| 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. |
