 |
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| # |
|
11th
District Cost of Funds -
A monthly cost-of-funds index (COFI)
reflecting the weighted-average
interest rate paid by 11th Federal
Home Loan Bank District savings
institutions for savings and
checking accounts. The 11th district
covers Arizona, California and
Nevada. The index is published on
the last day of the month and
reflects the cost of funds for the
prior month. |
|
|
| A |
|
Acceleration
clause -
The clause in a mortgage or trust
deed that stipulates the entire debt
is due immediately if the mortgagee
defaults under the terms of the
contract. |
|
Acquisition
cost -
Under an FHA loan, the purchase
price or appraised value of the
property plus the estimated closing
costs. |
|
Adjustable
Rate Mortgage (ARM) -
A mortgage in which the interest
rate is adjusted periodically based
on an index. Also called a variable
rate mortgage. |
|
Adjustment_date
-
The date the interest rate changes
on an ARM (adjustable rate
mortgage). |
|
Adjustment
Interval -
For an adjustable rate mortgage, the
time between changes in the interest
rate charged. The most common
adjustment intervals are one, three
or five years. |
|
Adjusted
book basis -
The purchase price of a property
plus any capital improvements less
accrued depreciation, if any, to the
date of the sale. |
|
Amortization
-
Literally to "kill off"
(root: mort) the outstanding balance
of a loan by making equal payments
on a regular schedule (usually
monthly). The payments are
structured so that the borrower pays
both interest and principal
with each equal payment. |
|
Annual
Percentage Rate (APR) -
A figure that states the total
yearly cost of a mortgage as
expressed by the actual rate of
interest paid. The APR includes the
base interest rate, points, and any
other add-on loan fees and costs. As
a result the APR is invariably
higher for the rate of interest that
the lender quotes for the mortgage
but gives a more accurate picture of
the likely cost of the loan. Keep in
mind, however, that most mortgages
are not held for their full 15 or 30
year terms, so the effective annual
percentage rate is higher than the
quoted APR because the points and
loan fees are spread out over fewer
years. |
|
Annuity
-
A series of income payments of
receipts over a period of years. |
|
Application
-
A mortgage application
requires borrowers to submit
information regarding their income,
savings, assets, debts, and more. |
|
Application
Fee -
The fee charged by the lender to the
borrower for applying for a loan.
Payment of this fee does not
guarantee that a loan will be
approved. Some lenders may apply the
cost of the application fee to
certain closing costs. |
|
Appraisal
-
The determination of property value
based on recent sales information of
similar properties. |
|
Assessment
-
Determining a property's value for
the purpose of taxation. |
|
Assumable
Loan -
These loans may be passed on from a
seller of a home to the buyer. The
buyer "assumes" all
outstanding payments. |
|
Assumption
-
Buying property and assuming the
responsibility of the exiting
mortgage. |
|
Appreciation
-
Increases in property value due to
fluctuations in the market,
inflation, et al. |
|
Asset
-
Valuable items, encumbered or not,
owned by a person, corporation, or
entity. |
|
Assumable
Mortgage -
A mortgage that provides for a buyer
to "assume" all
outstanding payments when a home is
sold. The buyer usually must meet
qualification standards to assume a
loan. |
|
|
| B |
|
Balloon
Mortgage -
Behaves like a fixed-rate mortgage
for a set number of years (usually
five or seven) and then must be paid
off in full in a single
"balloon" payment. Balloon
loans are popular with those
expecting to sell or refinance their
property within a definite period of
time. |
|
Balloon
Payment -
The final lump sum that is paid at
the end of the balloon mortgage. |
|
Bankruptcy
-
A tactic that individuals use to
relieve themselves of debts and/or
liabilities when they are no longer
able to repay. The most common form
of individual bankruptcy is a
Chapter 7, when an individual frees
himself from most of his/her debts.
Borrowers who have undergone
bankruptcy usually cannot qualify
for "A" paper loans until
after two years after declaration
and a re-establishment of credit. |
|
Best
Faith Estimate -
An estimate of the total costs for
securing a real estate loan, that is
given to borrowers prior to closing. |
|
Bill
of Sale -
A written document that transfers a
title to personal property. |
|
Biweekly
Mortgage -
Mortgage loan payments that requires
a payment twice monthly, yielding
thirteen payments per year instead
of twelve. This significantly
reduces the time a principal is paid
off. |
|
Blanket
Mortgage -
A mortgage secured by the pledging
of more than one property or
collateral. |
|
Book
Value -
Acquisition costs less any accrued
depreciation. |
|
Broker
-
An individual in the business of
assisting in arranging funding or
negotiating contracts for a client
but who does not loan the money
himself. Brokers usually charge a
fee or receive a commission for
their services. |
|
Bridge
Loan -
An equity loan secured to solve
short-term financing problem. |
|
Budget
Mortgage -
A mortgage that includes a portion
for taxes and insurance as well as
principal and interest. |
|
Buydown
-
Allows loans to be made at
less-than-market interest rates by
paying front-end discounts. The
interest rate is brought down for a
temporary period, usually from one
to three years. In oder to acquire
this discount, a lump sum is paid
and held in an account used to
supplement the borrower's monthly
payment. After the discount period,
the payment is calculated as the
note rate. |
|
|
| C |
|
Callable
Debt -
A debt security in where the issuer
has the right to redeem the security
at a specified price on or after a
specified date, but prior to its
stated final maturity date. |
|
Caps
-
A set percentage amount by which an
adjustable rate mortgage may adjust
each adjustment period. For
adjustable loans, caps are usually
quoted as two numbers as in 2/6. The
first number indicates how much a
loan may adjust at each adjustment
period while the second number
indicates how much a loan may adjust
over its lifetime.
