Click
on the letter below to find your word
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
acceleration
clause
A clause in a mortgage which allows the lender to demand payment
of the outstanding loan balance. The most common reason for
accelerating a loan is if the borrower defaults on the loan
or transfers title to another individual without informing the
lender.
adjustable-rate
mortgage (ARM)
A mortgage in which the interest changes periodically, according
to corresponding fluctuations in an index. ARM mortgages may
begin as fixed mortgages for a short period of time and them
become adjustable.
adjustment
date
The date the interest rate changes on an adjustable-rate
(ARM) mortgage.
amortization
The loan payment consists of a portion which will be applied
to pay the accruing interest on a loan, with the remainder being
applied to the principal. Over time, the interest portion decreases
as the loan balance decreases, and the amount applied to principal
increases so that the loan is paid off (amortized) in the specified
time.
amortization
schedule
A table which shows how much of each payment will be applied
toward principal and how much toward interest over the life
of the loan. This may also show the corresponding loan balance
until it reaches zero.
annual
percentage rate (APR)
This is not the note rate on your loan. It is a value created
according to a government formula that reflects the true annual
cost of borrowing. The APR percentage will always be higher
than the actual rate of your mortgage.
application
(1003)
The form used to apply for a mortgage loan, containing information
about a borrower's income, savings, assets, debts, and more.
appraisal
A professional estimate for the value of a property. Appraisals
are based on the condition of the property, as well as square
footage and comparable sales of similar homes.
appraised
value
An opinion of a property's fair market value, based on an appraiser's
knowledge, experience, and analysis of the property. For nearly
all purchase loans, the purchase price is considered the appraised
value.
appraiser
An individual qualified by education, training, and experience
to estimate the value of real property and personal property.
appreciation
The increase in the value of a property due to changes in market
conditions, inflation, improvements and/or other causes.
assessed
value
The valuation placed on property by a public tax assessor for
purposes of taxation.
assessment
The placing of a value on property for the purpose of taxation.
assessor
A public official who establishes the value of a property for
taxation purposes.
asset
Any Item of value owned by an individual. Assets that can be
quickly converted into cash are considered "liquid assets".
These include bank accounts, stocks, bonds, mutual funds, and
so on. Other assets such as: real estate, personal property,
and debts owed to an individual by others are not considered
"liquid assets".
assignment
When ownership of your mortgage is transferred from one lender
or investor to another, it is called an assignment.
assumable
mortgage
A mortgage that can be assumed by the buyer when a home is sold.
The borrower must "qualify" in order to assume the
loan.
assumption
The term applied when a buyer assumes the seller's
mortgage.
top
balloon
mortgage
A mortgage loan that requires the remaining principal balance
be paid at a specific point in time. For example, a loan may
be amortized as if it would be paid over a thirty year period,
but requires that at the end of the tenth year the entire remaining
balance must be paid. At that time, the owner will generally
sell the property or refinance into a new mortgage.
balloon
payment
The final lump sum payment that is due at the termination of
a balloon mortgage.
bankruptcy
By filing in federal bankruptcy court, an individual or individuals
can restructure or relieve themselves of debts and liabilities.
Bankruptcies are of various types, but the most common for an
individual seem to be a "Chapter 7 No Asset" bankruptcy
which relieves the borrower of most types of debts. A borrower
cannot usually qualify for an "A" paper loan for a
period of twelve months after the bankruptcy has been discharged
and requires the re-establishment of an ability to repay debt.
bill
of sale
A written document that transfers title to personal property.
For example, when selling an automobile to acquire funds which
will be used as a source of down payment or for closing costs,
the lender will usually require the bill of sale (in addition
to other items) to help document this source of funds.
biweekly
mortgage
A mortgage in which you make payments every two weeks instead
of once a month. The result is that instead of making twelve
monthly payments during the year, you make thirteen. The extra
payment goes directly to the principal, substantially reducing
the interest paid on a mortgage and the time it takes to pay
off the mortgage.
broker
Broker has several meanings in different situations. Most Realtors
are "agents" who work under a "broker."
Some agents may be brokers as well. In the mortgage industry,
broker usually refers to a company or individual that does not
lend money, but broker loans to larger lenders or investors.
A broker is anyone who acts as an agent, bringing two parties
together for any type of transaction and earns a fee for doing
so.
top
cap
Adjustable Rate Mortgages have fluctuating interest rates, but
those fluctuations are usually limited to a certain amount.
