|
|
|
 |
Select letter of inquiry:
A B C
D E F
G H I
J K L
M N O
P Q
R S T
U V W
X Y
Z
- 7/23 and 5/25 Mortgages
- Mortgages with a onetime rate
adjustment after seven years and five years respectively.
- 3/1, 5/1, 7/1 and 10/1 ARMs
- Adjustable-rate mortgages in which
rate is fixed for three-year, five-year, seven-year and 10-year
periods, respectively, but may adjust annually after that.
-
Acceleration
- The right of the mortgagee (lender)
to demand the immediate repayment of the mortgage loan balance upon
the default of the mortgagor (borrower), or by using the right vested
in the Due-on-Sale Clause.
- Adjustable rate mortgage (ARM)
- Is a mortgage in which the interest
rate is adjusted periodically based on a preselected index. Also
sometimes known as the re negotiable rate mortgage, the variable rate
mortgage or the Canadian rollover mortgage.
- Adjustment interval
- On an adjustable rate mortgage, the
time between changes in the interest rate and/or monthly payment,
typically one, three or five years, depending on the index.
- Amortization
- Means loan payment by equal
periodic payment calculated to pay off the debt at the end of a fixed
period, including accrued interest on the outstanding balance.
- Annual percentage rate (A.P.R.)
- Is a interest rate reflecting the
cost of a mortgage as a yearly rate. This rate is likely to be higher
than the stated note rate or advertised rate on the mortgage, because
it takes into account point and other credit cost. The APR allows home
buyers to compare different types of mortgages based on the annual
cost for each loan.
- Appraisal
- An estimate of the value of
property, made by a qualified professional called an "appraiser".
- Assessment
- A local tax levied against a
property for a specific purpose, such as a sewer or street lights.
- Assumption
- The agreement between buyer and
seller where the buyer takes over the payments on an existing mortgage
from the seller. Assuming a loan can usually save the buyer money
since this is an existing mortgage debt, unlike a new mortgage where
closing cost and new, probably higher, market-rate interest charges
will apply.
-
[Top]
-
- Balloon
(payment) mortgage
- Usually a short-term fixed-rate
loan which involves small payments for a certain period of time and
one large payment for the remaining amount of the principal at a time
specified in the contract.
- Blanket Mortgage
- A mortgage covering at least two
pieces of real estate as security for the same mortgage.
- Borrower (Mortgagor)
- One who applies for and receives a
loan in the form of a mortgage with the intention of repaying the loan
in full
- Broker
- An individual in the business of
assisting in arranging funding or negotiating contracts for a client
buy who does not loan the money himself. Brokers usually charge a fee
or receive a commission for their services.
- Buy-down
- When the lender and/or the home
builder subsidized the mortgage by lowering the interest rate during
the first few years of the loan. While the payments are initially low,
they will increase when the subsidy expires.
-
[Top]
-
- Cash Flow
- The amount of cash derived over a
certain period of time from an income-producing property. The cash
flow should be large enough to pay the expenses of the income
producing property (mortgage payment, maintenance, utilities, etc.)
- Caps (interest)
- Consumer safeguards which limit the
amount the interest rate on an adjustable rate mortgage may change per
year and/or the life of the loan.
- Caps (payment)
- Consumer safeguards which limit the
amount monthly payments on an adjustable rate mortgage may change.
- Certificate of Eligibility ,
- The document given to qualified
veterans which entitles them to VA guaranteed loans for homes,
business, and mobile homes. certificates of eligibility may be
obtained by sending DD-214 (Separation Paper) to the local VA office
with VA form 1880 (request for Certificate of Eligibility)
- Certificate of Reasonable Value
(CRV)
- An appraisal issued by the Veterans
Administration showing the property's current market value
- Certificate of veteran status
- The document given to veterans or
reservists who have served 90 days of continuous active duty
(including training time) It may be obtained by sending DD 214 to the
local VA office with form 26-8261a (request for certificate of veteran
status. This document enables veterans to obtain lower down payments
on certain FHA insured loans).