Loans
like the 3/1 and 5/1 adjustable
which have an initial fixed period
are quoted with 3 numbers as in
3/2/6 which would mean that the
first adjustment may be as much as
3%, subsequent adjustments are
capped at 2% each, and the lifetime
cap is 6%.
Two-Step
loans are quoted with a single cap,
which is the amount by which the
loan may adjust at its single
adjustment date.
|
|
Carryback
Loan -
A loan in which a seller agrees to
finance a buyer in order to complete
a property sale. |
|
Certificate
of Eligibility -
A veteran's evidence of entitlement
for a VA-guaranteed loan. |
|
Certificate
of Reasonable Value (CRV) -
An appraisal that has been performed
on a property that is being paid for
a VA loan. After the property has
been appraised, the Veterans
Administration issues a CRV. |
|
Clear
Title -
A title that is free of liens or any
legal question as to the ownership
of the property. |
|
Closing
-
Final arrangements to transfer title
of property as well as allocate
charges and credits. |
|
Closing
Costs -
Closing costs are fees paid by the
borrower when a property is
purchased or refinanced. Costs
incurred include a loan origination
fee, discount points, appraisal fee,
title search, title insurance,
survey, taxes, deed recording fee,
and credit report charges. All
closing costs are separated into
"non-recurring," and
"pre-paid." Non-recurring
charges are any items that are paid
only once because a loan was
obtained or a property bought, such
as a loan origination fee. Pre-paid
charges are those that recur over
time, like insurance and property
taxes. These are summarized in the
Good Faith Estimate. |
|
Cloud
-
An outstanding claim or encumbrance,
that, if valid, would affect or
impair the owner's property title. |
|
Collateral
-
Property, real or personal, pledged
as a security to back up a promise.
In a home loan, the property is
considered collateral that can be
revoked if loan is not repaid
according to the terms of the
mortgage or deed of trust. |
|
Commitment
-
A written letter of agreement
detailing the terms and conditions
by which the lender will lend and
the borrower will borrow funds to
finance a home. |
|
Conforming
Loan -
A loan for up to and including
$417,000 in the continental United
States (Alaska and Hawaii limits are
higher). |
|
Construction
Loan -
A short term loan for funding the
cost of construction. The lender
advances funds to the builder as the
work progresses. |
|
Conventional
Mortgage -
A mortgage loan that is obtained
without any additional guarantees
for repayment, such as FHA
insurance, VA guarantees, or private
insurance. This is usually given at
an 80% loan-to-value ratio. |
|
Conversion
-
The right of a borrower to convert
an adjustable or balloon loan into a
fixed loan. The Conversion
Option column on Moving.com
balloon tables indicates the right
of a borrower to convert this
balloon loan. The possible options
are as follows... |
|
|
| Option |
Description |
|
| Not
Available |
Borrower
May Not Convert This Loan. |
|
| Must
Requalify |
Borrower
May Convert But Must
Requalify.
Conversion Fee Applies |
|
| Auto-Qualify |
Borrower
May Convert And Is
Automatically Qualified.
Conversion Fee Applies |
|
|
|
|
Credit
Loan -
A credit loan is a mortgage that is
issued on only the financial
strength of a borrower, without
great regard for collateral. |
|
Credit-Loss
Ratio -
The ratio of credit-related losses
to the dollar amount of MBS
outstanding and total mortgages
owned by the corporation. |
|
Credit
Rating -
Borrowers are rated by lenders
according to the borrower's
credit-worthiness or risk profile.
Credit ratings are expressed as
letter grades such as A-, B, or C+.
These ratings are based on various
factors such as a borrower's payment
history, foreclosures, bankruptcies
and charge-offs. There is no exact
science to rating a borrower's
credit, and different lenders may
assign different grades to the same
borrower. |
|
Credit-Related
Expenses -
The sum of foreclosed property
expenses plus the provision for
losses. |
|
Credit-Related
Losses -
The sum of foreclosed property
expenses plus charge-offs. |
|
Credit
Report -
A report to a prospective lender on
the credit standing of a prospective
borrower. Used to help determine
creditworthiness. Information
regarding late payments, defaults,
or bankruptcies will appear here. |
| #
A B
C D
E F
G H
I J
K
L M
N O
P Q
R S
T U
V W
X
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Z |
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| D |
|
Debt-to-Income
Ratio (DTI) -
The ratio of aggregate monthly debt
to aggregate monthly income. |
|
Deed
-
A legal document which affects the
transfer of ownership of real estate
from the seller to the buyer. |
|
Deed
of Trust -
Synonymous to a mortgage. A deed of
trust or mortgage is obtained,
depending on the state in which the
borrower will reside. |
|
Default
-
The failure to make payments on a
loan. |
|
Delinquency
-
Late- or non-payments of principal,
interest, taxes, or insurance. |
|
Deposit
-
A lump sum given in advance as
security. A deposit is always paid
of a larger amount to be paid in the
future. In mortgage and real estate
terms, this is called the
"earnest money deposit." |
|
Depreciation
-
In real estate and mortgage terms,
the decline in the property value. |
|
Discount
-
Difference between the face amount
of a note or mortgage and the price
at which the instrument is sold in
the secondary market. |
|
Discount
Points -
A term used in government subsidized
loans, such as FHA and VA loans.
