCapital Bank with

more than $5 billion in assets, positions the company as the leading independent %nancial services company in Texas.

Relationship-building is paramount in the company culture and rooted in the company’s Lubbock beginnings—still

championed today by Chairman and CEO Alan B. White. PlainsCapital’s tremendous growth is due, in large part, to White’s

interest in meeting the needs of people. White is passionate about building long-term relationships with employees and

customers, a passion that has evolved into a strategic advantage for the company in terms of low employee turnover

and strong customer loyalty.

PlainsCapital chose the bu!alo as the corporate symbol in 1993 for its power and resilience. Having roamed the North

American Plains more than 12,000 years, the bu!alo symbolizes endurance and longevity and conjures visions of the

American West—freedom, opportunity, and expansion. Its strength, stability, pride and momentum are all characteristics

that embody the PlainsCapital spirit.

Strength and Stability

PrimeLending in recent years has ranked as a top producing mortgage company in major cities such as Austin, San

Antonio, and the Dallas/Fort Worth Metroplex and continues to grow strength in other markets.

PlainsCapital Bank is very well capitalized, signi%cantly exceeding FDIC guidelines for “well-capitalized” banks.

PrimeLending originates mortgage loans in more than 200 o#ces nationwide.

PrimeLending originated $8.7 Billion in loan volume in 2011.

PrimeLending remains on pace for another record year for loan volume in 2012.

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Customer Satisfaction

Survey StatisticsPrimeLending provides a customer satisfaction survey to every one of it’s clients. We pride ourselves on ful%lling every

aspect of the loan process, including the guarentee of our clients being completely satis%ed with the service they have

received.

Place Your Trust In A Winning Team

In these uncertain times, turn to a team you can trust to handle one of your life’s biggest and most important decisions!

Our Top 50 Loan O#cers...average over 10 years experience as trusted mortgage consultants, are each on track to close

over $35 million in mortgages this year, and each will close over 117 home loans.

Our Management Team recently completed a 360 Degree Panoramic Survey – a “How Are We Doing?” Investigation.

Look what our two highest rated categories are:

Demonstrates Honesty and Integrity, and

Shows Compassion and Respect for Others

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Here is what our Customers think about their

PrimeLending Loan O#cer

97.5%

94.0%

95.0%

95.3%

95.7%

94.2%

93.0%

95.7%

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Locations

Ever expanding, PrimeLending locations span from coast to coast. With this national representation, we are well

equipped to provide loans in all 50 states. We have a constant vision on the horizon.

This forward way of thinking spreads into every area of our organization. We look for and develop new products with a

goal to meet every client’s need. New strategic partnerships are formed and developed daily with a win/win approach.

PrimeLending is always excited to welcome another branch into our organization which brings more families into their

homes and makes our family a little bit bigger and better.

We are de%nitely glad and proud to be where we are, but we are thrilled and excited about where we are going.

VT

NH

MA

RI

CT

NJ

DE

MD

DC

WA

OR

ID

MT

WY

UT

NV

CA

AZ

NM

CO

OK

TX

KS

NE

SD

ND

MN

WI

IA

IL

MO

AR

LA

MS

TN

KY

IN

MI

OH

AL

FL

GA

SC

NC

VAWV

PA

NY

ME

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Did you know that PrimeLending currently o!ers more than 400 mortgage products?

Our Float Down OptionPrimeLending also provides an exclusive (oat down option, allowing customers to reduce their interest rates. This

program is a keystone to our people centric culture and service beyond expectations.

FHA Loans

FHA 203k Renovation Loans

VA Loans

USDA Loans

HomePath Financing Programs

Exclusive Float Down Option

Jumbo Loans

Adjustable Rate Mortgages

Extended Locks

Interest Only

Pool Escrows

Escrow Waivers

And more!

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Things to Consider Before BuyingFor many people, buying a home is the single biggest investment they will make in a lifetime. The so-called “right time”

is di!erent for everyone. Before making a decision to buy a home, ask your loan o#cer to help you answer the following

questions.

Can You Qualify for a Mortgage?

Determine your debt-to-income ratio. If a loan program uses a 28/36 qualifying ratio, it means you are allowed to spend

no more than 28% of your gross income on monthly mortgage payments, and no more than 36% on total debt. This

includes debts such as car and school loans, credit cards, child support and alimony. If a person earns $60,000 per year,

their monthly gross income is $5,000. Under the 28/36 guidelines, their maximum monthly mortgage payment should

not exceed $1,400, while their totally monthly debt should not exceed $1,800.