- Closing
- The meeting between the buyer,
seller and lender or their agents where the property and funds legally
change hands. Also called settlement. closing costs usually include an
origination fee, discount points, appraisal fee, title search and
insurance, survey, taxes, deed recording fee, credit report charge and
other costs assessed at settlement. The cost of closing usually are
about 3 percent to 6 percent of the mortgage amount.
- COFI
- Adjustable-rate mortgage with rate
that adjusts based on a cost-of-funds index, often the 11th District
Cost of Funds.
- Construction loan
- A short term interim loan to pay
for the construction of buildings or homes. These are usually designed
to provide periodic disbursements to the builder as he progresses.
- Contract sale or deed:
- A contract between purchaser and a
seller of real estate to convey title after certain conditions have
been met. It is a form of installment sale.
- Conventional loan
- A mortgage not insured by FHA or
guaranteed by the VA.
- Credit Report
- A report documenting the credit
history and current status of a borrower's credit standing.
-
[Top]
-
- Debt-to-Income
Ratio
- The ratio, expressed as a
percentage, which results when a borrower's monthly payment obligation
on long-term debts is divided by his or her gross monthly income. See
housing expenses-to-income ratio.
- Deed of trust
- In many states, this document is
used in place of a mortgage to secure the payment of a note.
- Default
- Failure to meet legal obligations
in a contract, specifically, failure to make the monthly payments on a
mortgage.
- Deferred interest
- When a mortgage is written with a
monthly payment that is less than required to satisfy the note rate,
the unpaid interest is deferred by adding it to the loan balance.Seenegative
amortization
- Delinquency
- Failure to make payments on time.
this can lead to foreclosure.
- Department of Veterans Affairs
(VA)
- An independent agency of the
federal government which guarantees long-term, low-or no-down payment
mortgages to eligible veterans.
- Discount Point
- see point
- Down Payment
- Money paid to make up the
difference between the purchase price and the mortgage amount.
- Due-on-Sale-Clause
- A provision in a mortgage or deed
of trust that allows the lender to demand immediate payment of the
balance of the mortgage if the mortgage holder sells the home.
-
[Top]
-
- Earnest
Money
- Money given by a buyer to a seller
as part of the purchase price to bind a transaction or assure payment.
- Entitlement
- The VA home loan benefit is called
entitlement. Entitlement for a VA guaranteed home loan. This is also
known as eligibility.
- Equal Credit Opportunity Act
(ECOA)
- Is a federal law that requires
lenders and other creditors to make credit equally available without
discrimination based on race, color, religion, national origin, age,
sex, marital status or receipt of income from public assistance
programs.
- Equity
- The difference between the fair
market value and current indebtedness, also referred to as the owner's
interest. The value an owner has in real estate over and above the
obligation against the property.
- Escrow
-
[Top]
-
- An account held by the lender into
which the home buyer pays money for tax or insurance payments. Also
earnest deposits held pending loan closing.
- Fannie Mae
- seeFederal National Mortgage
Association.
- Farmers Home Administration
(FmHA)
- provides financing to farmers and
other qualified borrowers who are unable to obtain loans elsewhere.
- Federal Home Loan Bank Board
(FHLBB)
- The former name for the regulatory
and supervisory agency for federally chartered savings institutions.
Agency is now called the Office of Thrift Supervision
- Federal Home Loan Mortgage
Corporation(FHLMC) also called "Freddie Mac",
- is a quasi-governmental agency that
purchases conventional mortgage from insured depository institutions
and HUD-approved mortgage bankers.
- Federal Housing Administration
(FHA)
- A division of the Department of
Housing and Urban Development. Its main activity is the insuring of
residential mortgage loans made by private lenders. FHA also sets
standards for underwriting mortgages.
- Federal National Mortgage
Association (FNMA) also know as "Fannie Mae"
- A tax-paying corporation created by
Congress that purchases and sells conventional residential mortgages
as well as those insured by FHA or guaranteed by VA. This institution,
which provides funds for one in seven mortgages, makes mortgage money
more available and more affordable.