Refers to any "points"
(one percent of the loan amount)
paid in addition to the one percent
loan origination fee. |
|
Down
Payment -
Money paid by a buyer from his own
funds, as opposed to that portion of
the purchase price which is
financed. |
|
|
| E |
|
Earnest
Money Deposit -
A deposit made by a potential home
buyer to show that they are serious
about purchasing the property. |
|
Esement
-
Giving other persons, other than the
owner, access to a property. |
|
Eminent
Domain -
The government right to take private
property for public use depended on
the payment of its fair market
value. |
|
Encumbrance
-
Any lien against a property or any
restriction it its use, such as an
easement; a right or interest in a
property held by one who is not the
legal owner. |
|
Equal
Credit Opportunity Act (ECOA) -
The act declaring the elimination of
discrimination on the basis of age,
sex, and race in finance. |
|
Equity
-
The difference between the current
market value of a property and the
principal balance of all outstanding
loans. |
|
Escalator
Clause -
A clause in a loan providing for
increases in payments or interest
based on pre-determined schedules or
on a specific economic index, such
as the consumer price index. |
|
Escrow
-
A third party agent that receives,
holds, and/or disburses certain
funds or documents upon the
performance of certain conditions.
For example, an earnest money
deposit is put into escrow until the
transaction is closed. Only then can
the seller receive the deposit. |
|
Escrow
Account (impound account) -
An account that a borrower can hold
with a lender once a purchase
transaction is closed. This requires
borrowers to pay more than the
principal and interest each month.
The overage is put into escrow,
which the lender uses to pay items
like property taxes and homeowner's
insurance when they are due. This
eliminates the actual number of
payments that a homeowner has to
worry about, but not the amount that
has to actually be paid. |
|
Escrow
Analysis -
An analysis performed by a lender
each year to escrow accountholders
to ensure that the correct amount of
money is being collected to cover
anticipated payments. |
|
Escrow
Fee -
These costs cover the preparation
and transmission of all home
purchased-related documents and
funds. Escrow fees range from
several hundred to over a thousand
dollars, based on the purchase price
of your home. Not all states require
funds to be put into escrow accounts
for closing. |
|
Estate
-
The ownership interest an individual
holds in real property. This is also
the sum total of all the real
property and personal property owned
by an individual at time of death. |
|
Eviction
-
The legal removal of real property
occupants for unlawful actions
carried out by those occupants. |
|
|
| F |
|
Fair
Credit Reporting Act -
A law that protects consumer that
regulates the reporting of consumer
credit by agencies and establishes
procedures for correcting errors on
an individual record. |
|
Fannie
Mae (FNMA) -
The Federal National Mortgage
Association is a congressionally
chartered, shareholder-owned
company. This organization is the
nation's largest supplier of home
mortgage funds. |
|
Fannie
Mae's Community Home Buyer's Program
-
A program that offers flexible
underwriting guidelines to subsidize
a low- to moderate-income family's
purchase of a home. The program
usually decreases the total amount
of cash needed to purchase a home. |
|
Federal
Housing Administration (FHA) -
An agency under the U.S. Department
of Housing and Urban Development
(HUD), it insures loans made by
approved lenders to qualified
borrowers, in accordance with its
regulations. |
|
Fees
-
Up-front costs associated with a
loan. Clicking on the word VIEW
shown under the "Fees
Detail" column on the quotes
results page will display detailed
information about the financial
institution's fees and requirements
pertaining to that rate. |
|
Fee
Simple -
The best title that one can obtain;
unqualified and conveys the highest
bundle of rights. |
|
FHA
Loan -
A government-backed mortgage loan
supported by the US FHA and the
Department of Housing and Urban
Development (HUD). |
|
Finance
Charge -
The total dollar amount your loan
will cost you. It includes all
interest payments for the life of
the loan, any interest paid at
closing, your origination fee and
any other charges paid to the lender
and/or broker. Appraisal, credit
report and title search fees are not
included in the finance charge
calculation. |
|
Firm
Commitment -
A lender's agreement to provide a
loan to a specific borrower on a
specific property. |
|
First
Mortgage -
A mortgage that has priority over
other mortgages. |
|
Fixed-Rate
Mortgage -
A mortgage where the interest rate
does not change for the life of the
loan. |
|
Float
-
Between the time of application and
closing, a borrower may choose to
bet on interest rates decreasing by
electing to float. Floating is
essentially choosing not to lock
the interest rate. Since it is the
borrower's responsibility to lock
his or her rate before (or at)
closing, choosing to float is
considered risky and may result in a
higher interest rate. Request
information from your lender
regarding lock procedures. |
|
Forbearance
-
The postponement for a limited time
of a portion or all the payments on
a loan when a borrower is
delinquent. |
|
Foreclosure
-
A legal procedure in which real
estate is sold by the lender to pay
a defaulting borrower's debt . |
|
401(k)/403(b)
-
An investment plan sponsored by