Those limitations may apply to how much the loan may adjust
over a six month period, an annual period, and over the life
of the loan, and are referred to as "caps."
cash-out
refinance
When a borrower refinances his mortgage at a higher amount than
the current loan balance with the intention of pulling out money
for personal use, it is referred to as a "cash out refinance."
Certificate
of Eligibility
A document issued by the Veterans Administration that certifies
a veteran's eligibility for a VA loan.
clear
title
A title that is free of liens or legal questions as to ownership
of the property.
closing
This has different meanings in different states. In some states
a real estate transaction is not consider "closed"
until the documents record at the local recorders office. In
others, the "closing" is a meeting where all of the
documents are signed and money changes hands.
closing
costs
Closing costs are separated into what are called "non-recurring
closing costs" and "pre-paid items." Non-recurring
closing costs are any items which are paid just once as a result
of buying the property or obtaining a loan. "Pre-paids"
are items which recur over time, such as property taxes and
homeowners insurance. A lender makes an attempt to estimate
the amount of non-recurring closing costs and prepaid items
on the Good Faith Estimate which they must issue to the borrower
within three days of receiving a home loan application.
co-borrower
IAn additional individual who is both obligated on the loan
and is on title to the property.
collateral
In a home loan, the property is the collateral. The borrower
risks losing the property if the loan is not repaid according
to the terms of the mortgage or deed of trust.
collection
When a borrower falls behind, the lender contacts them in an
effort to bring the loan current. The loan goes to "collection."
As part of the collection effort, the lender must mail and record
certain documents in case they are eventually required to foreclose
on the property.
commission
Most salespeople earn commissions for the work that they do
and there are many sales professionals involved in each transaction,
including Realtors, loan officers, title representatives, attorneys,
escrow representative, and representatives for pest companies,
home warranty companies, home inspection companies, insurance
agents, and more. The commissions are paid out of the charges
paid by the seller or buyer in the purchase transaction. Realtors
generally earn the largest commissions, followed by lenders,
then the others.
common
law
An unwritten body of law based on general custom in England
and used to an extent in some states.
In some states, especially the southwest, property acquired
by a married couple during their marriage is considered to be
owned jointly, except under special circumstances.
comparable
sales
Recent sales of similar properties in nearby areas and used
to help determine the market value of a property. Also referred
to as "comps."
condominium
A type of ownership in real property where all of the owners
own the property, common areas and buildings together, with
the exception of the interior of the unit to which they have
title. Often mistakenly referred to as a type of construction
or development, it actually refers to the type of ownership.
construction
loan
A short-term, interim loan for financing the cost of construction.
The lender makes payments to the builder at periodic intervals
as the work progresses.
contingency
A condition that must be met before a contract is legally binding.
For example, home purchasers often include a contingency that
specifies that the contract is not binding until the purchaser
obtains a satisfactory home inspection report from a qualified
home inspector.
contract
An oral or written agreement to do or not to do a certain thing.
conventional
mortgage
Refers to home loans other than government loans (VA and FHA).
convertible
ARM
An adjustable-rate mortgage that allows the borrower to change
the ARM to a fixed-rate mortgage within a specific time.
credit
An agreement in which a borrower receives something of value
in exchange for a promise to repay the lender at a later date.
credit
history
A record of an individual's repayment of debt. Credit histories
are reviewed my mortgage lenders as one of the underwriting
criteria in determining credit risk.
creditor
A person to whom money is owed.
credit
report
A report of an individual's credit history prepared by a credit
bureau and used by a lender in determining a loan applicant's
creditworthiness.
top
debt
An amount owed to another.
deed
The legal document conveying title to a property.
deed-in-lieu
Short for "deed in lieu of foreclosure," this conveys
title to the lender when the borrower is in default and wants
to avoid foreclosure. The lender may or may not cease foreclosure
activities if a borrower asks to provide a deed-in-lieu. Regardless
of whether the lender accepts the deed-in-lieu, the avoidance
and non-repayment of debt will most likely show on a credit
history. What a deed-in-lieu may prevent is having the documents
preparatory to a foreclosure being recorded and become a matter
of public record.
deed
of trust
Some states, like California , do not record mortgages. Instead,
they record a deed of trust which is essentially the same thing.
default
Failure to make the mortgage payment within a specified period
of time. For first mortgages or first trust deeds, if a payment
has still not been made within 30 days of the due date, the
loan is considered to be in default.
delinquency
Failure to make mortgage payments when mortgage payments are
due. For most mortgages, payments are due on the first day of
the month. Even though they may not charge a "late fee"
for a number of days, the payment is still considered to be
late and the loan delinquent. When a loan payment is more than
30 days late, most lenders report the late payment to one or
more credit bureaus.
deposit
A sum of money given in advance of a larger amount being expected
in the future. Often called in real estate as an "earnest
money deposit."
depreciation
A decline in the value of property; the opposite of appreciation.
