Mortgage Terms Defined
- The interest rate charged among banks for short-term Eurodollar loans, and a common index for ARMs.
- A claim by one person on the property of another for payment of debt.
- For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage.
- For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap.
- An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time
- A cash asset or an asset that is easily converted into cash.
- A sum of borrowed money (principal) that is generally repaid with interest.
- An initial statement of personal and financial information. Once six essential items are submitted to the lender the application process begins. These items are 1. Borrower’s name. 2. The borrower’s monthly income. 3. The borrowers Social Security number. 4. The property address. 5. The(...)
- This documents sets out the costs associated with a mortgage, including interest rate, lenders fees, title charges, pre-paid interest and insurance. The government requires that your lender give you a Loan Estimate within three days of receiving your loan application. The Loan Estimate is(...)
- A fee the lender charges to process a mortgage, usually expressed as a percentage of a loan (or Points), which pays for the work involved in evaluating and processing the loan.
- The collection of mortgage payments from borrowers and related responsibilities (such as handling escrows or impounds for property tax and insurance, foreclosing on defaulted loans and remitting payments to investors.)
- The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.
- The guarantee of an interest rate for a specified period of time by a lender, including loan term and points, if any, to be paid at closing. Short term locks (under 21 days), are usually available after lender loan approval only. However, many lenders may permit a borrower to lock a loan for(...)
- A lenders guarantee of an interest rate for a set period of time, usually between loan application and loan closing. This protects borrowers against rate increases during that time.
- The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.
- The average rate charged by a lender for a loan.
- The highest price that a buyer would pay for a property and the lowest price that a seller would accept.
- The date on which the principal balance of a loan becomes due and payable.
- That portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction and doesn't cover all of the interest. The loan balance therefore increases instead(...)
- Total monthly expense of principal, interest, taxes and insurance.
- A legal document that pledges a property to the lender as security for payment of a debt.
- A company that originates mortgages exclusively for resale in the secondary mortgage market.
- An individual or company that brings borrowers and lenders together for the purpose of loan origination.
- A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency.