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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. |
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| B |
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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. |
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| C |
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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. |
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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. |
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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. |
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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... |
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| 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 |
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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. |
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| D |
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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. |
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Down
Payment -
Money paid by a buyer
from his own funds, as
opposed to that portion
of the purchase price
which is financed. |
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| E |
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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. |
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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. |
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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. |
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Eviction
-
The legal removal of
real property occupants
for unlawful actions
carried out by those
occupants. |
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| F |
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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. |
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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. |
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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. |
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Fee
Simple -
The best title that one
can obtain; unqualified
and conveys the highest
bundle of rights. |
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FHA
Loan -
A government-backed
mortgage loan supported
by the US FHA and the
Department of Housing
and Urban Development
(HUD). |
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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. |
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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. |
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Forbearance
-
The postponement for a
limited time of a
portion or all the
payments on a loan when
a borrower is
delinquent. |
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Foreclosure
-
A legal procedure in
which real estate is
sold by the lender to
pay a defaulting
borrower's debt . |
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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. |
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| 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. |
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| 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 |
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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. |
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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. |
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Interest
Only -
A term loan arrangement
calling for payments of
interest only, not to
include any amount for
principal.
|
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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. |
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|
| 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. |
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| L |
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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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2007-2008 Mortgage Tree Capital Inc, All rights
reserved.