employers that allows individuals to
set aside tax-deferred income for
retirement or emergency purposes. A
401(k) applies to private
corporations, while a 403(b) applies
to non-profit organizations. |
|
401(k)/403(b)
loan -
A loan that can be taken against the
amount accumulated in the
401(k)/403(b) plans, if so allowed
by the plan administrator. Loans
against these plans are an
acceptable source of down payment
for most types of other loans. |
|
|
| G |
|
Good
Faith Estimate -
An estimate of charges which a
borrower is likely to incur in
connection with a loan closing. |
|
Government
Loan -
A type of mortgage insured by the
FHA (Federal Housing Authority), VA
(Veteran's Administration), or RHS
(Rural Housing Authority). |
|
Government
National Mortgage Association (Ginny
Mae) -
Provides funds for government loans
and takes over special assistance
and liquidation functions of Fannie
Mae. |
|
Grace
Period -
A time allowed, usually 15 days, for
making late payments without a
penalty. |
|
grantee
-
The person to whom an interest in
real property is conveyed. |
|
grantor
-
The person conveying an interest in
real property. |
|
Gross
Monthly Income -
The total amount the borrower earns
per month, not counting any taxes or
expenses. Often used in calculations
to determine whether a borrower
qualifies for a particular loan. |
|
|
| H |
|
Hard-Money
Mortgage -
Cash loan to a borrower. |
|
Hazard
Insurance -
A form of insurance in which the
insurance company protects the
insured from certain losses, such as
fire, vandalism, storms and certain
other natural causes. |
|
Home
Equity Conversion Mortgage (HECM) -
Also known as the reverse annuity
mortgage. This mortgage provides
that instead of making payments to a
lender, the lender makes payments to
the individual. Older homeowners are
able to convert home equity into
cash this way, in the form of
monthly payments. Borrowers don't
qualify on the basis of income, but
on the value of his or her home.
Such a loan does not have to be
repaid until the borrower no longer
occupies the property. |
|
home
equity line of credit -
A mortgage loan in second position
that allows a borrower to obtain
cash drawn against home equity, up
to a certain amount. |
|
Home
Inspection -
A thorough assessment by a
professional regarding the
structural and mechanical condition
of a property. |
|
homeowner's
insurance -
An insurance policy that combines
personal liability insurance and
hazard insurance for a home and its
contents. |
|
homeowner's
warranty -
An insurance policy that is
purchased by a buyer that covers
certain repairs, should they be
necessary over a certain period. |
|
Housing
Ratio -
The ratio of the monthly housing
payment to total gross monthly
income. Also called
Payment-to-Income Ratio or Front-End
Ratio. |
|
HUD
-
Department of Housing and Urban
Development; regulates Fannie Mae
and Ginny Mae. |
|
Hybrid
Financing -
The joining together of two forms of
finance, such as combining a
convertible loan with a
participation loan, under which the
lender has the right at loan
maturity to convert the debt to a 50
percent ownership in the property. |
| #
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| I |
|
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. |
|
Interest
-
Consideration in the form of money
paid for the use of money, usually
expressed as an annual percentage.
Also, a right, share, or title in
property. |
|
|
Interest
Only -
A term loan arrangement calling for
payments of interest only, not to
include any amount for principal.
|
|
Interest
Rate -
The percentage of an amount of money
that's paid for its use over a
specified time period. |
|
Interest
Rate Swap -
A transaction between two parties,
in which each agrees to exchange
payments tied to different interest
rates or indices for a specified
period of time. |
|
Intermediate-Term
Mortgage -
A mortgage loan with a stated
maturity at the time of purchase
that it is equal to or less than 20
years. |
|
|
| J |
|
Judicial
Foreclosure -
A court procedure used by lenders to
secure clear title to a property
under a defaulted real estate loan. |
|
Jumbo
Loan -
A loan for $417,001 or more in the
continental United States (Alaska
and Hawaii limits are higher). These
limits are set by the Federal
National Mortgage Association and
the Federal Home Loan Mortgage
Corporation. Because jumbo loans
cannot be funded by these two
agencies, they usually carry a
higher interest rate. |
|
|
| L |
|
Last
Updated -
The Last Update column on a quotes
results table tells you when the
information was last provided by the
lender to our site. We always place
new listings at the top of each
table so that you, the borrower, may
have immediate access to the most
timely information. Times provided
are all Eastern Standard Time. |
|
lease
-
A written agreement between a
property owner and a tenant that
stipulates the payment and
conditions under which the tenant
may possess the real estate for a
specified period of time. |
|
Leasehold
Estate -
An estate for a fixed length of
time, established when a landlord
gives up possession of real estate
to a tenant, giving the tenant an
equitable interest in the property,
as defined by lease terms. |
|
Lease
Option -
A rental agreement indicating a
tenant's option to purchase a
property. Monthly payments consists
not only of rent, but an overage
that can be applied towards a down
payment on an already established
amount. |
|
Lender
-
The bank, mortgage company, or
mortgage broker offering the loan.