Depreciation is also an accounting term which shows the declining
monetary value of an asset and is used as an expense to reduce
taxable income. Since this is not a true expense where money
is actually paid, lenders will add back depreciation expense
for self-employed borrowers and count it as income.
down
payment
The part of the purchase price of a property that the buyer
pays in cash and does not finance with a mortgage.
due-on-sale
provision
A provision in a mortgage that allows the lender to demand repayment
in full if the borrower sells the property that serves as security
for the mortgage.
top
earnest
money deposit
A deposit made by the potential home buyer to show that he or
she is serious about buying the house.
equity
A homeowner's financial interest in a property. Equity is the
difference between the fair market value of the property and
the amount still owed on its mortgage and other liens.
escrow
An item of value, money, or documents deposited with a third
party to be delivered upon the fulfillment of a condition. For
example, the earnest money deposit is put into escrow until
delivered to the seller when the transaction is closed.
escrow
account
Once you close your purchase transaction, you may have an escrow
account or impound account with your lender. This means the
amount you pay each month includes an amount above what would
be required if you were only paying your principal and interest.
The extra money is held in your impound account (escrow account)
for the payment of items like property taxes and homeowner's
insurance when they come due. The lender pays them with your
money instead of you paying them yourself.
estate
The ownership interest of an individual in real property. The
sum total of all the real property and personal property owned
by an individual at time of death.
eviction
The lawful expulsion of an occupant from real property.
eviction
crew
Workers who accompany the sheriff on behalf of the lender to
assist in the eviction of an occupant from real property. The
eviction crew are the workers who will actually move the occupants
belongings from the home to the street/yard//driveway/sidewalk
and then change the locks to keep the previous occupant from
retunring to the home.
examination
of title
The report on the title of a property from the public records
or an abstract of the title.
exclusive
listing
A written contract that gives a licensed real estate agent the
exclusive right to sell a property for a specified time.
executor
A person named in a will to administer an estate. The court
will appoint an administrator if no executor is named. "Executrix"
is the feminine form.
top
Fair
Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer
credit reports by consumer/credit reporting agencies and establishes
procedures for correcting mistakes on one's credit record.
fair
market value
The highest price that a buyer, willing but not compelled to
buy, would pay, and the lowest a seller, willing but not compelled
to sell, would accept.
Fannie
Mae (FNMA)
The Federal National Mortgage Association, which is a congressionally
chartered, shareholder-owned company that is the nation's largest
supplier of home mortgage funds. For a discussion of the roles
of Fannie Mae, Freddie Mac (FHLMC), and Ginnie Mae (GNMA), see
the Library.
An income-based community lending model, under which mortgage
insurers and Fannie Mae offer flexible underwriting guidelines
to increase a low- or moderate-income family's buying power
and to decrease the total amount of cash needed to purchase
a home. Borrowers who participate in this model are required
to attend pre-purchase home-buyer education sessions.
Federal
Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development
(HUD). Its main activity is the insuring of residential mortgage
loans made by private lenders. The FHA sets standards for construction
and underwriting but does not lend money or plan or construct
housing.
fee
simple
The greatest possible interest a person can have in real estate.
fee
simple estate
An unconditional, unlimited estate of inheritance that represents
the greatest estate and most extensive interest in land that
can be enjoyed. It is of perpetual duration. When the real estate
is in a condominium project, the unit owner is the exclusive
owner only of the air space within his or her portion of the
building (the unit) and is an owner in common with respect to
the land and other common portions of the property.