- FHA loan
- a loan insured by the Federal
Housing Administration open to all qualified home purchasers. While
there are limits to the size of FHA loans ($155,250 as of 1/1/96),
they are generous enough to handle moderately-priced homes almost
anywhere in the country.
- FHA mortgage insurance
- Requires a fee (up to 2.25 percent
of the loan amount) paid at closing to insure the loan with FHA. In
addition, FHA mortgage insurance requires an annual fee of up to 0.5
percent of the current loan amount, paid in monthly installments. The
lower the down payment, the more years the fee must be paid.
- FHLMC
- The Federal Home Loan Mortgage
Corporation provides a secondary market for savings and loans by
purchasing their conventional loans. Also known as "Freddie Mac."
- Firm Commitment
- A promise by FHA to insure a
mortgage loan for a specified property and borrower. A promise from a
lender to make a mortgage loan.
- Fixed Rate Mortgage
- The mortgage interest rate will
remain the same on these mortgages throughout the term of the mortgage
for the original borrower.
- FNMA
- The Federal National Mortgage
Association is a secondary mortgage institution which is the largest
single holder of home mortgages in the United States. FNMA buys VA,
FHA, and conventional mortgages from primary lenders. Also known as
"Fannie Mae."
- Foreclosure
- A legal process by which the lender
or the seller forces a sale of a mortgaged property because the
borrower has not met the terms of the mortgage. Also known as a
repossession of property.
- Freddie Mac
-
[Top]
-
- see Federal Home Loan Mortgage
Corporation
- Ginnie Mae
- see Government National Mortgage
Association.
- Government National Mortgage
Association (GNMA)
- Graduated Payment Mortgage (GPM)
- A type of flexible-payment mortgage
where the payments increase for a specified period of time and then
level off. This type of mortgage has negative amortization built into
it.
- Guaranty
-
[Top]
-
- Apromise by one party to pay a debt
or perform an obligation contracted by another if the original party
fails to pay or perform according to a contract
- Hazard
Insurance
- A form of insurance in which the
insurance company protects the insured from specified losses, such as
fire, windstorm and the like.
- Housing Expenses-to-Income Ratio
- The ratio, expressed as a
percentage, which results when a borrower's housing expenses are
divided by his/her gross monthly income. See debt-to-income ratio.
-
[Top]
-
- Impound
- That portion of a borrower's
monthly payments held by the lender or servicer to pay for taxes,
hazard insurance, mortgage insurance, lease payments, and other items
as they become due. Also known as reserves.
- Index
- A published interest rate against
which lenders measure the difference between the current interest rate
on an adjustable rate mortgage and that earned by other investments
(such as one- three-, and five-year U.S. Treasury security yields, the
monthly average interest rate on loans closed by savings and loan
institutions, and the monthly average costs-of-funds incurred by
savings and loans), which is then used to adjust the interest rate on
an adjustable mortgage up or down.
- Indexed rate
- The sum of the published index plus
the margin. For example if the index were 9% and the margin 2.75%, the
indexed rate would be 11.75%. Often, lenders charge less than the
indexed rate the first year of an adjustable-rate mortgage.
- Interim Financing
- A construction loan made during
completion of a building or a project. A permanent loan usually
replaces this loan after completion.
- Investor
- A money source for a lender.
-
[Top]
-
- Jumbo Loan
- a loan which is larger (more than
$207,000 as of 1/1/96) than the limits set by the Federal National
Mortgage Association and the Federal Home Loan Mortgage
Corporation. Because jumbo loans cannot be funded by thes
-
[Top]
-
e two agencies, they usually carry a
higher interest rate.
- Lien
- A claim upon a piece of property
for the payment or satisfaction of a debt or obligation.
- Loan-to-Value Ratio
- The relationship between the amount
of the mortgage loan and the appraised value of the property expressed
as a percentage.
- Lock
- Lender's guarantee that the
mortgage rate quoted will be good for a specific number of days from
day of application.
-
[Top]
-
- Margin
- The amount a lender adds to the
index on an adjustable rate mortgage to establish the adjusted
interest rate.
- Market Value
- The highest price that a buyer
would pay and the lowest price a seller would accept on a property.
