| Terms A-C |
| Acceleration
Clause |
| It is a provision in a mortgage that gives the
lender the right to demand repayment of the entire
principal balance upon the default of the borrower.
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| Adjustable
Rate Mortgage |
| A mortgage, which allows the lender to adjust
the mortgage's interest rate periodically on the
basis of changes in a specified index. Interest
rates may move up or down, as market conditions
change. The change in interest rate will result
in a change in the periodic payments due under the
mortgage. |
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| Agent |
| A person authorized to act for and under the direction
of another person when dealing with third parties. |
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| Alternative
Financing |
| Mortgage financing, usually provided by an institutional
lender, other than a 30-year Fixed Rate Mortgage. |
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| Amortization |
| Reducing the principle and interest on a loan
with a payment plan that allows for equal payments
to be made to the creditor at consistent intervals
over the life of the loan (the amortization period).
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| Amortization
Schedule |
| The time table of the payments to be made on an
amortized loan showing the following information:
the date and amount of each payment, the amount
of each payment which will be applied to interest
and to principal and the balance of principal still
outstanding on the loan after the payment is made.
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| Annual Percentage
Rate |
| A rate designed to allow for the comparison of
one type of loan to another. The APR reflects the
cost of your mortgage loan as a yearly rate. It
will often be higher than the interest rate designated
on the note because it includes such items as interest,
mortgage insurance, and loan origination fee (points).
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| Application |
| A printed form used by a mortgage lender to record
required information concerning a prospective mortgage. |
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| Application Fee |
| The fees the lender charges the applicant. May
include costs of a property appraisal and a credit
report on the applicant. |
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| Appraisal |
| A written analysis made by a qualified person
setting forth an estimation of the value of a property,
usually after an inspection of the property. The
appraisal usually determines the amount of money
that a lender will loan on that property. |
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| Assessed Valuation |
| The value assigned to a property by a public tax
assessor for purposes of taxation. This valuation
does not necessarily correspond to the market valuation. |
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| Assessment |
| The process of placing a value on property for
purposes of taxation. This may take the form of
a levy against property for a special purpose, such
as a sewer assessment where the property owner pays
a share of the cost according to the valuation of
the property. |
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| Assets |
| Assets refer to the value of the entire property
and resources of a person or corporation. A fund's
assets generally include the securities in its portfolio
plus any cash. |
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| Assumption |
| A mortgage obligation that can be taken over by
the buyer when a home is sold. The new owner assumes
the mortgage obligations and assumes title to the
property. |
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| Assumption Fee
|
| The fee paid to a lender (usually by the purchaser
of real property) which results from the assumption
of an existing mortgage. |
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| Balloon Mortgages
|
| Usually a short-term fixed-rate loan that involves
small payments for a certain period of time with
the balance due in a single, large payment at a
time specified in the contract. |
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| Balloon Payment
|
| When the final installment payment on a note is
greater than the preceding installment payments
that extinguishes the debt. |
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| Basis Point |
| One basis point equals 1/100 of 1% in interest.
Basis points are used by Lenders to measure interest
rates in yield calculations. |
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| Binder |
| A preliminary agreement, which is written in evidence
of insurance coverage for a limited time. It is
usually secured by the payment of an earnest money
deposit and is replaced later with a permanent policy. |
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| Blanket Mortgage |
| A mortgage that covers two or more pieces of real
estate for security on a single loan. |
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| Borrower |
| A person or company (also know as Mortgagor) who
receives funds in the form of a loan in exchange
for a written promise to repay principal with interest. |
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| Bridge Loan |
| A loan used to fill a gap in financing. It is
usually a temporary mortgage to help a borrower
obtain the necessary cash funds to purchase another
home, prior to the sale of their currently owned
home. |
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| Buydown |
| The payment of extra money on a loan now so as
to provide a lower interest rate over either a given
period or over the life of the loan. |
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| Cash Flow |
| The amount of cash derived over a given period
of time from an income producing property, such
as a rental house, after all expenses of holding
and carrying the property are paid. Theoretically,
the cash flow should be large enough to pay all
property expenses including mortgages, taxes, etc.
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| Cash Out |
| The refinancing of a mortgage in which the money
received from the new loan exceeds the amount due
on the old loan. This refinance transaction results
in additional cash for the homeowner that can be
used for any purpose. |
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| Cash To Close |
| Liquid assets that are accessible to be used to
pay the closing cost in a mortgage transaction. |
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| Closing |
| The culmination of a real estate transaction in
which documents are signed and recorded, funds are
exchanged and the property is transferred. |
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| Closing Costs |
| Expenses (over and above the price of the property)
incurred by buyers and sellers in connection with
the closing of a mortgage loan. This usually involves
an origination fee, discount points, appraisal,
credit report, title insurance, attorney's fees,
survey, and prepaid items such as taxes and insurance
escrow payments. |
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| Closing Statement
|
| A document that details an account of the funds
between a buyer and seller received and paid at
the closing. |
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| Co-Borrower |
| An additional individual who is both obligated
on the loan and whose name appears on all documents
with equal legal obligations. |
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| Collateral |
| Additional security for a debt, such as the real
estate pledged as security for a mortgage. The lender
has the right, if the debt is not paid, to slll
the collateral to recoup the outstanding principal
and interest on the loan. |
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| Commitment Fee
(Loan) |
| An up-front fee paid by a potential borrower to
a lender for the lender's promise to lend money
at a specified rate and within a give time. |
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| Condominium |
| A development where individuals have title to
their own dwelling units in a multi-family structure
with joint ownership of common areas of structure
and the land. |
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| Conforming Loan
|
| Conventional home mortgages, first mortgages up
to loan amounts mandated by Congressional directive,
which meets the qualifications for sale or delivery
to either the Federal National Mortgage Association
(FNMA) or the Federal Home Loan Mortgage Corporation
(FHLMC). |
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| Construction
Loan |
| A structured, short-term loan to provide funds
necessary to begin construction on buildings or
homes. |
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| Contingency |
| A condition that must occur before a contract
is legally binding. For example: The sale of a house
is contingent upon the buyer obtaining financing. |
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| Conventional
Mortgage |
| A mortgage loan made by an institutional lender
without the inclusion of government guarantees such
as VA or FHA loans. |
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| Conversation
Option |
| The right for the borrower for a fee to convert
an Adjustable Rate Mortgage into a Fixed Rate Mortgage
within a specific time frame. |
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| Convertible ARM
|
| The convertible ARM is a combination of both fixed-rate
and adjustable rate mortgages, allowing the best
of both options in one package. |
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| Co-Op |
| Short for Cooperative, a structure of two or more
units, owned by a corporation that gives each resident
the right to occupy a specific apartment or unit.
It is a mode of land ownership where the occupiers
of individual units in a building own an interest
in the Cooperative Corporation that owns the whole
property. |
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| Creative Financing |
| When institutional financing of the purchase of
a property does not meet the purchaser's need, another
party may provide additional financing. Creative
financing is outside the normal practice of residential
financing because the lender does not have to follow
the same stringent rules governing the institutional
lenders. |
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| Current Index |
| The current value of a recognized
index as calculated and published nationally or
regionally. It is used in calculating the new note
at each adjustment period as periodically, the current
index changes. |
