You are buying a house. Well imagine this … you are sitting at the desk of a loan officer and they tell you that if you want to buy a house your LTV must be 96.50% and your D / P must be 3.5%, your Rate is 5.00% and its APR is 5.752% w / PT’s of 1.00% and a Loan origination fee of 1.00%. With all that, your PITIMI (piti-me) payment will be 1,100.00 per month.

Do you understand anything that was just said? Maybe some of you do, but for most of us who are not into loans, this can be a huge confusion of acronyms and abbreviations that don’t make any sense. So here it is … the low point of the 5 most used loan terms.

1. PITIMI Payment (piti-me) – This is your combined total mortgage payment. Pprincipal, Iinterest, Taxles Insafe, and SUBWAYortgage Iinsurance

2. MI – Mortgage Insurance – Contrary to popular belief, this is not your homeowners insurance. Mortgage insurance is an insurance payment that you pay for your lender. It allows banks to make loans to people with a lower amount of down payment and the customer pays the insurance to cover the risk of the loan. If someone defaults on their loan and the lender has to sell the property, the insurance will cover any gap in the amount collected.

3. H / O – Homeowners Insurance. This is your insurance policy. The insurance you have chosen to cover your home against disasters, fire and theft so that you can get your money back if something happens to your property or possessions inside.

4. LTV – Loan-To-Value. This is the percentage that is calculated from the amount of your loan to the value of the home. IF your house is worth 100K and your loan is 80K, then your LTV is 80%

5. APR – Annual Percentage Rate: This is not the rate on which your payment is calculated. Your mortgage payment will always be calculated based on the interest rate. Your APR is what banks use to represent the true cost of your loan. If you have a lot of fees associated with your loan, your APR will generally be much higher than the interest rate, if you don’t have to pay a lot of fees, then your APR will be closer to the interest rate on your loan. When comparing loan products, it is best to compare their APR rather than interest rate.