A person is considered self employed in the mortgage industry if they own more than 25% of the company they work for or they are paid as an independent contractor. A self employed borrower’s income is calculated by taking a two year average of the borrowers’ net income plus depreciation if they own the business
An amount that provides a limit to the increase in an adjustable rate mortgage interest rate during a calendar year. An adjustable rate mortgage that has a present rate of 5.50% and contains an annual rate cap of 6.50%, cannot exceed that rate regardless of the change to the underlying index the loan is based
A charge by the mortgage lender required to assure that all tax billings are paid on the right tax parcel. FHA and VA do not allow the borrower to pay the tax service fee on mortgage loans.