~ A mortgage whose interest rate
changes periodically based on the changes in a specified index.. Referred to as
an adjutstible rate loan
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
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..
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
Freddie Mac ~
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
Charge~The cost of interest
and other charges involved in borrowing money.
~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.
Mortgage ~ A mortgage in
which the interest rate and monthly principal and interest payments remain the
same for the life of the loan.
~ A legal procedure in which a mortgaged
property is sold to pay the outstanding debt in case of default.
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.
~ 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 $
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
Lien ~A monetary claim against your property. Usually
liens must be settled before the seller can take title.
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.
~ The date that a loan is due in
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.
~ 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
~ Money paid by the borrower
to the lender for interest that accrues between the closing date and the end of
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
Private Mortgage Insurance
(PMI) ~ Insurance that
protects a mortgage lender against loss in the event of default by a borrower.
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.
Deed ~ A loan on a property
that was made after the first deed.
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.
~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
Title ~ The right to ownership in real estate, which is
transferred by a deed. Evidence of ownership in real estate.
Insurance ~ Coverage that compensates the insured
for any loss caused by defects of title.
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