FHA
mortgage
A mortgage that is insured by the Federal Housing Administration
(FHA). Along with VA loans, an FHA loan will often be referred
to as a government loan.
firm
commitment
A lender's agreement to make a loan to a specific borrower on
a specific property.
first
mortgage
The mortgage that is in first place among any loans recorded
against a property. Usually refers to the date in which loans
are recorded, but there are exceptions.
fixed-rate
mortgage
A mortgage in which the interest rate does not change during
the entire term of the loan.
fixture
Personal property that becomes real property when attached in
a permanent manner to real estate.
flood
insurance
Insurance that compensates for physical property damage resulting
from flooding. It is required for properties located in federally
designated flood areas.
foreclosure
The legal process by which a borrower in default under a mortgage
is deprived of his or her interest in the mortgaged property.
This usually involves a forced sale of the property at public
auction with the proceeds of the sale being applied to the mortgage
debt.
401(k)/403(b)
An employer-sponsored investment plan that allows individuals
to set aside tax-deferred income for retirement or emergency
purposes. 401(k) plans are provided by employers that are private
corporations. 403(b) plans are provided by employers that are
not for profit organizations.
401(k)/403(b)
loan
Some administrators of 401(k)/403(b) plans allow for loans against
the monies you have accumulated in these plans. Loans against
401K plans are an acceptable source of down payment for most
types of loans.
top
government
loan (mortgage)
A mortgage that is insured by the Federal Housing Administration
(FHA) or guaranteed by the Department of Veterans Affairs (VA)
or the Rural Housing Service (RHS). Mortgages that are not government
loans are classified as conventional loans.
Government
National Mortgage Association (Ginnie Mae)
A government-owned corporation within the U.S. Department of
Housing and Urban Development (HUD). Created by Congress on
September 1, 1968 , GNMA performs the same role as Fannie Mae
and Freddie Mac in providing funds to lenders for making home
loans. The difference is that Ginnie Mae provides funds for
government loans (FHA and VA)
grantee
The person to whom an interest in real property is conveyed.
grantor
The person conveying an interest in real property.
top
hazard
insurance
Insurance coverage that in the event of physical damage to a
property from fire, wind, vandalism, or other hazards.
Home
Equity Conversion Mortgage (HECM)
Usually referred to as a reverse annuity mortgage, what makes
this type of mortgage unique is that instead of making payments
to a lender, the lender makes payments to you. It enables older
home owners to convert the equity they have in their homes into
cash, usually in the form of monthly payments. Unlike traditional
home equity loans, a borrower does not qualify on the basis
of income but on the value of his or her home. In addition,
the loan does not have to be repaid until the borrower no longer
occupies the property.
home
equity line of credit
A mortgage loan, usually in second position, that allows the
borrower to obtain cash drawn against the equity of his home,
up to a predetermined amount.
home
inspection
A thorough inspection by a professional that evaluates the structural
and mechanical condition of a property. A satisfactory home
inspection is often included as a contingency by the purchaser.
homeowners'
association
A nonprofit association that manages the common areas of a planned
unit development (PUD) or condominium project. In a condominium
project, it has no ownership interest in the common elements.
In a PUD project, it holds title to the common elements.
homeowner's
insurance
An insurance policy that combines personal liability insurance
and hazard insurance coverage for a dwelling and its contents.
homeowner's
warranty
A type of insurance often purchased by homebuyers that will
cover repairs to certain items, such as heating or air conditioning,
should they break down within the coverage period. The buyer
often requests the seller to pay for this coverage as a condition
of the sale, but either party can pay.
HUD
median income
Median family income for a particular county or metropolitan
statistical area (MSA), as estimated by the Department of Housing
and Urban Development (HUD).
HUD-1
settlement statement
A document that provides an itemized listing of the funds that
were paid at closing. Items that appear on the statement include
real estate commissions, loan fees, points, and initial escrow
(impound) amounts. Each type of expense goes on a specific numbered
line on the sheet. The totals at the bottom of the HUD-1 statement
define the seller's net proceeds and the buyer's net payment
at closing. It is called a HUD1 because the form is printed
by the Department of Housing and Urban Development (HUD). The
HUD1 statement is also known as the "closing statement"
or "settlement sheet."
top
top
joint
tenancy
A form of ownership or taking title to property which means
each party owns the whole property and that ownership is not
separate. In the event of the death of one party, the survivor
owns the property in its entirety.
judgment
A decision made by a court of law. In judgments that require
the repayment of a debt, the court may place a lien against
the debtor's real property as collateral for the judgment's
creditor.
judicial
foreclosure
A type of foreclosure proceeding used in some states that is
handled as a civil lawsuit and conducted entirely under the
auspices of a court. Other states use non-judicial foreclosure.