Market value may be different from the price a property could actually
be sold for at a given time.
- MIP (Mortgage Insurance Premium)
- It is insurance from FHA to the
lender against incurring a loss on account of the borrower's default.
- Mortgage Insurance
- Money paid to insure the mortgage
when the down payment is less than 20 percent. See private mortgage
insurance, FHA mortgage insurance.
- Mortgagee
- The lender
- Mortgagor
- The borrower or homeowner
-
[Top]
-
- Negative
Amortization
- Occurs when your monthly payments
are not large enough to pay all the interest due on the loan. This
unpaid interest is added to the unpaid balance of the loan. The danger
of negative amortization is that the home buyer ends up owing more
than the original amount of the loan.
- Net Effective Income
- The borrower's gross income minus
federal income tax.
- Non Assumption Clause
- A statement in a mortgage contract
forbidding the assumption of the mortgage without the prior approval
of the lender. Note: The signed obligation to pay a debt, as a
mortgage note.
-
[Top]
-
- Office of
Thrift Supervision (OTS)
- The regulatory and supervisory
agency for federally chartered savings institutions. Formally known as
Federal Home Loan Bank Board.
- One-year adjustable
- Mortgage whose annual rate changes
yearly. The rate is usually based on movements of a published index
plus a specified margin, chosen by the lender.
- Origination Fee
- The fee charged by a lender to
prepare loan documents, make credit checks, inspect and sometimes
appraise a property; usually computed as a percentage of the face
value of the loan.
-
[Top]
-
- Permanent
Loan
- A long term mortgage, usually ten
years or more. Also called an "end loan."
- PITI
- Principal, Interest, Taxes and
Insurance. Also called monthly housing expense.
- Pledged account Mortgage
(PAM):
- Money is placed in a pledged
savings account and this fund plus earned interest is gradually used
to reduce mortgage payments.
- Points (loan discount
points)
- Prepaid interest assessed at
closing by the lender. Each point is equal to 1 percent of the loan
amount (e.g., two points on a $100,000 mortgage would cost $2,000).
- Power of Attorney
- A legal document authorizing one
person to act on behalf of another.
- Prepaid Expenses
- Necessary to create an escrow
account or to adjust the seller's existing escrow account. Can include
taxes, hazard insurance, private mortgage insurance and special
assessments.
- Prepayment
- A privilege in a mortgage
permitting the borrower to make payments in advance of their due date.
- Prepayment Penalty
- Money charged for an early
repayment of debt. Prepayment penalties are allowed in some form (but
not necessarily imposed) in many states.
- Primary Mortgage Market
- Lenders making mortgage loans
directly to borrower's such as savings and loan associations,
commercial banks, and mortgage companies. These lenders sometimes sell
their mortgages into the secondary mortgage markets such as to FNMA
or GNMA, etc.
- Principal
- The amount of debt, not counting
interest, left on a loan.
- Private Mortgage Insurance (PMI)
- In the event that you do not have a
20 percent down payment, lenders will allow a smaller down payment -
as low as 5 percent in some cases. With the smaller down payment
loans, however, borrowers are usually required to carry private
mortgage insurance. Private mortgage insurance will usually require an
initial premium payment and may require an additional monthly fee
depending on you loan's structure.
-
[Top]
-
- Realtor
- A real estate broker or an
associate holding active membership in a local real estate board
affiliated with the National Association of Realtors.
- Recision
- The cancellation of a contract.
With respect to mortgage refinancing, the law that gives the homeowner
three days to cancel a contract in some cases once it is signed if the
transaction uses equity in the home as security.
- Recording Fees
- Money paid to the lender for
recording a home sale with the local authorities, thereby making it
part of the public records.
- Refinance
- Obtaining a new mortgage loan on a
property already owned. Often to replace existing loans on the
property.
- Renegotiable Rate Mortgage
- a loan in which the interest rate
is adjusted periodically. See adjustable rate mortgage.
- RESPA
- short for the Real Estate
Settlement Procedures Act. RESPA is a federal law that allows
consumers to review information on known or estimated settlement cost
once after application and once prior to or at a settlement. The law
requires lenders to furnish the information after application only.
