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A
B C D E
F G H I
J K L M
N O P Q
R S T U
V W X Y
Z
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Acceleration Clause: allows the lender to speed up the rate
at which your loan comes due or even to demand immediate payment
of the entire outstanding balance of the loan should you default
on your loan.
Adjustable
rate mortgage (ARM): is a mortgage in which the interest rate
is adjusted periodically based on a preselected index. Also
known as the renegotiable rate mortgage, the variable rate
mortgage or the Canadian rollover mortgage.
Adjustment
Interval: on an adjustable rate, the time between changes
in the interest rate and/or monthly payment, typically one,
three or five years, depending on the index.
Amortization:
means loan payment by equal periodic payment calculated to
pay off the debt at the end of a fixed period, including accrued
interest on the outstanding balance.
Annual
Percentage Rate: an interest rate reflecting the cost of a
mortgage as a yearly rate. This rate is likely to be higher
than the stated note rate. This rate or advertised rate on
the mortgage, because it takes into account points and other
credit costs. This (APR)allows homebuyers to compare different
types of mortgages based on the annual cost for each loan.
Appraisal:
an estimate of the value of property, made by a qualified
professional called a "appraiser".
Assumption:
the agreement between the buyer and the seller where the buyer
takes over the payments on a existing mortgage from the seller.
Assuming a loan can save the buyer money since this is a existing
mortgage debt, unlike a new mortgage where closing cost and
new possibly higher, market rate interest charges will apply.
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Balloon Payment Mortgage:usually a short term fixed-rate loan
which involves small payments for a certain period of time
and one large payment for the remaining amount of the principal
at a time specified in the contract.
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.
Buy-Down:
when the lender and/ or the homebuilder subsidizes the mortgage
by lowering the interest rate during the first few years of
the loan. While the payments are initially low, they will
increase when the subsidy expire.
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Caps ( Interest): consumer safeguards which limit the amount
the interest rate on an adjustable rate mortgage may change
per year and / or the life of the loan.
Caps
( payment): consumer safeguards which limit the amount monthly
payments on an adjustable rate mortgage can change.
Closing:
the meeting between the buyer, seller and lender or their
agents where the property and funds change hands. Also called
settlement.
Closing
Cost: usually include an origination fee, discount points,appraisal
fee, title search and insurance, survey, taxes, deeds recording
fee, credit report charge and other cost assessed at settlement.
The cost of closing usually are about 3-6% of the mortgage
amount.
Commitment:
an agreement, often in writing, between a lender and a borrower
to loan money at a future date subject to the completion of
paperwork or compliance with stated conditions.
Construction
Loan: a short-term loan for financing the cost of construction.
The lender advances funds to the builder at periodic intervals
as the work progresses.
Conventional
Loan: a mortgage not insured by FHA or guaranteed by the VA
or Farmers Home Administration (FMHA).
Credit
Report: a report documenting the credit history and current
status of a borrower's credit standing.
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Debt-to-income-Ratio: the ratio, expressed as a percentage,
which result when a borrower's monthly payment obligation
on long term debts is divided by his or her net effective
income (FHA/VA Loans) or gross monthly income (Conventional
Loan) . See housing expenses to income ratio.
Deed
of Trust: in many states, this document is used in place of
a mortgage to secure the payment of a note.
Default
: failure to meet legal obligation in a contract, specifically,
failure to make the monthly payments on a mortgage.
Deferred
Interest: see Negative Amortization.
Delinquency:
failure to make payments on time. This can lead to foreclosure.
Department Of Veterans Affairs (VA): an independent agency
of the federal government which guarantees long term or low
or no down payment mortgages to eligible veterans.
Discount
Points: see Points.
Down
Payment: money paid to make up the difference between the
purchase price and the mortgage amount. Down payment usually
are 10 to 20 % of sales price on conventional loans, and no
money down up to 5 % on FHA / VA loans.
Due
On Sale Clause: a provision in a mortgage or deed of trust
that allows the lender to demand immediate payment of the
balance of the mortgage if the holder sells the home.
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Earnest Money: money given by the buyer to a seller as part
of purchase price to bind a transaction or assure payment.
Equal
Credit Opportunity Act (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 or receipt of income from
public assistance programs.
Equity:
the difference between the fair market value and current indebtedness,
also referred to as the owner's interest.