How Much Home Can You A!ord?

Down payments are generally paid in cash, due at closing, and are based on a percentage of the selling price of the

home. You can make a down payment of 20% or more and avoid the cost of mortgage insurance. If you don’t have 20%

to put down on a home, don’t worry. There are many a!ordable mortgage programs available, including loans that

require little down payment. In addition, some veterans, active-duty military personnel and reservists are eligible for

zero-down-payment programs.

How’s Your Credit?

All lenders require a credit report that contains various personal %nancial data, including loan payment information,

bank and credit card accounts and more. If you are interested in obtaining a copy of yours, call your Loan O#cer.

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How Your Credit is DerivedDeveloped in 1956, a Fair Isaac Score is a three digit number ranging from 300-850, according to the following risk

factors:

Payment History (35% of score)

Payment information on many types of accounts

Public record and collection items

Details on late or missed payments

Speci%cally, how late they were, how much was owed, how recently they occurred and how many there are

Amounts Owed (30% of score)

Amount owed on all accounts

Amount owed on di!erent types of accounts

Whether you are showing a balance on certain types of accounts

How much of the total credit line is being used

How much of installment loan accounts is still owed

Length of Credit History (15% of score)

How long your credit accounts have been established, in general

How long speci%c credit accounts have been established

How long it has been since you used certain accounts

New Credit & Inquiries (10% of score)

What kinds of credit accounts you have and how many of each

Total number of accounts you have

Types of Credit (10% of score)

How many new accounts you have

How long it has been since you opened a new account

How many recent requests for credit you have made

Also visit www.my%co.com

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How To Keep Your Credit CleanFollow These Steps

1. Review line-by-line: search for errors, omissions, duplications, “common name” errors.

2. Write out exactly what should be corrected and why - on disputed items, you are

3. allowed to add 100 words or less to your reports.

4. Credit Bureaus have counselors who will help you.

5. Credit Bureaus are obligated by Federal Law to contact all creditors where mistakes were made. These %rms

must respond in writing within 30 days. Failure to do so obligates the Bureau to remove the disputed items from

your records (Fair Credit Reporting Act of 1971).

6. Work out a “deal” with merchants that you owe.

7. Chapter 13 bankruptcies will stay on your record for seven years. Chapter 7 bankruptcies will stay on record for

seven years.

Judgments, Garnishments, or Liens

Liens, garnishments, etc., that are recent may indicate an unstable borrower. (Any judgments, garnishments, or liens

must be paid in full, and a clear credit report supplement or other evidence from the creditor in paid receipt form and

proof that the judgment, garnishment or lien has been cleared must be obtained prior to closing.) IRS tax liens must also

be paid in full as outlined above. A satisfactory letter of explanation from the borrower is required.

Delinquent Child Support

Because of the seriousness of the delinquency/default, which in many states can cause incarceration, the child support

payments must be brought current, and speci%c documentation evidencing the fact must be in the %le-NO EXCEPTIONS!

There must be evidence from the credit-reporting agency that the payments have been brought current. A letter

from the court or the legal authority responsible for collection in the city/state (e.g. district attorney, sheri!, etc.) is

acceptable. A letter from an ex-spouse and copies of personal checks are not acceptable, nor is an agreed upon, but not

yet completed, payment plan.

Free Annual Report - Beware of other sites and o!ers.

www.annualcreditreport.com

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Documents Needed for

Loan ApplicationsAll Borrowers

! Copies of W-2’s for the last two years;

! Copies of paycheck stubs for the last 30 days (most current);

! Copies of checking and saving account statements for last 3 months (all pages);

! Copies of quarterly or semi-annual statements for checking, savings, IRA’s, CD’s, money market fund, stock, 401k,

pro%t sharing, etc.;

! Income Tax Forms;

! Copy of sales contract when rati%ed;

! Employment history for the last two years (address any gaps of employment);

! Residency history over the last two years, with name, phone number, address and account number of Land or

Mortgage Company.

! Rental property copies of leases plus mortgage information.

! Canceled earnest money check when it clears or corresponding bank statement, if applicable;

! Commissioned or bonused income -- if 25% or more of base, must have 2 year tax returns;

! Check for the expense of appraisal & credit report;

! Re%nance Copy of Note, Deed of Trust, Settlement Statement, Survey, and Insurance information;

! Any assets used for down payment, closing cost, and cash reserves must be documented by a paper trail;

! If paid o! mortgage in the last 2 years, need copies of HUD1;

! Copy of drivers license for applicant and co-applicant.