jumbo
loan
A loan that exceeds Fannie Mae's and Freddie Mac's loan limits,
currently at $227,150. Also called a nonconforming loan. Freddie
Mac and Fannie Mae loans are referred to as conforming loans.
top
top
late
charge
The penalty a borrower must pay when a payment is made a stated
number of days. On a first trust deed or mortgage, this is usually
fifteen days.
lease
A written agreement between the 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
A way of holding title to a property wherein the mortgagor does
not actually own the property but rather has a recorded long-term
lease on it.
lease
option
An alternative financing option that allows home buyers to lease
a home with an option to buy. Each month's rent payment may
consist of not only the rent, but an additional amount which
can be applied toward the down payment on an already specified
price.
legal
description
A property description, recognized by law, that is sufficient
to locate and identify the property without oral testimony.
lender
A term which can refer to the institution making the loan or
to the individual representing the firm. For example, loan officers
are often referred to as "lenders."
liabilities
A person's financial obligations. Liabilities include long-term
and short-term debt, as well as any other amounts that are owed
to others.
liability
insurance
Insurance coverage that offers protection against claims alleging
that a property owner's negligence or inappropriate action resulted
in bodily injury or property damage to another party. It is
usually part of a homeowner's insurance policy.
lien
A legal claim against a property that must be paid off when
the property is sold. A mortgage or first trust deed is considered
a lien.
life
cap
For an adjustable-rate mortgage (ARM), a limit on the amount
that the enterest rate can increase or decrease over the life
of the mortgage.
line
of credit
An agreement by a commercial bank or other financial institution
to extend credit up to a certain amount for a certain time to
a specified borrower.
liquid
asset
A cash asset or an asset that is easily converted into cash.
loan
A sum of borrowed money (principal) that is generally repaid
with interest.
loan
officer
Also referred to by a variety of other terms, such as lender,
loan representative, loan "rep," account executive,
and others. The loan officer serves several functions and has
various responsibilities: they solicit loans, they are the representative
of the lending institution, and they represent the borrower
to the lending institution.
loan
origination
How a lender refers to the process of obtaining new loans.
loan
servicing
After you obtain a loan, the company you make the payments to
is "servicing" your loan. They process payments, send
statements, manage the escrow/impound account, provide collection
efforts on delinquent loans, ensure that insurance and property
taxes are made on the property, handle pay-offs and assumptions,
and provide a variety of other services.
loan-to-value
(LTV)
The percentage relationship between the amount of the loan and
the appraised value or sales price (whichever is lower).
lock-in
An agreement in which the lender guarantees a specified interest
rate for a certain amount of time at a certain cost.
lock-in
period
The time period during which the lender has guaranteed an interest
rate to a borrower.
top
margin
The difference between the interest rate and the index on an
adjustable rate mortgage. The margin remains stable over the
life of the loan. It is the index which moves up and down.
maturity
The date on which the principal balance of a loan, bond, or
other financial instrument becomes due and payable.
merged
credit report
A credit report which reports the raw data pulled from two or
more of the major credit repositories. Contrast with a Residential
Mortgage Credit Report (RMCR) or a standard factual credit report.
modification
Occasionally, a lender will agree to modify the terms of your
mortgage without requiring you t refinance. If any changes are
made, it is called a modification.
mortgage
A legal document that pledges a property to the lender as security
for payment of a debt. Instead of mortgages, some states use
First Trust Deeds.
mortgage
banker
For a more complete discussion of mortgage banker, see "Types
of Lenders." A mortgage banker is generally assumed to
originate and fund their own loans, which are then sold on the
secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie
Mae. However, firms rather loosely apply this term to themselves,
whether they are true mortgage bankers or simply mortgage brokers
or correspondents.
mortgage
broker
A mortgage company that originates loans, then places those
loans with a variety of other lending institutions with whom
they usually have pre-established relationships.
mortgagee
The lender in a mortgage agreement.
mortgage
insurance (MI)
Insurance that covers the lender against some of the losses
incurred as a result of a default on a home loan. Often mistakenly
referred to as PMI, which is actually the name of one of the
larger mortgage insurers. Mortgage insurance is usually required
in one form or another on all loans that have a loan-to-value
higher than eighty percent. Mortgages above 80% LTV that call
themselves "No MI" are usually a made at a higher
interest rate. Instead of the borrower paying the mortgage insurance
premiums directly, they pay a higher interest rate to the lender,
which then pays the mortgage insurance themselves. Also, FHA
loans and certain first-time homebuyer programs require mortgage
insurance regardless of the loan-to-value.
mortgage
insurance premium (MIP)
The amount paid by a mortgagor for mortgage insurance, either
to a government agency such as the Federal Housing Administration
(FHA) or to a private mortgage insurance (MI) company.
mortgage
life and disability insurance
A type of term life insurance often bought by borrowers. The
amount of coverage decreases as the principal balance declines.