Escrow:
refers to a neutral third party who carries out the instructions
of both the buyer and seller to handle all the paper work
of settlement or "closing " .Escrow may also refer to an account
held by the lender into which the homebuyer pays money for
tax or insurance payments.
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Fannie Mae: see Federal National Mortgage.
Farmers
Home Administration (FHMA): provides financing to farmers
and other qualified borrowers who unable to obtain loans elsewhere.
Federal
Home Loan Bank Board (FHLBB): a regulatory and supervisory
agency for federally chartered savings institution.
Federal
Home Loan Mortgage Corporation (FHLMC): also called "Fannie
Mac" is a quasi-govern-mental agency that purchases conventional
mortgages from insured depository institutions and Hud approved
mortgage bankers.
Federal
Housing Administration(FHA): a division of the Department
of Housing and Urban Development. Its main activity is insuring
of residential mortgage loan made by private lenders. FHA
also sets standards for underwriting mortgages.
Federal
National Mortgage Association (FNMA): also known as Fannie
Mac. A taxpaying corporation created by Congress that purchases
and sells conventional residential mortgages as well as those
insured by FHA or guaranteed by VA. This institution, which
provides funds for one in seven mortgages, makes mortgage
money more available and more affordable.
FHA
Loan: a loan insured by the federal Housing Administration
open to all qualified home purchasers. While there are limit
to size of FHA loans,they are generous enough to handle moderate
priced homes almost anywhere in the country.
FHA
Mortgage Insurance: requires a small fee ( up to 3.8%of the
amount ) paid at closing or a portion of this fee added to
each monthly payment of an FHA loan.
Fixed
Rate Mortgage: a mortgage on which the interest rate is set
for the term of the loan.
Foreclosure:
a legal procedure in which property securing debt is sold
by the lender to pay the defaulting borrower's debt. Freddie
Mac: see Federal Home loan Mortgage Corporation
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Ginnie Mae: see Government National Mortgage.
Government
National Mortgage Association (GNMA):Also known as Ginnie
Mae, provides sources of funds for residential mortgages,
guaranteed by FHA or VA.
Graduated
Payment Mortgage (GPM): a type of flexible payment mortgage
where the payments increase for a specified period of time
and then level off. This type of mortgage has negative amortization
built into it.
Gross
Monthly Income: the total amount the borrower earns per Month,
before any expenses are deducted.
Guaranty:
a promise by one party to pay a debt or perform an obligation
contracted by another if original party fails to pay or perform
according to a contract.
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Hazard Insurance: a form of insurance in which the insurance
company protects the insured from specified losses,such as
fire, wind storm and the like.
Housing
Expenses to Income Ratio: the ratio, expressed as a percentage,
which result when a borrower's housing expenses are divided
by his or her net effective income (FHA/VA Loans) or gross
monthly income (Conventional Loans) . See debt to income ratio.
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Impound: that portion of a borrower's monthly payments held
by the lender or servicer to pay for taxes,hazard insurance,
mortgage insurance, lease payments, and other items as they
become due . Also known as reserves.
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 yield, the
monthly average interest rate on loans closed by saving loans
institutions, and the monthly average cost-of-funds incurred
by savings and loans),which is then used to adjust the interest
rate on an adjustable mortgage up or down.
Investor:
a money source for a lenders.
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Jumbo Loan: A loan which is larger than the limits 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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Lien: a claim upon piece of property for the payment or satisfaction
of debt or obligation.
Loan
to Value Ratio: the relationship between the amount of the
mortgage loan and appraised value of the property expressed
as a percentage.
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Margin: the amount a lender adds to the index on an adjustable
rate mortgage to establish the adjusted interest rate.
Market
Value: the highest price that a buyer would pay and the lowest
price a seller would accept on a property. Market value may
be different from the price a property could actually be sold
for at a given time.
Mortgage
Insurance: money paid to insure the mortgage when the down
payment is less than 20 %. See private mortgage insurance,
FHA mortgage insurance.
Mortgagee:
the lender.
Mortgagor
: the borrower or the homeowner.
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Negative Amortization: occurs when your monthly payments are
not large enough to pay all the interest due on the loan.
The danger of negative amortization is that the homeowner
ends up owing more than the original amount of the loan.
Net
effective Income: the borrower's gross income minus federal
income tax.
Non-assumption
Clause: a statement in a mortgage contract forbidding the
assumption of the mortgage without the prior approval of the
lender.