Self-Employed Borrowers

! Copies of most recent 2 years tax returns (with all schedules including k-I’s, if applicable);

! Copy of current pro%t & loss statement and balance sheet;

! Copy of corporate/partnership tax returns for most recent 2 year period if owning 25% or more of company

Copies of W-2’s and/or 1099 forms.

Documents Which May Be Required

! Relocation Agreement if move is %nanced by employer, i.e. buyout agreement plus documentation outlining

company paid closing costs bene%ts;

! Previous bankruptcy, need copies of petition for bankruptcy and discharge, including supporting schedules;

! Divorce Decree if applicable;

! Documentation supporting moneys received from social security/retirement trust income, i.e. copies of direct

deposit bank statements, awards letter, evidence income will continue for at least 3 years.

Documents Needed For FHA/VA Loans

! FHA: Copy of social security card and drivers license for each applicant and co-applicants;

! VA: Original Certi%cate of Eligibility and copy of DD214 Discharge Paper; Name and address of nearest living

relative; and, Child Care information.

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DO’s and DON’Ts Before

Closing A LoanBelow are a few reminders of “do’s and don’ts” before you close on your loan.

bring a cashier’s check made out to the title company/closing attorney for your closing costs and

down payment.

bring driver’s license or valid photo ID to closing

notify us if your employment, salary, or other compensation changes from what is noted on your

loan application.

inform us if your address changes from what appears on your original loan application.

We will complete rental and mortgage veri%cation for all of your residences within the last two

years.

obtain homeowner’s insurance with minimum coverage equal to the amount of your total loan or

the replacement value of the house. Call my o#ce with your agent’s name and phone number at

least 10 days before closing.

keep documentation (or a “paper trail”) on any large deposits into your account. A “paper trail” is

composed of the copies of all paperwork necessary to prove a %nancial transaction: copies of all

checks, deposit slips, loan paperwork, forms to liquidate assets, etc.

notify us if you move funds from one account to another. Provide a “paper trail” on transactions.

make sure you have a clear termite report on the property. If the termite report is not clear, provide

a receipt for treatment that shows the chemicals and the amount used for treatment.

acquire any additional credit lines or make any large purchases on existing credit without %rst

consulting us. For example: Purchasing a car or buying appliances for your new home will change

your debt-to-income ratios.

change jobs without consulting us. A change in compensation may a!ect your ability to qualify.

Borrowers must have a two-year history of bonuses and/or commissions to be counted as income.

Lenders may verify employment on the day of closing as a quality control check.

co-sign with anyone to obtain a line of credit or make a purchase. The payment will show up on your

credit report as an additional debt.

negotiate your contract with an allowance and expect to get money back at closing. An allowance

can be used to pay closing costs and/or prepaids.

DO

DON’T

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Know What To Expect at ClosingClosing on a new home should be an exciting time. But to some, it ends with the unwelcome

surprise of cost increases.

Closing costs are one of the least understood aspects of the home buying process. However, at PrimeLending, we will

take the time to answer questions and walk you through the process. Closing costs tend to vary from lender to lender,

but are generally considered any costs associated with the purchases of a new home. Today, these costs range from 2

and 7 percent of the home’s purchase price and include three basic categories:

Prepaid Expenses

Real estate taxes, (ood insurance, interest from the day of closing to the %rst of the month, homeowner’s insurance,

mortgage insurance and costs to set up an escrow account are considered prepaid expenses. Escrow accounts are

a service provided by the lender through which they will pay annual insurance premiums and various taxes on the

borrower’s behalf. The amount that goes into these accounts is based on the %rst year’s premiums, plus an additional

amount to help build the account for future premiums. Prepaid expenses are di#cult to determine because they

depend on the type of property and the time of the closing. These items will change throughout the life of the loan due

to changes in insurance premium and real estate taxes.

Mortgage Points

A mortgage point is equal to 1 percent of the mortgage loan amount. For example, depending on prevailing rates, a

$100,000 mortgage might be obtained at 7.75 percent with 2 points, or at 8.25 percent with no points. Obtaining the

lower interest rate would cut the mortgage payment by about $35 a month, but would require $2,000 — or 2 points —

up front at closing.

Out-of-Pocket Expenses

Out-of-pocket expenses are fees for appraisals, attorneys, credit reports, deed recording, tax services and other

miscellaneous expenses. These fees are for services usually performed by a third party and directly charged to the

borrower. Most out-of-pocket fees are necessary and legitimate. However, whenever the borrower sees a fee which they

don’t understand, they should ask about it.

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The Loan ProcessPrequali%cationThis step gives you the early notice of being quali%ed for a loan from

PrimeLending, and also increases your potential by being listed as a “cash

buyer” when negotiations begin.

Getting the LoanPrimeLending will research all resources to %nd the best %nancing options

for your needs. Some of the many factors that come into play during this

step are:

What length of time are you planning on having the loan?

What type of interest rate, %xed or adjustable, works for you?

What kinds of costs are involved with the loan and can you a!ord

them?

Should you pay points?

What is the best time to lock your interest rate for the loan?

Applying for the LoanAfter gathering all of the necessary information from you, your loan

application will be complete. Thing to remember to give to PrimeLending

are:

Outstanding Debts

Other Loans

Additional Assets

Yearly Income

Submitting PaperworkAlthough we live in a green age, paperwork is still needed for the mortgage

process. You will submit additional paperwork with the application that

includes:

2 years of W2’s

2 months of bank statements

1 months of paystubs

Finding Your HomeNow you can start to look for your new home. Finding one can be

challenging but with the knowledge of what you qualify for and the support

at PrimeLending, you can focus your search. Things to consider while

negotiating for the home are price, closing costs and date, seller concessions,

and possible the length or term of the loan.

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Appraising the HomeMost mortgage lenders, including PrimeLending, require an appraisal be

done on the home. This way you can know the exact value of the home,

ensuring that you are not overpaying for your potential new home.

Getting Home InsuranceMost mortgage lenders also require home insurance that covers %re and

hazards. If your new home is located within a (ood zone, you will also be

required to have (ood insurance.

Getting Mortgage InsuranceNot all loans do, but some require mortgage insurance if your down

payment on the home is less than 20% of the sales price. The good thing is

that mortgage insurance can be %led as a tax deductible. Ask us for more

details about this.

Loan ProcessingWith all of the %nal information gathered about you and your potential new

home, PrimeLending will package it together and send to our Processing

department for review and approval. The Processor will look over all of

the details to ensure accuracy, match numbers, check to see if the correct

insurance is included, put the loan through our automated underwriting

system, and see if any documents are missing. Once the review is %nalized,

the packet will be send to our underwriting team.

UnderwritingAn Underwriter will look over your loan application from start to %nish.

Once done, they will see if any additional information is required and then

make the decision to approve your loan.

Closing and Funding Your LoanWith the Underwriter’s approval and all of the documents packaged, the

packet is sent to the attorney to be signed, funded by PrimeLending, and

then %led for records.

You, the New HomeownerYou are now the owner of your new home!

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Moving Checklist4 Weeks Prior to Move

! Make a “Move” %le folder.

! Set up a calendar for your move.

! Have a garage sale.

! Contact a local charity to donate any unneeded furniture.

! Gather moving supplies, boxes, tape, rope.

! Call a moving company or make truck rental reservations to move yourself.

! Collect doctors, dentists, medical and school records.

! Collect all %nancial, tax, and employment documentation that may be needed for your loan.

! Contact your insurance company to transfer your policies (life, auto, homeowners).

3 Weeks Prior to Move ! Arrange a cut o! date, and date for new service with your utility companies (telephone, gas, electric, water,

garage, and cable).

! Call friends and relatives to let them know you are moving.

! Canned goods can be costly to move-you may consider donating to a local charity.

! Check out Voter Registration information.

! Send change of address forms to newspapers, magazines, and associations.

! Notify the post o#ce of your move. Fill out a change of address card.

! Review tax deductions on moving expenses.

2 Weeks Prior to Move ! Transfer stocks, bonds, bank accounts, and contents of safety deposit boxes.

! Prepare a list of clothes to take with you, start separating them into suitcases.

! Take the time to check ALL of the previous items, you still have time.

1 Week Prior to Move ! Clean your refrigerator and let it air out at least 24 hours before moving.

! Drain outdoor equipment, water from hoses, propane tanks from barbecue grills, and gas and oil from lawn

mowers. Discard any aerosol, paint, oils, and all (ammable and/or toxic chemicals.

! Label items you need to easily access and place them in a separate room or closet.

! Arrange for pest control before moving into your new home-especially on new construction.

Move Out Day ! Remember that those items packed last will be unloaded %rst.

