dcsimg

free mortgage quotes from top lenders @ loannetwork.com




Common mortgage and loan terms

 

  • ARM ~ A mortgage whose interest rate changes periodically based on the changes in a specified index.. Referred to as an adjutstible rate loan
  • Amortization~ The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.
  • APR~The cost of a loan stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee
  • Bond~ An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.
  • Cap~A provision of an adjustable-rate mortgage  that limits how much the interest rate or mortgage payments may increase or decrease, There are typically initial, periodic and lifetime cap's on a loan, refer to the note for clarification.
  • Deed~ The legal document conveying title to a property
  • EMD~ A deposit made by the potential home buyer to show that he or she is serious about buying the house, often referred to as the earnest deposit..
  • Escrow Account
    Lenders often establish an account called escrow or impound account, to pay the tax and insurance and other additional charges of your monthly mortgage payment.
  • Freddie Mac ~ A government-sponsored institution that supports the secondary mortgage market by purchasing mortgages from lenders and reselling them as securities.
  • Federal Housing Administration ~ A federal agency that issues first mortgages, enabling lenders to lend a very high percentage of the sale price. Also known as FHA.
  • Federal National Mortgage Association~ A privately owned, congressionally chartered company that is the nation's largest mortgage investor (fannie mae).
  • FHA Loan ~ A loan insured by the Federal Housing Administration.
  • Finance Charge~The cost of interest and other charges involved in borrowing money.
  • First Mortgage ~A mortgage which has priority over all other voluntary liens against a certain property; used in states that secure loans against real property with a mortgage.
  • Fixed Rate Mortgage ~ A mortgage in which the interest rate and monthly principal and interest payments remain the same for the life of the loan.
  • Foreclosure ~ A legal procedure in which a mortgaged property is sold to pay the outstanding debt in case of default.
  • Gift Letter~ A written statement from friends or family that explains gift funds given to a borrower to purchase a home, and states that no repayment is expected.
  • Good Faith Estimate ~ An estimate given to the borrower within three days of formal application that lists the costs they may incur at closing.
  • Home Equity Line of Credit ~ A loan, based on the borrower?s available equity in the home, that allows the borrower to withdraw and repay available loan proceeds on an ongoing basis.
  • Index ~ The rate you pay directly related to a particular interest-rate index.
  • Interest ~ The amount paid for the use of money, usually expressed as an annual percentage.
  • Interest Rate ~ The interest charged by a lender for the use of money, expressed as a percentage.
  • Jumbo Loan ~ A loan with a dollar amount that exceeds the statutory size limit purchase by Fannie Mae or Freddie Mac, presently $ 417,000
  • LIBOR (London Inter Bank Offer Rate) ~ An interest rate charged among banks in London for short-term loans denominated in a specific currency. A common index for debt securities.
  • Lien ~A monetary claim against your property. Usually liens must be settled before the seller can take title.
  • Line of Credit~ Type of loan in which the borrower may draw on funds at any time, up to an established maximum limit; the borrower may borrow, repay, and borrow again, any and all of the credit extended; a revolving loan.
  • Margin ~ Percentage added to the index by the lender to determine the interest rate.
  • Maturity Date ~ The date that a loan is due in full.
  • Negative Amortization ~ An increase in the outstanding mortgage balance that occurs when the amount of interest due is greater than the borrower?s monthly payment, and the difference is added to the mortgage principal.
  • Non-conforming ~ A loan that is not eligible to be purchased by Fannie Mae or Freddie Mac.
  • Note ~ A signed document in which a borrower agrees to repay a debt to a lender within a certain timeframe and according to certain terms.
  • Prepaid Interest ~ Money paid by the borrower to the lender for interest that accrues between the closing date and the end of the month.
  • Prime Rate ~ The most favorable interest rate charged by a commercial bank for short term loans; a benchmark from which a bank computes an appropriate rate of interest for a loan contract.
  • Point ~ An amount equal to one percent of the principal amount of the mortgage.
  • Principal ~ The balance on the loan amount, excluding interest.
  • Private Mortgage Insurance (PMI) ~ Insurance that protects a mortgage lender against loss in the event of default by a borrower.
  • Rate Adjustment Period ~ With most ARMs, any periodic adjustment in the interest rate changes the payment. Adjustment periods tend to reflect the period of the index of the most popular ARMs.
  • Rate Cap ~ Consumer safeguards that protect the interest rate during the application and processing period.
  • Refinance ~ The repayment of a debt from the proceeds of a new loan using the same property as security.
  • Second Trust Deed ~ A loan on a property that was made after the first deed.
  • Secondary Mortgage Market ~ The market where lenders and investors buy and sell existing mortgages or mortgage-backed securities, thereby providing funds for additional mortgage lending.
  • Servicing ~ A mortgage banking function following loan closing which includes the receipt of payments, customer service, escrow administration, investor accounting, collections, and foreclosures.
  • Subordination Agreement ~An agreement by which an encumbrance is made subject to a junior encumbrance; a lender with a loan in second position agrees to stay in second position on the property, even when the loan in first position has been rewritten or refinanced.
  • Term ~ The period of time during which a loan is repaid.
  • Title ~ The right to ownership in real estate, which is transferred by a deed. Evidence of ownership in real estate. Title Insurance ~ Coverage that compensates the insured for any loss caused by defects of title.