As with any walk of life, there is lingo that is specific to the mortgage industry. When speaking with a mortgage professional you may hear terms like LTV, DTI, or VOE and wonder what in the world they are talking about. Educating yourself on the key terms will help ease the mortgage process. Below you will find several key terms that are commonly utilized throughout the industry and what they mean.
- LTV (Loan-to-value) –This is a ratio that reflects the amount of your mortgage as a percentage of the value of the property. This is an important ratio to consider when discussing loan types and mortgage insurance.
- DTI (Debt-to-income) – This ratio shows your monthly debts as a percentage of your monthly income. There are two different calculation for DTI, back-end and front-end. They are both critical components in determining how large of a mortgage you will qualify for.
- VOE (Verification of employment) – Lenders are required to get a verification of employment from your employer. The paperwork must be submitted to the HR department supervising manager.
- COE (Close of escrow) – This is the date that your contract shows the loan is expected to close and you can assume ownership of the property. Numerous factors effect the actual day of closing, but this is the “goal” deadline.
- Docs –Docs stands for documents, and may be the most commonly used term in the industry.