! Once everything is out of the house, take one last look through the house: cupboards, closets, behind doors,

attics, stairwells, overhead in the garage, outside the home, and any storage sheds.

Move In Day ! Have the house ready before the trucks arrive. Take some time, sit back, and relax.

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Frequently Asked QuestionsWhat is Prequali%cation?A process by which a potential homebuyer quali%es for a home mortgage before

making an o!er on a house. A lending institution reviews documentation to determine

if they can make a loan in the speci%ed amount to the person it is prequalifying.

My real estate agent recommended that I get a commitment

letter. What is a commitment letter, and why should I get

one?The lender gives a commitment letter that states the lender agrees to provide a

mortgage to a homebuyer based upon certain criteria being met. Commitment

letters help you set realistic goals while you’re house-hunting, provide the same

negotiating ability as a cash buyer and enable you to move quickly once the perfect

home is found.

When mortgage lenders refer to “PITI” what are they

referring to?PITI is principle, interest, taxes, and insurance: the components of a monthly mortgage.

When my loan o#cer asks me if I want to waive escrows,

what exactly does this mean?When you waive escrows, you take the responsibility of paying your taxes and

insurance rather than having them included in your monthly mortgage payment.

Waiving escrows may add a small fee to your closing costs. You can only waive escrows

if your loan program allows for this such as conventional loans that have a loan value

of 80% or less on your %rst lien.

What does my mortgage lender mean by points or

origination fee?One point is equal to one percent of the loan amount. Points and origination fees can

be used to buy down the interest rate.

How does the annual percentage rate di!er from the

interest rate?The APR (Annual Percentage Rate) di!ers from the interest rate as it is the %nancing

rate calculated with the %nance charges over the life of the loan. The interest rate

calculates the principle and interest payment for the loan.

How do I know what my interest rate will be?You discuss this with your loan o#cer who advises you of the rates available for your

loan product. You can then “lock” the rate with your loan o#cer.

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Do I need to have a certain amount of money left after I

buy my home?Reserve requirements are program speci%c and will be gone over with you by the

Loan O#cer.

What is the Debt-to-Income Ratio?This is a ratio used by lending institutions to assist in determining whether a person

is quali%ed for a mortgage. Debt-to-Income is the total amount of debt, including

credit cards and other loans, divided by total gross monthly income.

What is the di!erence between a FHA and a VA loan?A FHA loan is a loan guaranteed by the Federal Housing Administration. FHA issues

speci%c guidelines for mortgages. A VA loan is a loan guaranteed by the Veterans

Administration. To obtain a VA loan, the borrower must have served in the Armed

Forces for a speci%c time period.

What is Private Mortgage Insurance (PMI)?PMI is insurance required to help cover the lender expenses should the borrower

default on the loan. It is required on certain loan products and LTVs.

Do I always have to have PMI on my loan?PMI can be eliminated by having a down payment of at least 20%.

Will I have two separate payments if I have a second lien?The second lien is often from a di!erent lender than the %rst lien. Therefore, borrowers

with a second lien will make two separate payments each month - one on the %rst

lien and one on the second lien.

What does my lender mean by “paper trail?”A “paper trail” is composed of the copies of all paperwork necessary to prove a

%nancial transaction: copies of all checks, deposit slips, loan paperwork, forms to

liquidate assets, etc.

Why did I receive a Truth-In-Lending?Truth-In-Lendings are sent to all borrowers after a loan application has been made.

The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms

of a mortgage. The APR that appears on your Truth-In-Lending will be higher than

the interest rate on your Real Estate Lien Note, as it is calculated based on term and

%nance charges.

Will I get a copy of my credit report and appraisal?Yes.

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What inspections are required by the lender?The lender requires an appraisal on most transactions. A clear termite report is

required on many government transactions. If the appraiser recommends repairs or

if repairs are mentioned in the contract, the lender will require that those repairs be

done before closing. The appraiser then will perform a %nal inspection to assure that

the repairs were completed. If the termite report recommends treatment, treatment

is required. We will need a receipt showing the name and amount of chemicals used

and a clear termite inspection.

When will I %nd out what my %nal %gure is for the total

costs to close?The Settlement Statement (HUD-1) is prepared by the title company/closing attorney

according to closing instructions prepared by the lender. This is available 24 hours

prior to closing by contacting your Loan O#cer or Title Company.

Where do I go for closing?Your closing will take place at the title company. The title company name and address

appears in your sales contract. Call the title company to schedule a time for your

closing.

