|
 |
| |
Adjustable
Rate Mortgage loan (ARM)
- A
type of alternative mortgage instrument in which the interest
rate adjusts periodically according to a predetermined index and
margin, this adjustment results in the payment either increasing
or decreasing . In some situations, the adjustment is made to
the outstanding principal.
Amortization
- Repayment
of a debt in equal installments of principal and interest, rather
than interest-only payments.
Annual
Percentage Rate (APR)
- A
measure of the cost of credit, expressed as a yearly rate. It
includes interest as well as other charges. Because all lenders
follow the same rules to ensure the accuracy of the annual percentage
rate, it provides consumers with a good basis for comparing the
cost of loans, including mortgage plans.
Appraisal
- A
report by a qualified person setting forth an opinion or estimate
of value. Also, the process by which this estimate is obtained.
Appraised
Value
- An
opinion of the value of a property at a given time, based on facts
regarding the location, improvements, etc., to the property and
surroundings.
Assumption
of Mortgage
- Agreement
by a buyer to assume the liability under an existing note secured
by a mortgage or deed of trust. The lender usually must approve
the new debtor in order to release the existing debtor from liability.
Balloon
Note
- A
note calling for periodic payments which are insufficient to fully
amortize the face amount of the note prior to maturity, so that
a principle sum known as a "Balloon" is due at maturity.
Bi-weekly
mortgage
- A
mortgage with payments due every two weeks totaling 26 payments
a year.
Buydown
- A
payment to the lender to reduce the interest rate on a mortgage.
Call
provision
- A
clause in the mortgage or deed of trust giving the 'mortgagee' or
beneficiary the right to accelerate payment of he mortgage debt
in full on a certain date or on the happening of specified conditions.
Cap
- The
maximum increase the an Adjustable Rate Mortgage (ARM) can change,
either at each adjustment or during the life of the mortgage.
Example: If the original loan was made at 10% with a 5% cap, the
interest on the loan may not exceed 15% regardless of market conditions.
Certificate
of eligibility
- A
document used by the VA to certify a veteran’s eligibility for
a VA loan.
Certificate
of reasonable value (CRV)
- A
document issued by the VA establishing maximum value and loan
amount for a VA-guaranteed mortgage.
Certified
Mortgage Banker (CMB)
- A
professional designation of the mortgage banking industry.
Commitment
- A
written promise to make or insure a loan for a specified amount
and on specified items.
Comparables
- Properties
used as comparisons to determine the value of a specified property.
Conventional
Mortgage
- A
mortgage or deed of trust not obtained under a government insured
program (such as FHA or VA), but may require private mortgage
insurance.
Convertible
Mortgage
- An
adjustable rate mortgage where the mortgagor can convert the mortgage
to a fixed rate mortgage during a predetermined time period.
Credit
report
- A
report to a prospective lender on the credit standing of prospective
borrower or tenant. Used to help determine creditworthiness.
Deed
- A
written legal document which purports to transfer ownership of
land from one party to another.
Deed
in lieu
- A
deed given by a mortgagor to a 'mortgagee' to satisfy a debt and
avoid foreclosure.
Deposit
- A
sum of money given to bind a sale of real estate, or a sum of
money given to assure payment, or an advance of funds in the processing
of a loan. Also known as earnest money.
Discount
- The
difference between face value of an installment note and mortgage
or deed of trust, and the present cash value.
Down
payment
- Cash
portion paid by a buyer from his own funds, as opposed to that
portion of the purchase price which is financed.
Easement
- A
right created by grant, reservation, agreement, prescription,
or necessary implication, which one has in the land of another.
Encroachment
- Generally
construction onto the property of another, as of a wall, fence,
building, etc.
Encumbrance
- A
claim, lien, charge, or liability attached to and binding real
property.
Equal
Credit Opportunity Act (ECOA)
- ECOA
is a federal law that requires lenders and other creditors to
make credit equally available without discrimination based on
race, color, religion, national origin, age, sex, marital status,
receipt of income from public assistance programs or reliance
on any consumer protection law. Also known as Regulation B.