- Reverse Annuity Mortgage
(RAM)
- a form of mortgage in which the
lender makes periodic payments to the borrower using the borrower's
equity in the home as Satisfaction of Mortgage: The document issued by
the mortgagee when the mortgage loan is paid in full. Also called a
"release of mortgage."
-
[Top]
-
- Second
Mortgage
- A mortgage made subsequent to
another mortgage and subordinate to the first one.
- Secondary Mortgage Market
- The place where primary mortgage
lenders sell the mortgages they make to obtain more funds to originate
more new loans. It provides liquidity for the lenders security.
- Servicing
- all the steps and operations a
lender performs to keep a loan in good standing, such as collection of
payments, payment of taxes, insurance, property inspections and the
like.
- Settlement/Settlement Costs
- see closing/closing costs
- Shared Appreciation Mortgage
(SAM)
- a mortgage in which a borrower
receives a below-market interest rate in return for which the lender
(or another investor such as a family member or other partner)
receives a portion of the future appreciation in the value of the
property. May also apply to mortgage where the borrowers shares the
monthly principal and interest payments with another party in exchange
for part of the appreciation.
- Simple Interest
- Interest which is computed only on
the principle balance.
- Survey
- A measurement of land, prepared by
a registered land surveyor, showing the location of the land with
reference to now points, its dimensions, and the location and
dimensions of any buildings.
- Sweat Equity
- Equity created by a purchaser
performing work on a property being purchased.
-
[Top]
-
- Title
- a document that gives evidence of
an individual's ownership of property.
- Title Insurance
- a policy, usually issued by a title
insurance company, which insures a home buyer against errors in the
title search. The cost of the policy is usually a function of the
value of the property, and is often borne by the purchaser and/or
seller. Policies are also available to protect the lender's interests.
- Title Search
- an examination of municipal records
to determine the legal ownership of property. Usually is performed by
a title company.
- Truth-In-Lending
- a federal law requiring disclosure
of the Annual Percentage Rate to home buyers shortly after they apply
for the loan. Also known as Regulation Z.
- Two-Step Mortgage
- a mortgage in which the borrower
receives a below-market interest rate for a specified number of years
(most often seven or 10), and then receives a new interest rate
adjusted (within certain limits) to market conditions at that time.
the lender sometimes has the option to call the loan due with 30 days
notice at the end of seven or 10 years. also called "Super Seven" or
"Premier" mortgage.
-
[Top]
-
-
Underwriting
- the decision whether to make a loan
to a potential home buyer based on credit, employment, assets, and
other factors and the matching of this risk to an appropriate rate and
term or loan amount.
- USURY
- Interest charged in excess of the
legal rate established by law.
-
[Top]
-
- VA Loan
- a long-term, low-or no-down payment
loan guaranteed by the Department of Veterans Affairs. Restricted to
individuals qualified by military service or other entitlements.
- VA Mortgage Funding Fee
- a premium of up to 1-7/8 percent
(depending on the size of the down payment) paid on a VA-backed loan.
On a $75,000 fixed-rate mortgage with no down payment, this would
amount to $1,406 either paid at closing or added to the amount
financed.
- Variable Rate Mortgage (VRM)
- see adjustable rate mortgage
- Verification of Deposit (VOD)
- a document signed by the borrower's
financial institution verifying the status and balance of his/her
financial accounts.
- Verification of Employment (VOE)
- a document signed by the borrower's
employer verifying his/her position and salary.
-
[Top]
-
- Warehouse
Fee
- Many mortgage firms must borrow
funds on a short term basis in order to originate loans which are to
be sold later in the secondary mortgage market (or to investors). When
the prime rate of interest is higher on short term loans than on
mortgage loans, the mortgage firm has an economic loss which is offset
by charging a warehouse fee.
- Wraparound mortgage
- results when an existing assumable
loan is combined with a new loan, resulting in an interest rate
somewhere between the old rate and the current market rate. The
payments are made to a second lender or the previous homeowner, who
then forwards the payments to the first lender after taking the
additional amount off the top.
|
|