Many institutions only
"originate" loans and then
resell the obligation to third
parties. |
|
Leverage
-
Using someone else's money for the
purchase of property. |
|
Liability
Insurance -
Insurance that protects property
owners against claims that alleges
negligence or inappropriate action
that resulted in bodily injury or
property damage to another party. |
|
LIBOR
-
The London Interbank Offered Rate
Index (LIBOR) is an average of the
interest rates that major
international banks charge each
other to borrow U.S. dollars in the
London money market. Like the U.S.
treasury the CD indexes, LIBOR tends
to move and adjust quite rapidly to
changes in interest rates. |
|
Lien
-
A legal claim by one party against
the property of another as security
for a debt. Must be paid off when
property is sold. A mortgage or a
first trust deed is a lien. |
|
Life
of Loan Cap -
The maximum interest rate that can
be charged during the life of the
loan. Also called Lifetime Cap. This
value is often expressed as an
increment above the initial loan
rate. For example, an adjustable
rate loan with an initial rate of
7.25% and a 6% lifetime cap will
never adjust above a rate of 13.25%
(7.25+6.0). |
|
Loan
-
The principal, or amount of total
borrowed money, that is repaid with
interest. |
|
Loan
Amount -
The amount of money that you intend
on borrowing from a financial
institution for the purchase of your
home. Subtracting the down payment
from the purchase price of the home
will provide you with the loan
amount. |
|
Loan
Officer -
An intermediary between lending
institutions and borrowers, loan
officers solicit loans, represent
creditors to borrowers, and
represent borrowers to creditors. |
|
Loan
Origination -
What the process of obtaining new
loans is called. |
|
Loan
Servicing -
A service performed by a lender to
protect a mortgage investment,
including collecting monthly
payments from borrowers and dealing
with delinquencies. |
|
Loan-To-Value
Ratio -
The relationship between the amount
of the mortgage loan and the
appraised value of the property
expressed as a percentage. A LTV
ratio of 90 means that a borrower is
borrowing 90% of the value of the
property and paying 10% as a down
payment. For purchases, the value of
the property is assumed to be the
purchase price, for refinances the
value is determined by an appraisal. |
|
Lock
noun -
The period, expressed in days,
during which a lender will guarantee
a rate. Some lenders will lock rates
at the time of application while
others will allow the borrower to
lock the rate after the application
is taken. Request information from
your lender regarding lock
procedures. |
|
Lock
verb -
The act of committing to a mortgage
rate. This action, taken by a
borrower some time between the
application and the closing dates,
is sometimes accompanied by a
payment by the borrower to the
lender. |
|
Lock-in
Clause -
Clause in a loan agreement that
states that the borrower cannot
repay a loan prior to a specified
date. |
|
|
| M |
|
Margin
-
The amount a lender adds to the
quoted index rate for an adjustable
rate loan to determine the new
interest rate. |
|
Maturity
-
The "Due Date" of a loan. |
|
Merged
Credit Report -
A credit report that reports data
from two or more major credit
repositories. |
|
Minimum
Credit -
This field on the table refers to
the minimum credit
rating a borrower must have in
order to qualify for the listed
loan. |
|
Modification
-
Any change to the original terms of
a mortgage. |
|
Monthly
Housing Expense -
Total principal, interest, taxes,
and insurance paid by the borrower
on a monthly basis. Used with gross
income to determine affordability. |
|
Mortgage
-
A legal document that pledges
property to a creditor for the
repayment of the loan, and is the
term used to describe the loan
itself. Some states use the term
First Trust Deeds to refer to
mortgage loans. |
|
Mortgagee
-
The lender in a mortgage agreement. |
|
Mortgage
Banker -
A financial intermediary that
originates or funds loans, collects
payments, inspects the property, and
forecloses if necessary. The main
difference between a mortgage banker
and a loan officer is a banker funds
their own loans and sell them on the
secondary market, usually to Fannie
Mae, Freddie Mac, or Ginny Mae. |
|
Mortgage
Broker -
A mortgage company that originates
loans, joining the borrower and
lender for a real estate loan,
earning a placement fee. |
|
Mortgage
Constant -
The factor used for rapid
computation of the annual payment
needed to amortize a loan. |
|
Mortgage
Insurance -
Insurance that covers the lender
against losses incurred as a result
of a default on a home loan. This is
usually required on all loans that
have a loan-to-value higher than
eighty percent. Mortgages that have
an 80% LTV that do not require
mortgage insurance have higher
interest rates. The lenders then pay
the mortgage insurance themselves.