Equity
- The
difference between the market value of he real property and any
liens on the property.
Escrow
- Delivery
of a deed by a grantor to a third party for delivery to the grantee
upon the happening of a contingent event.
Federal
Housing Administration (FHA)
- A
federal Agency which insures first mortgages, enabling lenders
to loan a very high percentage of the sale price.
Foreclosure
- A
proceeding in or out of court, to extinguish all rights, title,
and interest, of the owner(s) of property in order to sell the
property to satisfy a lien against it.
Freddie
Mac (FHLMC)
- Federal
Home Loan Mortgage Corporation. A federal Agency purchasing first
mortgages, both conventional and federally insured, form members
of the Federal Reserve System, and the Federal Home Loan Bank
System.
Ginnie
Mac (GNMA)
- Government
National Mortgage Association. A federal association working with
FHA which offers special assistance in obtaining mortgages, and
purchases mortgages in a secondary capacity.
Index
Rate
- An
index used to adjust the interest rate of an adjustable mortgage
loan.
Insured
Mortgage
- A
mortgage insured against loss to the 'mortgagee' in the event of
default and a failure of the mortgaged property to satisfy the
balance owing plus costs of foreclosure.
Interest
Rate
- The
percentage of an amount of money which is paid for its use for
a specified time. Usually expressed as an annual percentage.
Late
Charge
- An
additional charge a borrower is required to pay as penalty for
failure to pay a regular installment when due.
Lien
- An
encumbrance against property for money, either voluntary or involuntary.
Loan
to Value (LTV)
- The
relationship between the amount of a mortgage loan and the appraised
value of the security expressed as a percentage of the appraised
value.
Margin
- The
number of percentage points the lender adds to the Index rate
to calculate the ARM interest rate at each adjustment.
Market
Value
- The
highest price that a buyer, willing but no compelled to buy, would
pay, and the lowest a seller, willing but not compelled to sell,
would accept.
Maturity
- The
termination or due date of a note, time, draft, acceptance, bill
of exchange, or bond. The date a time instrument or indebtedness
becomes due and payable.
Mortgage
- To
Hypothecate as security, real property for the payment of a debt.
The borrower (mortgagor) retains possession and use of the property.
Mortgage
banker
- A
firm or individual active in the field of mortgage banking. Mortgage
bankers, as local representatives of regional or national institutional
lenders, act as correspondents between lenders and borrowers.
Mortgage bankers need to borrow the funds they lend out.
Mortgage
banking
- The
packaging or mortgage loans secured by real property to be sold
to a permanent investor with servicing retained for the life of
the loan for a fee. The origination, sale, and servicing of mortgage
loans by a firm or individual. The investor-correspondent system
is the foundation of the mortgage banking industry.
Mortgagee
- The
party lending the money and receiving the mortgage.
Mortgage
insurance
- The
function of mortgage insurance (whether government or private)
is to insure a mortgage lender against loss caused by a mortgagor’s
default. This insurance may cover a percentage of or virtually
all of the mortgage loan depending on the type of mortgage insurance.
Mortgage
insurance premium (MIP)
- The
consideration paid by a mortgagor for mortgage insurance either
to FHA or a private mortgage insurance (PIM) company. On and FHA
loan, the payment is ½ of 1 percent annually on the declining
balance of the mortgage.
Mortgagor
- The
party who borrows the money and gives the mortgage.
Net
worth
- The
value of all assets, including cash, less total liabilities. It
is often used as an underwriting guideline to indicate an individual’s
creditworthiness and financial strength.
Note
- A
written promise to repay a certain sum of money on specified terms.
Open
End Mortgage
- A
mortgage permitting the mortgagor to borrow additional money under
the same mortgage, with certain conditions, usually as the assets
of the mortgage.
Origination
Fee
- A
fee or charge made by a lender for making a real estate loan.
Usually a percentage of the amount loaned.
PITI
(principal, interest, taxes, and insurance)
- The
principal and interest payment on most loans is fixed for the
term of he loan; the tax and insurance portion may be adjusted
to reflect changes in taxes or insurance costs.