Some policies also cover the borrower in the event of disability.
In the event that the borrower dies while the policy is in force,
the debt is automatically satisfied by insurance proceeds. In
the case of disability insurance, the insurance will make the
mortgage payment for a specified amount of time during the disability.
Be careful to read the terms of coverage, however, because often
the coverage does not start immediately upon the disability,
but after a specified period, sometime forty-five days.
mortgagor
The borrower in a mortgage agreement.
multidwelling
units
Properties that provide separate housing units for more than
one family, although they secure only a single mortgage.
top
negative
amortization
Some adjustable rate mortgages allow the interest rate to fluctuate
independently of a required minimum payment. If a borrower makes
the minimum payment it may not cover all of the interest that
would normally be due at the current interest rate. In essence,
the borrower is deferring the interest payment, which is why
this is called "deferred interest." The deferred interest
is added to the balance of the loan and the loan balance grows
larger instead of smaller, which is called negative amortization.
no
cash-out refinance
A refinance transaction which is not intended to put cash in
the hand of the borrower. Instead, the new balance is caculated
to cover the balance due on the current loan and any costs associated
with obtaining the new mortgage. Often referred to as a "rate
and term refinance."
no-cost
loan
Many lenders offer loans that you can obtain at "no cost."
You should inquire whether this means there are no "lender"
costs associated with the loan, or if it also covers the other
costs you would normally have in a purchase or refinance transactions,
such as title insurance, escrow fees, settlement fees, appraisal,
recording fees, notary fees, and others. These are fees and
costs which may be associated with buying a home or obtaining
a loan, but not charged directly by the lender. Keep in mind
that, like a "no-point" loan, the interest rate will
be higher than if you obtain a loan that has costs associated
with it.
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 interest rate stated on a mortgage note.
notice
of default
A formal written notice to a borrower that a default has occurred
and that legal action may be taken.
top
original
principal balance
The total amount of principal owed on a mortgage before
any payments are made.
origination
fee
On a government loan the loan origination fee is one
percent of the loan amount, but additional points may be charged
which are called "discount points." One point equals
one percent of the loan amount. On a conventional loan, the
loan origination fee refers to the total number of points a
borrower pays.
owner
financing
A property purchase transaction in which the property
seller provides all or part of the financing.
top
partial
payment
A payment that is not sufficient to cover the scheduled
monthly payment on a mortgage loan. Normally, a lender will
not accept a partial payment, but in times of hardship you can
make this request of the loan servicing collection department.
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). Generally, the payment change date occurs in
the month immediately after the interest rate adjustment date.
periodic
payment cap
For an adjustable-rate mortgage where the interest
rate and the minimum payment amount fluctuate independently
of one another, this is a limit on the amount that payments
can increase or decrease during any one adjustment period.
periodic
rate cap
For an adjustable-rate mortgage, a limit on the
amount that the interest rate can increase or decrease during
any one adjustment period, regardless of how high or low the
index might be.
personal
property
Any property that is not real property.
PITI
This stands for principal, interest, taxes and insurance.
If you have an "impounded" loan, then your monthly
payment to the lender includes all of these and probably includes
mortgage insurance as well. If you do not have an impounded
account, then the lender still calculates this amount and uses
it as part of determining your 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 principal, interest, taxes, and insurance (PITI)
reserves must equal the amount that the borrower would have
to pay for PITI for a predefined number of months.
planned
unit development (PUD)
A type of ownership where individuals actually
own the building or unit they live in, but common areas are
owned jointly with the other members of the development or association.