Where do I send my %rst mortgage payment?Refer to your “First Payment Letter” in your closing documents to determine where to

send your %rst mortgage payment. If you receive a statement from your new lender

prior to the due date of your %rst payment, send your payment to the new lender.

Otherwise, send your payment to PrimeLending, a PlainsCapital Company as detailed

in your “First Payment Letter.” Remember to include your loan number on your check.

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Mortgage DictionaryAdjustable-Rate Mortgage (ARM)A mortgage that permits the lender to periodically adjust the interest rate on the

basis of changes in a speci%ed index.

AmortizationThe gradual reduction of the mortgage debt through regularly scheduled payments

over the term of the loan.

Annual Percentage Rate (APR)The measure of the cost of credit stated as a yearly rate; includes such items as the

stated interest rate, plus certain charges.

AppraisalA written estimate or opinion of a property’s value prepared by a quali%ed appraiser.

Balloon MortgageA mortgage in which the borrower’s monthly payments are amortized over a longer

period than the actual term of the mortgage. As a result, at the end of the loan term,

the borrower must pay o! the remaining balance with a single lump sum payment

or re%nance the loan.

CapFor an Adjustable-Rate Mortgage (ARM), a limitation on the amount the interest rate

or mortgage payments may increase or decrease.

Debt-to-Income RatioThe relationship between a borrower’s total monthly debt payments (including

proposed housing expenses) and his or her gross monthly income; this calculation is

used in determining the mortgage amount the borrower is quali%ed for.

DefaultThe failure to make a schedule payment or otherwise comply with the terms of a

mortgage loan or other contract.

Discount Point (or Point) Origination FeeA fee paid by the borrower at closing to reduce the interest rate. A point equals 1

percent of the loan amount.

EquityThe owner’s interest in a property, calculated as the current fair market value of the

property less the amount of existing liens.

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EscrowAn item of value, money, or documents deposited with a third party to be delivered

upon the ful%llment of a condition. For example, the deposit by a borrower with the

lender of funds to pay taxes and insurance premiums when they become due, or the

deposit of funds or documents with an attorney or escrow agent to be disbursed

upon the closing of a sale of real estate.

FHA Insured LoanA loan that is insured by the Federal Housing Administration (FHA) of the U.S.

Department of Housing and Urban Development (HUD).

Lifetime CapFor an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate or

monthly payment can increase or decrease over the life of the loan.

Loan-To-Value Ratio (or LTV Ratio)The relationship between the loan amount and the value of the property (the lower

of appraised value or sales price), expressed as a percentage of the property’s value.

For example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.

MarginFor an adjustable-rate mortgage (ARM), the amount that is added to the index to

determine the interest rate on each adjustment date, as stated in the note.

Mortgage Insurance (MI)Insurance that protects lenders against losses caused by a borrower’s default on a

mortgage loan. MI typically is required if the borrower’s down payment is less than

20% of the purchase price.

Paper TrailSee #14 FAQ. Depending on the lender, this may be required by the lender.

PITIAn acronym for the four primary components of a monthly mortgage payment:

principle, interest, taxes, and insurance (PITI). Point -- See Discount Point

Prepayment PenaltyA fee that a borrower may be required to pay to the lender, in the early years of a

mortgage loan, for repaying the loan in full or prepaying a substantial amount to

reduce the unpaid principle balance.

21A LOOK INSIDE



Prequali%cationA preliminary assessment by a lender of the amount it will lend to a potential

homebuyer. The process of determining how much money a prospective home

buyer may be eligible to borrow before he or she applies for a loan.

PrincipalThe amount of money owed on a loan, excluding interest. Also, the part of the

monthly payment that reduces the remaining balance of a mortgage.

Second MortgageA mortgage that has a lien position subordinate to the %rst mortgage.

Truth-In-Lending ActA federal law intended to promote the informed use of consumer credit by requiring

disclosure about its terms and costs. Creditors are required to disclose the cost of

credit as a dollar amount (the %nance charge) and as an annual percentage rate (APR).

VA (or U.S. Department of Veterans A!airs)A federal government agency that provides bene%ts to veterans and their dependents,

including health care, educational assistance, %nancial assistance, and guaranteed

home loans.

22A LOOK INSIDE


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Frank J. FuentesSenior Mortgage Loan Officer

760.797.5607

[email protected]

http://ffuentes.primelending.com

NMLS#: 49963

Address: 74-199 El Paseo Drive, Suite 202, Palm Desert, CA 92260

primelending, a look inside 2012

Economy & Finance