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The mortgage process can be a little confusing if you aren’t familiar with the terms used in the process. To help you out, here is a list of terms with corresponding mortgage definitions.

Broker: An independent mortgage professional that oversees the entire home loan process.

Lender: The business entity providing and funding the home loan.

Processor: Prepares your loan for underwriting. The processor makes certain your income is properly documented and verified, the appraisal is being performed, and title and escrow are opened.

Escrow: Works with title to certify payoff demands for all existing liens. Escrow is an independent group which disburses monies to all parties in the loan transaction and ensures full payment.

Title: Ensures both the borrower and the lender have a clean title on the home, guaranteeing to both parties there are no mistaken liens and that all existing liens on the home are scheduled to be paid and removed.

Underwriters: Make the decision to approve or deny the loan. Hired by the lender, their job is to review all aspects of the loan based on the lender’s approval guidelines.

Automated Underwriting: A computer generated loan approval. This automated process only takes minutes and is the quickest path to approval.

ARM: Adjustable Rate Mortgage. An ARM has a fixed rate for a specified amount of time. After the initial term, the loan becomes adjustable and the rate can fluctuate depending on market conditions. ARM payments are initially lower than fixed rate payments. This is an excellent option for people with damaged credit, those who plan to sell their homes short term or who simply want to save money on their monthly payment.

DTI: Debt to Income Ratio or your total monthly debt in relation to your gross monthly income. For example if you have $2,500 in total monthly debts with a total income of $5,000, your DTI is 50%. The higher the DTI, the higher the lender’s risk and 50% is typically the maximum allowable DTI.

Equity — The amount of vested or owned interest in your property. Subtract the total balance owed on the property from the appraised value to determine your equity.

FICO Scores: Most lenders use the FICO scoring system to qualify borrowers. The FICO score is a number assigned from each of the three main credit repositories (Experian, Trans-Union, and Equifax). This number is calculated based on your complete credit profile and takes into account late payments, balances on trade lines, inquiries for additional credit, judgments, bankruptcies, total debt, length of credit history, and more. The lower the FICO score, the higher the lender’s risk.

LTV: Loan to Value Ratio. For example: a loan amount of $75,000 on a home valued at $100,000 equals an LTV of 75%. Your equity would equal $25,000, or 25%. The higher the LTV ratio, the higher the lender’s risk.

Stated Income: Your own statement of income on the application versus income that can be independently verified. Use of stated income is an excellent option for self-employed individuals or those with hard to prove income.

Getting a mortgage for a home purchase can be stressful. If you understand the lingo being used, you will find it less so.

According to the NAMB (National Association of Mortgage Brokers), two out of three Americans work with a mortgage broker to purchase a home because of the brokers expertise and wide selection of loan products and lenders. However, with so many so called experts out there, how does one separate the wheat from the chaff? How do you know if a broker is honest? And how do you know they’re an expert or not?

The NAMB says that over 70 percent of brokers are legitimate, that is they have safeguards and policies in place to make sure that they stay on the straight and narrow. So what about the other 30 percent? Well, the whole 30 percent isnt bad, but just as in any classroom, youre going to have those at the top, some in the middle, a few at the bottom, and others who simply dont show for class. Obviously, those at the bottom and the no shows would not be your first choice if you were going into surgery and they were holding the scapel, nor should they be handling your loan when you purchase a home or refinance.

Because of the surge in numbers of mortgage brokers in the past few years, there are plenty of incompetent and dishonest brokers out there. In order to avoid the 30 percentile, I offer the following tips to help you find a mortgage broker that is not only an expert but honest and reputable as well:

1.Dont believe everything you hear. Asking friends or family to recommend a mortgage professional is usually the first place people start. However, how do they know the broker is reputable and trustworthy? Check with your state regulatory offices and licensing bureau once you have some referrals. Better to be safe than sorry.

2.Use an NAMB certified mortgage broker. Brokers certified by the NAMB practice the highest ethical and professional standards in the industry. There is a Find a Broker link on the NAMBs website at www.namb.org.

3.Use an Upfront Mortgage Broker (UMB). These brokers disclose their fees to customers in writing in advance at the customers request. They also disclose the wholesale prices they receive from lenders. For a list of UMBs visit www.mtgprofessor.com.

4.Honesty is the best policy. If a mortgage broker suggests that you lie on your loan application in any way, he/she is most likely in the 30 percentile. Walk away.

5.They need to show you the money. If a mortgage broker doesnt disclose your closing costs in three business days, its probably best to take your business elsewhere.

6.If youre not bleeding, they shouldnt be applying pressure. A mortgage broker who pressures you into anything you are not comfortable with probably failed ethics. No reputable broker will pressure you into anything you dont feel comfortable with.

7.There are no stupid questions. Does the mortgage broker answer all your questions to your satisfaction? Are his/her answers straightforward, honest, and respectful?

8.Do you have a reservation? If you feel comfortable with whom youre working with and feel like they have answered all your questions and put all your reservations to ease, youve probably found a good mortgage broker.