Contrast with condominium, where an individual actually owns
the airspace of his unit, but the buildings and common areas
are owned jointly with the others in the development or association.
point
A point is 1 percent of the amount of the mortgage.
power
of attorney
A legal document that authorizes another person to
act on one's behalf. A power of attorney can grant complete
authority or can be limited to certain acts and/or certain periods
of time.
pre-approval
A loosely used term which is generally taken to
mean that a borrower has completed a loan application and provided
debt, income, and savings documentation which an underwriter
has reviewed and approved. A pre-approval is usually done at
a certain loan amount and making assumptions about what the
interest rate will actually be at the time the loan is actually
made, as well as estimates for the amount that will be paid
for property taxes, insurance and others. A pre-approval applies
only to the borrower. Once a property is chosen, it must also
meet the underwriting guidelines of the lender. Contrast with
pre-qualification
prepayment
Any amount paid to reduce the principal balance
of a loan before the due date. Payment in full on a mortgage
that may result from a sale of the property, the owner's decision
to pay off the loan in full, or a foreclosure. In each case,
prepayment means payment occurs before the loan has been fully
amortized.
prepayment
penalty
A fee that may be charged to a borrower who pays
off a loan before it is due.
pre-qualification
This usually refers to the loan officer's written opinion
of the ability of a borrower to qualify for a home loan, after
the loan officer has made inquiries about debt, income, and
savings. The information provided to the loan officer may have
been presented verbally or in the form of documentation, and
the loan officer may or may not have reviewed a credit report
on the borrower.
prime
rate
The interest rate that banks charge to their preferred
customers. Changes in the prime rate are widely publicized in
the news media and are used as the indexes in some adjustable
rate mortgages, especially home equity lines of credit. Changes
in the prime rate do not directly affect other types of mortgages,
but the same factors that influence the prime rate also affect
the interest rates of mortgage loans.
principal
The amount borrowed or remaining unpaid. The part of
the monthly payment that reduces the remaining balance of a
mortgage.
principal
balance
The outstanding balance of principal on a mortgage.
The principal balance does not include interest or any other
charges. See remaining balance.
principal,
interest, taxes, and insurance (PITI)
The four components of a monthly mortgage payment
on impounded loans. Principal refers to the part of the monthly
payment that reduces the remaining balance of the mortgage.
Interest is the fee charged for borrowing money. Taxes and insurance
refer to the amounts that are paid into an escrow account each
month for property taxes and mortgage and hazard insurance.
private
mortgage insurance (MI)
Mortgage insurance that is provided by a private
mortgage insurance company to protect lenders against loss if
a borrower defaults. Most lenders generally require MI for a
loan with a loan-to-value (LTV) percentage in excess of 80 percent.
promissory
note
A written promise to repay a specified amount over
a specified period of time.
public
auction
A meeting in an announced public location to sell property
to repay a mortgage that is in default.
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 transaction
The acquisition of property through the payment
of money or its equivalent.
top
qualifying
ratios
Calculations that are used in determining whether a borrower
can qualify for a mortgage. There are two ratios. The "top"
or "front" ratio is a calculation of the borrower's
monthly housing costs (principle, taxes, insurance, mortgage
insurance, homeowner's association fees) as a percentage of
monthly income. The "back" or "bottom" ratio
includes housing costs as will as all other monthly debt.
quitclaim
deed
A deed that transfers without warranty whatever interest or
title a grantor may have at the time the conveyance is made.
top
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 agent
A person licensed to negotiate and transact the sale of real
estate.
Real
Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers
advance notice of closing costs.
real
property
Land and appurtenances, including anything of a permanent nature
such as structures, trees, minerals, and the interest, benefits,
and inherent rights thereof.
Realtor
®
A real estate agent, broker or an associate who holds active
membership in a local real estate board that is affiliated with
the National Association of Realtors.
recorder
The public official who keeps records of transactions that affect
real property in the area. Sometimes known as a "Registrar
of Deeds" or " County Clerk ."
recording
The noting in the registrar's office of the details of a properly
executed legal document, such as a deed, a mortgage note, a
satisfaction of mortgage, or an extension of mortgage, thereby
making it a part of the public record.
refinance
transaction
The process of paying off one loan with the proceeds from a
new loan using the same property as security.
remaining
balance
The amount of principal that has not yet been repaid. See principal
balance.
remaining
term
The original amortization term minus the number of payments
that have been applied.
rent
loss insurance
Insurance that protects a landlord against loss of rent or rental
value due to fire or other casualty that renders the leased
premises unavailable for use and as a result of which the tenant
is excused from paying rent.
repayment
plan
An arrangement made to repay delinquent installments or advances.
replacement
reserve fund
A fund set aside for replacement of common property in a condominium,
PUD, or cooperative project -- particularly that which has a
short life expectancy, such as carpeting, furniture, etc.