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Origination Fee: the fee charged by the lender to prepare
loan documents, make credit checks, inspect and sometimes
appraise a property; usually computed as a percentage of the
face value of the loan.
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PITI: principal ,interest, taxes and insurance. Also called
monthly housing expense. Points (Loan Discount Points): prepaid
interest assessed at closing by the lender. Each point is
equal to 1% of the loan amount (2) points on a $100,000 mortgage
would cost $2,000.
Power
of Attorney: a legal document authorizing one person to act
on behalf of another.
Prepaid:
expenses necessary to create an escrow account or adjust the
seller's existing escrow account. Can include taxes, hazard
insurance, private mortgage insurance and special assessment.
Prepayment:
a privilege in a mortgage permitting the borrower to make
payments in advance of their due date.
Prepayment
Penalty: money charged for an early repayment of debt. Prepayment
penalties are allowed in some form (but not necessarily imposed)
in 36 states and the District of Columbia.
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Realtor: a real estate broker or an associate holding active
membership in a local authorities, thereby making it part
of the public records.
Rescission:
the cancellation of a contract. With respect to mortgage refinancing,
the law that gives the homeowner three days to cancel a contract
in some cases once it is signed if the transaction uses equity
in the home as security.
Recording
Fees: money paid to lender for recording a home sale with
the local authorities, thereby making it part of public record.
Renegotiable
Rate Mortgage(RRM): a loan in which the interest rate is adjusted
periodically . see adjustable rate mortgage.
RESPA:
short for the Real Estate Settlement Procedures Act. RESPA
is a federal law that allows consumers to review information
on known or estimated settlements cost once after application
and once prior to or at settlement. The law requires lenders
to furnish the information after application only.
Reverse
Annuity Mortgage (RAM): a form of mortgage in which the lender
makes periodic payments to the borrower's equity in the home
as security.
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Servicing: all the steps and operation a lender performs to
keep a loan in good standing, such as collection of payments,payment
of taxes, insurance, property inspections and the like.
Settlement/Settlement
Cost: see closing /closing cost.
Shared
Appreciation Mortgage (SAM): a mortgage in which a borrower
receives a below market interest rate in return for which
the lender ( or another investor such as family member or
other partner ) receives a portion of the future appreciation
in the value of the property. May also apply to mortgages
where the borrower shares the monthly principal and interest
payments with another party in exchange for a part of the
appreciation.
Survey:
a measurement of land, prepared by a registered land surveyor,
showing the location of land with reference to known points,
its dimensions, and the location and dimensions of any buildings.
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Term Mortgage: see balloon payment mortgage.
Title:
a document that gives evidence of an individual's ownership
of property.
Title
Insurance: a policy, usually issued by a title insurance company,which
insures a homebuyer against errors in the title search. The
cost of the policy is usually based on the value of the property,
and is often borne by the purchaser and / or seller.
Title
Search: an examination of municipal records usually performed
by a title company.
Truth
In Lending: a federal law requiring disclosure of the Annual
Percentage Rate to homebuyers shortly after they apply for
a loan.
Two
step Mortgage: a mortgage in which the borrower receives a
below market interest rate for a specified number of years
( most often 7-10 ) and then receives a new interest rate
adjusted ( with in certain limits) to market conditions at
that time. The lender sometimes has the option to call the
loan due with 30 days notice at the end of 7-10 years. Also
called Super Seven or Premier Mortgage
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Underwriting: the decision to make a loan to a potential homebuyer
based on credit, employment,assets and other factors and the
matching of this risk to an appropriate rate and term or loan
amount.
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VA Loan: a long term , low or no down payment loan guaranteed
by the Department of Veterans Affairs. Restricted to individuals
qualified by military services or other entitlements.
VA
Mortgage Funding Fee: a premium of up to 1 7/8 % (depending
on the size of the down payment) paid on a VA backed loan.
Variable
Rate Mortgage (VRM): a document signed by the borrower's financial
institution verifying the status and balance of his /or her
financial accounts.
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Wraparound: results when an existing assumable loan is combined
with a new loan , resulting in an interest rate somewhere
between the old one and the current market rate. The payments
are made to a second lender or previous homeowner, who then
forwards the payments to the first lender after taking the
additional amount off the top.
Sorry,
no definitions for letters K, Q,
X, Y, Z
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