In addition, FHA loans and some
first-time homebuyer programs
require mortgage insurance
regardless of the loan-to-value. |
|
Mortgagor
-
The borrower in a mortgage
agreement. |
|
Multidwelling
Units -
Properties that provide separate
housing units for more than one
family, although only a single
mortgage is secured. |
|
|
| N |
|
Negative
Amortization -
Essentially occurs when a borrower
makes a minimum payment that may not
cover the interest that is due. Loan
balance then increases as a result. |
|
Net
Effective Income -
Gross income less federal income
tax. |
|
No
Cash-out Refinance -
A refinance transaction that is not
intended to put cash in the hand of
the borrower, but instead calculates
a new balance to cover the balance
due on a current loan and any costs
with obtaining a new mortgage. |
|
No-Cost
Loan -
A no-cost loan can either be: 1) a
loan that has no "lender
costs" associated with it or,
2) a loan that also covers purchases
or refinancing costs, which may be
incurred in buying a home, obtaining
and/or refinancing a loan, but are
not directly charged by the lender.
The interest rate on this type of
loan is higher. |
|
Note
-
A legal document that obligates a
borrower to repay a mortgage loan at
a stated interest rate during a
specified period of time. |
|
Note
Rate -
The stated interest rate on a
mortgage note. |
|
|
| O |
|
Origination
Fee -
The fee imposed by a lender to cover
certain processing expenses in
connection with making a loan.
Usually a percentage of the amount
loaned. |
|
Owner
Financing -
A property purchase that is partly
or wholly financed by the seller. |
|
Owner's
Title Policy -
A policy protecting the buyer for
the amount of the purchase price in
the event of a future title dispute. |
|
|
| P |
|
Package
Mortgage -
A mortgage that /includes equipment
and appliances located on the
premises in addition to the real
property itself. |
|
Partial
Entitlement -
Under VA loans, the amount of
guarantee still available to an
eligible veteran who has used his
previous entitlement. |
|
partial
payment -
A payment that is not sufficient
enough to cover the month payment.
During times of economic hardship, a
borrower can make this request of
the loan servicing collection
department. |
|
Participation
Financing -
A loan in which more than one
mortgagee or more than one mortgagor
harbors an interest. It can also be
a loan in which the mortgagee
receives partial ownership of the
property being financed. |
|
Payment
Change Date -
The date when a new monthly payment
amount takes effect on an adjustable
rate mortgage (ARM) or a graduated
payment mortgage (GPM). The payment
change date occurs the month
immediately after the interest rate
adjustment date. |
|
Periodic
Payment Cap -
The limit on the amount that
payments can increase or decrease
during any one adjustment period for
an adjustable-rate mortgage (ARM)
where the interest rate and
principal fluctuate independently of
one another. |
|
Periodic
Rate Cap -
The limit on the amount that
payments can increase or decrease
during any one adjustment period in
an ARM (adjustable rate mortgage),
regardless of how high or low the
index fluctuates. |
|
Personal
Property -
Movable property that does not fit
the definition of realty. |
|
Phone
-
The table list the correct telephone
numbers to access the loan
department of each institution. |
|
PITI
-
PITI stands for principal, interest,
taxes, and insurance. An
"impounded" loan means
that the monthly payment covers all
of these, and perhaps mortgage
insurance, if your loan so calls for
it. If one does not have an
"impounded" account, then
the lender still calculates these
amounts separately and uses it as
part of determining one's
debt-to-income ratio. |
|
PITI
Reserves -
A cash amount that a borrower must
have on hand after making a down
payment and paying all closing costs
for the purchase of a home. The PITI
(principal, interest, taxes, and
insurance) must equal the amount
that the borrower would have to pay
for PITI for a determined number of
months. |
|
Planned
Unit Development (PUD) -
A type of ownership where
individuals actually own the
building or unit they reside in, but
shared areas are owned jointly with
the other members of the development
or established association. |
|
Pledge
Account Mortgage (PAM) -
Combines GPM (graduated payment
mortgage) with a subsidizing savings
account to provide the borrower with
a low payment plan, the lender with
amortizing payments and the seller
with cash. |
|
Points
-
The site allows lenders to post
rates via point ranges. Points are
broken out on the site for Discount
and Origination. The definitions for
each are as follows:
- Discount
Points = Interest Charges
paid up-front when a borrower
closes a loan. A point is equal
to 1 percent of the loan amount
(e.g. 1.5 points on a $100,000
mortgage would cost the borrower
$1,500). Generally, by paying
more points at closing, the
borrower reduces the interest
rate of his loan and thus future
monthly payments.