revolving
debt
A credit arrangement, such as a credit card, that allows a customer
to borrow against a preapproved line of credit when purchasing
goods and services. The borrower is billed for the amount that
is actually borrowed plus any interest due.
right
of first refusal
A provision in an agreement that requires the owner of a property
to give another party the first opportunity to purchase or lease
the property before he or she offers it for sale or lease to
others.
right
of ingress or egress
The right to enter or leave designated premises.
right
of survivorship
In joint tenancy, the right of survivors to acquire the interest
of a deceased joint tenant.
top
sale-buyback
A technique in which a seller deeds property to a buyer
for a consideration and the buyer simultaneously sells the property
back to the seller using a land contract or similar agreement.
sale-leaseback
A technique in which a seller deeds property to a buyer for
a consideration, and the buyer simultaneously leases the property
back to the seller.
second
mortgage
A mortgage that has a lien position subordinate to the first
mortgage.
secondary
market
The buying and selling of existing mortgages, usually as part
of a "pool" of mortgages.
secured
loan
A loan that is backed by collateral.
security
The property that will be pledged as collateral for a loan.
seller
carry-back
An agreement in which the owner of a property provides financing,
often in combination with an assumable mortgage.
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
statement
See HUD1 Settlement Statement
sheriffs
sale
Public Auction of a borrower's assets seized in a Foreclosure
order obtained from a court, and carried out by a sheriff or
other court officer. Assets pledged as loan collateral and secured
by attachments, liens, or mortgages may be sold at auction.
subdivision
A housing development that is created by dividing a tract of
land into individual lots for sale or lease.
subordinate
financing
Any mortgage or other lien that has a priority that is lower
than that of the first mortgage.
survey
A drawing or map showing the precise legal boundaries of a property,
the location of improvements, easements, rights of way, encroachments,
and other physical features.
sweat
equity
Contribution to the construction or rehabilitation of a property
in the form of labor or services rather than cash.
top
tenancy
in common
As opposed to joint tenancy, when there are two or more individuals
on title to a piece of property, this type of ownership does
not pass ownership to the others in the event of death.
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 evidencing 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
Insurance that protects the lender (lender's policy) or the
buyer (owner's policy) against loss arising from disputes over
ownership of a property.
title
search
A check of the title records to ensure that the seller is the
legal owner of the property and that there are no liens or other
claims outstanding.
transfer
of ownership
Any means by which the ownership of a property changes hands.
Lenders consider all of the following situations to be a transfer
of ownership: the purchase of a property "subject to"
the mortgage, the assumption of the mortgage debt by the property
purchaser, 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 title passes from one owner
to another.
Treasury
index
An index that is used to determine interest rate changes for
certain adjustable-rate mortgage (ARM) plans. It is based on
the results of auctions that the U.S. Treasury holds for its
Treasury bills and securities or is derived from the U.S. Treasury's
daily yield curve, which is based on the closing market bid
yields on actively traded Treasury securities in the over-the-counter
market.
Truth-in-Lending
A federal law that requires lenders to fully disclose, in writing,
the terms and conditions of a mortgage, including the annual
percentage rate (APR) and other charges.
two-step
mortgage
An adjustable-rate mortgage (ARM) that has one interest rate
for the first five or seven years of its mortgage term and a
different interest rate for the remainder of the amortization
term.
two-
to four-family property
A property that consists of a structure that provides living
space (dwelling units) for two to four families, although ownership
of the structure is evidenced by a single deed.
trustee
A fiduciary who holds or controls property for the benefit of
another.
top
top
VA
mortgage
A mortgage that is guaranteed by the Department of Veterans
Affairs (VA).
vested
Having the right to use a portion of a fund such as an individual
retirement fund. For example, individuals who are 100 percent
vested can withdraw all of the funds that are set aside for
them in a retirement fund. However, taxes may be due on any
funds that are actually withdrawn.
Veterans
Administration (VA)
An agency of the federal government that guarantees residential
mortgages made to eligible veterans of the military services.
The guarantee protects the lender against loss and thus encourages
lenders to make mortgages to veterans.
top
For a free professional evaluation
and foreclosure ebook, simply click the link below and fill out the
evaluation form.
Take
Me To The Evaluation Form
Free Foreclosure Information | Free
Foreclosure Advice | Foreclosure Scams | Foreclosure Loans | Foreclosure
Investors | Foreclosure Investing