Principal
- Amount
of debt, not including interest. The face value of a note, mortgage,
etc.
Principal
balance
- The
outstanding balance of a mortgage, exclusive of interest and any
other charges.
PMI
Private Mortgage Insurance
- Insurance
similar to FHA or VA insurance, insuring part of the first mortgage
or deed of trust, enabling a lender to make a conventional loan
of higher percentage of the property value.
Points
- A
point is equal to one percent of the loan.
Prepayment
Penalty
- A
fee charged to a mortgagor who pays off the principal balance
on a loan before it is due.
Prorate
- To
divide in proportionate shares, such as taxes, insurance, rent,
or other items which the buyer and seller share as of the time
of closing, or other agreed upon time.
Purchase
Agreement
- An
unconditional sales contract that defines the terms and conditions
under which real property is conveyed.
Quit
claim deed
- A
deed that transfers (with no warranty) only such interest, title,
or right a grantor may have at the time the conveyance is executed.
Real
Estate
- Land
and anything permanently affixed to the land, and those things
attached to the building.
Realtor
- A
real estate broker or an associate holding active membership in
a local real estate board affiliated with the National Association
of Realtors.
Recording
- The
noting in the registrar’s office of the details of a property
executed legal document, such as a deed, mortgage, a satisfaction
of mortgage, or an extension of mortgage, thereby making it a
part of the public record.
Refinance
- The
repayment of a debt from the proceeds of a new loan using the
same property as security.
Reissue
Rate
- A
charge for a title insurance policy if previous policy on the
same property was issued within a specified period. Reissue is
less than the original charge.
Rescission
of Contract
- Annulling
a contract and placing the parties to it in a position as if there
had not been a contract.
RESPA
(Real Estate Settlement Procedures Act)
- A
federal statute requiring disclosure of certain costs in the sale
of residential improved property which is to be financed by a
federally insured lender.
Secondary
Mortgage
- The
buying and selling of first mortgages of trust deeds by banks,
insurance companies, government agencies, and other 'mortgagees'.
Securities
and Exchange Commission (SEC)
- The
federal agency which regulates securities and the securities business.
It is involved in real estate and mortgage lending when MBS are
issued.
Security
- Real
or personal property pledged by a borrower, as additional protection
for the lender’s interest.
Settlement
Statement
- A
statement prepared by broker, escrow, or lender, giving a complete
breakdown of costs involved in a real estate sale.
Tax
lien
- A
claim against property for the amount of its due and unpaid taxes.
Term
- The
period of time between the commencement date and termination date
of a note, mortgage, legal document, or other contract.
Title
- Often
used interchangeably with the work ownership. It indicates the
accumulation of all rights in property, the owner and others.
Title
Insurance
- An
insurance policy which protects the insured (purchaser and lender)
against loss arising from defects in title.
Underwriting
- The
analysis and matching of risk to an appropriate rate and term.
The process of deciding whether to make a mortgage loan.
Usury
- Charging
a rate of interest greater than that permitted by law.
VA
Loan
- Home
loan guaranteed by the U.S. Veterans Administration, enabling
a veteran to buy a home with no money down.
Verification
of Deposit (VOD)
- A
document signed by the borrower's bank or other financial institution
verifying the account balance and history.
Verification
of Employment
- A
document signed by the borrower's employer verifying his/her starting
date, job title, salary and probability of continued employment.
Waiver
- The
voluntary renunciation, abandonment, or surrender of some claim,
right, or privilege.
Warehousing
- Mortgage
bankers and other financial institutions make loans that are then
periodically sold on the secondary market. After the loan is made
but before it is sold - the loan is said to be in the lenders
warehouse.
Warranty
Deed
- A
deed conveying the title to a property with a warranty of a clear
marketable title.
Zero
Lot Line
- A
form of housing where individual units are on separate lots, but
are attached to one another.
Zoning
- Areas
may be zoned to specify use of a property i.e. residential, commercial,
agricultural. These zoning ordinances are normally enforced by
the city or the county.
|
| |
|