- Origination
Points = A fee imposed by a
lender to cover certain
processing expenses in
connection with making a real
estate loan. Usually a
percentage of the amount loaned,
such as one percent.
|
|
Pre-Approval
-
A term used to mean that a borrower
has completed a loan application and
provided debt, income, and savings
information that has been reviewed
and pre-approved by an underwriter. |
|
Pre-Foreclosure
Sale -
A procedure in which the borrower is
allowed to sell his or her property
for an amount less that what is owed
on it to avoid foreclosure, fully
satisfying the borrower's debt. |
|
Pre-Paids
-
Expenses such as taxes, insurance,
and assessments, which are paid in
advance of their due date, and on a
prorated basis at closing. |
|
Pre-Payment
-
Any amount paid so as to reduce the
principal before the due date. |
|
Prepayment
Penalty -
Lenders who impose prepayment
penalties will charge borrowers a
fee if they wish to repay part or
all of their loan in advance of the
regular schedule. |
|
Pre-Qualification
-
After a loan officer has made
inquiries about a borrower's debt,
income, and savings, he or she can
write a written statement
(pre-qualification) about the
borrower's chances for qualifying
for a home loan. |
|
Prime
Rate -
Interest charged by financial
institutions to top-rate borrowers. |
|
Principal
-
The amount of debt, not counting
interest, left on a loan. |
|
Private
Mortgage Insurance (PMI) -
Paid by a borrower to protect the
lender in case of default. PMI is
typically charged to the borrower
when the Loan-to-Value Ratio is
greater than 80%. |
|
Prorations
-
The allocation of charges and
credits to the appropriate parties
at a real estate sale and/or loan
closing at a real-estate sale and/or
loan closing. |
|
Promissory
Note -
A written promise to repay a
specified amount over a specified
period of time. |
|
Purchase
Agreement -
A written contract signed by the
buyer and seller stating the terms
and conditions under which a
property will be sold. |
|
Purchase-Money
Mortgage -
Mortgage given by a borrower to the
seller as part of the purchase price
of the property. |
|
Purchase-Money
Transaction -
The acquisition of property through
the payment of money or its
equivalent. |
|
|
| Q |
|
Qualifying
Ratio -
The ratio of the borrower's fixed
monthly expenses to his gross
monthly income. Ratios are expressed
as two numbers like 28/36 where 28
would be the Front-End Ratio
and 36 would be the Back-End
Ratio.
The
Front-End Ratio is the percentage of
a borrower's gross monthly income
(before income taxes) that would
cover the cost of PITI (Mortgage Principal
Payment + Mortgage Interest
Payment + Property Taxes
+ Homeowners Insurance).
In the case of a 28% Front-End Ratio
a borrower could qualify if the
proposed monthly PITI payments were
28% or less than the borrower's
gross monthly income.
The
Back-End Ratio is the percentage of
a borrower's gross monthly income
that would cover the cost of PITI plus
any other monthly debt payments like
car or personal loans and credit
card debt.
Please
note that qualifying ratios are only
a rough guideline in determining a
potential borrower's
credit-worthiness. Many factors such
as excellent or poor credit history,
amount of down payment, and size of
loan will influence the decision to
approve or disapprove a particular
loan. Moving.com urges all borrowers
to discuss their particular
situation with a qualified lender
regardless of the outcome of any
self-qualification exercise.
|
|
Quitclaim
Deed -
A deed that transfers, without
warranty, whatever interest or title
a grantor may have at the time the
conveyance is made. |
|
|
| R |
|
Rate
Lock -
A commitment issued by a lender to a
borrower or other mortgage
originator guaranteeing a specified
interest rate for a specified period
of time at a specific cost. |
|
Real
Estate -
A portion of the earth's surface
extending downward to the center to
the earth and upward into space,
including all things permanently
attached thereto by nature or man
and all legal rights therein. |
|
Real
Estate Agent -
A person licensed to negotiate and
transact the sale of real estate. |
|
Real
Estate Settlement Procedures Act (RESPA)
-
An act requiring the revelation of
all costs involved in a real estate
closing to all participants. |
|
Real
property -
See real estate. |
|
Realtor
-
A real estate agent, broker, or
associate that holds an active
membership in a local real estate
board that is affiliated with the
National Association of Realtors. |
|
Recast
-
To redesign an existing loan balance
into a new loan for the same period
or longer, to reduce payments and
help a distressed borrower. |
|
Reconciliation
-
Determining the final estimate of
value by weighing the results of the
various approaches in an appraisal. |
|
Reconveyance
Clause -
The clause in a trust deed that
gives the title back to the borrower
when the loan is paid in full. |
|
Recording
-
The formal filing of documents
affecting a property's title. |
|
Regulation
Z -
A truth-in-lending provision that
requires lenders to reveal the
actual costs of borrowing. |
|
Refinancing
-
The process of paying off one loan
with the proceeds from a new loan,
using the same property as security. |
|
Rent-Loss
Insurance -
Insurance that protects a landlord
against loss of rent or rental value
due to fire or other casualty,
resulting in the tenant being
excused from paying rent. |
|
Repayment
Plan -
An agreement between a lender and a
delinquent borrower regarding
mortgage payments, in which the
borrower agrees to make additional
payments to pay down past due
amounts while still making scheduled
payments. |
|
Residual
Qualifying -
Under a VA loan, using specified
housing expenses to qualify for a
loan payment. |
|
Restrictions
-
Rules imposed on the use of real
estate in an effort to preserve
property values. |
|
Reverse
Annuity Mortgage (RAM) -
A system developed for an elderly
property owner in which regular
monthly payments can be received
from a lender. When the total
reaches a pre-determined amount, the
owner begins repaying the loan or
sells the property. |
|
Revolving
Debt -
A credit arrangement that allows a
customer to borrow against a
pre-approved line of credit used to
purchase goods and services. The
borrower is responsible for the
actual amount borrowed plus any
interest due. |
|
Right-of-First
Refusal -
A provision that states that a
property to be first offered to a
specific person before it can be
offered for sale or lease to other
parties. |
|
Rollover
Loan -
A loan that /includes a call date
earlier than its normal amortization
period. |
|
Rule
of 78 -
Calculates proportionate amount of
interest due on a loan being paid in
full before its maturity. |
|
|
| S |
|
Sale-Buyback
-
A financing arrangement in which an
investor buys property from a
developer and immediately sells it
back under a long-term sales
agreement, wherein the investor
retains legal title. |
|
Sale-Leaseback
-
A financing arrangement whereby an
investor purchases real estate owned
and used by a business corporation,
then leases the property back to the
business. |
|
Secondary
Mortgage Market -
A market where mortgage originators
may sell them, freeing up funds for
continued lending and distributes
mortgage funds nationally from
money-rich to money poor areas. |
|
Second
Mortgage -
A mortgage that has a lien position
subordinate to the first mortgage. |
|
Secured
Loan -
A loan that is backed by collateral. |
|
Security
-
Something given, deposited, or
pledged to make secure the
fulfillment of an obligation,
usually the repayment of a debt. |
|
Seller
Carry-Back -
An agreement in which the owner of a
property provides financing, often
in combination with an assumable
mortgage. |
|
Senior
Loan -
A real estate loan in first priority
position. |
|
Servicer
-
An organization that collects
principal and interest payments from
borrowers and manages borrowers'
escrow accounts. The servicer often
services mortgages that have been
purchased by an investor in the
secondary mortgage market. |
|
Servicing
-
The collection of mortgage payments
from borrowers and related
responsibilities of a loan servicer. |
|
Settlement
Costs -
See Closing Costs. v Sinking
Fund -
Monies deposited in advance in
anticipation of satisfying a debt in
the future. |
|
Stop
Date -
Date on a term loan when the balloon
payment is due. |
|
Subordinate
Financing -
Any mortgage or other lien that has
a priority lower than that of the
first mortgage, or senior loan. See
second mortgage. |
|
Survey
-
A drawing or map the shows the
precise legal boundaries of a
property, the location of
improvements, easements, rights of
way, encroachments, and other
physical features. |
|
Sweat
Equity -
Increase in property value due to
improvement by owners. |
|
|
| T |
|
Takeout
Mortgage -
A permanent mortgage, obtained by
pre-arrangement between a builder
and a financial institution, to
repay the interim mortgagee at the
completion of construction. |
|
Tax
Lien -
A claim against real estate for the
amount of its unpaid taxes. |
|
Third-Party
Origination -
A process by which a lender uses
another party to completely or
partially originate, process,
underwrite, close, fund, or package
the mortgages it plans to deliver to
the secondary mortgage market. |
|
Title
-
A legal document showing a person's
right to or ownership of a property. |
|
Title
Company -
A company that specializes in
examining and insuring titles to
real estate. |
|
Title
Insurance -
Title Insurance policies typically
insure a homebuyer against any
title-search errors or mistakes, and
against loss due to disputes over
property ownership. Title Insurance
can additionally offer protection to
the lender under similar
circumstances. The cost of title
insurance is usually a set value per
thousand of dollars of the total
loan amount. |
|
Title
Search -
A check of the title records to make
sure that the seller is the actual
legal owner of the property, and
that there are no liens or other
claims outstanding. |
|
Total
Debt Ratio -
Monthly debt and housing payments
divided by gross monthly income.
Also known as Back-End Ratio. |
|
Transfer
of Ownership -
The means by which the ownership of
a property changes hands. Examples
of such include the purchase of a
property "subject to" the
mortgage, the assumption of the
mortgage debt by the property
purchases, and any exchange of
possession of the property under a
land sales contract or any other
land trust device. |
|
Transfer
Tax -
State or local tax payable when the
title passes from one owner to
another. |
|
Truth-in-Lending
Law -
Provision that requires lenders to
reveal the actual costs of
borrowing. |
|
Two-Step
Mortgage -
A loan where the interest rate is
fixed for the first seven years and
then is adjusted one time for the
balance of the loan period. |
|
|
| V |
|
VA
Loan -
A government-backed mortgage loan
supported by the US Veterans
Administration. |
|
Variable
Rate Mortgage -
See Adjustable Rate Mortgage. |
|
Vested
-
Means that one has a right to use a
portion of a fund, such as an
individual's retirement fund. |
|
|
| Z |
|
Zero
Percent Financing -
A loan with no interest in the
contract. The IRS imputes 10 percent
for both borrower and lender. |
|
Zoning
-
The right of a community, under its
police power, to dictate the use of
property within its boundaries. |
|
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