|
Adjustable Rate
Mortgage (ARM): |
Mortgage loans under which the interest rate is
periodically adjusted to more closely coincide
are agreed to at the inception of the loan. |
| |
|
|
Alternative Documentation: |
The use of pay
stubs, W-2 forms, and bank statements in lieu of
Verifications of Employment (VOE) and
Verifications of Deposit (VOD) to qualify a
borrower for a mortgage. |
| |
|
|
Amortization: |
The systematic
and continuous payment of an obligation through
installments until the debt has been paid in
full. |
| |
|
| Annual
Percentage Rate (APR): |
A term used in
the Truth-in-Lending Act to present the
percentage relationship of the total finance
charge to the amount of the loan. The APR
reflects the cost of the mortgage loan as a
yearly rate. It could be higher than the
interest rate stated on the Note because it
includes, in addition to the interest rate, loan
discount points, miscellaneous fees and mortgage
insurance. |
| |
|
|
Appraisal:
|
A report made
by a qualified person setting forth an opinion
or estimate of property value. (Appraisal also
refers to the process through which a conclusion
on property value is derived.) |
| |
|
| Appraisal
Amount or Appraised Value: |
The fair
market value of a home determined by an
independent appraisal. The appraisal uses local
real estate market sales activity as a major
basis for valuation. |
| |
|
|
Appreciation: |
An increase in
the value of a property due to market conditions
or other causes. The opposite is depreciation. |
| |
|
|
Balloon Mortgage:
|
A fixed-rate
mortgage for a set number of years and then must
be paid off in full in a single "balloon"
payment. Balloon loans are popular with
borrowers expecting to sell or refinance their
property within a definite period of time. |
| |
|
|
Bankruptcy:
|
Legal relief
from the payment of all debts after the
surrender of all assets to a court-appointed
trustee. Assets are distributed to creditors as
full satisfaction of debts, with certain
priorities and exemptions. A person, firm or
corporation may declare bankruptcy under one of
several chapters of the U. S. Bankruptcy Code:
Chapter 7 covers liquidation of the debtor's
assets; Chapter 11 covers reorganization of
bankrupt businesses; Chapter 13 covers payment
of debts by individuals through a bankruptcy
plan. |
| |
|
| Cap:
|
The limit
placed on adjustments that can be made to the
interest rate or payments such as the annual cap
on an adjustable rate loan (ARM) or the cap on a
rate over the life of the loan. |
| |
|
|
Cash-out Refinance:
|
To refinance
the mortgage on a property for more than the
principal owed. This allows the borrower to get
cash from the equity in their home. Loan
products may vary on how much can be borrowed on
a cash-out refinance. |
| |
|
| Closing: |
Also known as
settlement, the finalization of the process of
purchasing or refinancing real estate. The
closing includes the delivery of a Deed, the
signing of Notes and the disbursement of funds |
| |
|
| Closing
Costs: |
Costs that are
due at closing, in addition to the purchase
price of the property. These costs normally
include, but are not limited to, origination
fee, discount points, attorney's fees, costs for
title insurance, surveys, recording documents,
and prepayment of real estate taxes and
insurance premiums held by the lender. Sometimes
the seller will help the borrower pay some of
these costs. |
| |
|
| Closing
Statement: |
An accounting
of the debits and credits incurred at closing.
All FHA, VA and Conventional financing loans use
a Uniform Closing or Settlement Statement
commonly referred to as the HUD-1. |
| |
|
|
Co-Borrower: |
A party who
signs the mortgage note along with the primary
borrower, and who also shares title to the
subject real estate. |
| |
|
| Collateral: |
Property
pledged as security for a debt. For example,
real estate that secures a mortgage. Collateral
can be repossessed if the loan is not repaid. |
| |
|
| Combined
Loan To Value (CLTV): |
The
mathematical relationship between the total of
all loan amounts (first mortgage plus
subordinate liens) and the value of the subject
property. |
| |
|
| Community
Reinvestment Act (CRA): |
This act
requires financial institutions to meet the
credit needs of their community, including low
and moderate-income sections of the local
community. It also requires banks to make
reports concerning their investment in the areas
where they do business. |
| |
|
|
Condominium:
|
A form of
property ownership in which the homeowner holds
title to an individual dwelling unit, an
undivided interest in common areas of a
multi-unit project, and sometimes the exclusive
use of certain limited common areas. All
condominiums must meet certain investor
requirements. |
| |
|
| Conforming
Loan: |
A loan with a
mortgage amount that does not exceed that which
is eligible for purchase by FNMA or FHLMC. All
loans are considered either as conforming or
non-conforming, also known as jumbo. |
| |
|
|
Conventional Loan: |
A mortgage
loan not insured or guaranteed by the federal
government. |
| |
|
| Conversion
Option: |
Options to
convert an adjustable rate mortgage or balloon
loan to a fixed rate mortgage under specified
conditions. |
| |
|
| Co-Signer: |
A party who
signs the mortgage note along with the borrower,
but who does not own or have any interest in the
title to the property. |
| |
|
| Creditor: |
A person to
whom debt is owed by another person who is the
"debtor". |
| |
|
| Credit
Rating: |
A rating given
a person or company to establish
credit-worthiness based upon present financial
condition, experience and past credit history. |
| |
|
| Credit
Report: |
A document
completed by a credit-reporting agency providing
information about the buyer's credit cards,
previous mortgage history, bank loans and public
records dealing with financial matters. |
| |
|
| Deal
Structure: |
An
Underwriters review of certain aspects of a loan
application that do not meet standard
guidelines. |
| |
|
| Debt to
Income Ratio: |
Compares the
amount of monthly income to the amount the
borrower will owe each month in house payment
(PITI) plus other debts. The other debts may
include but not limited to car payment, credit
cards, alimony, child support, and personal
loans. This ratio is commonly used to see if the
borrower has the capacity to repay the debt. |
| |
|
| Deed of
Trust: |
A legal
document that conveys title to real estate to a
disinterested third party (trustee) who holds
the title until the owner of the property has
repaid the debt. In states where it is used, a
Deed of Trust accomplishes essentially the same
purpose as a Mortgage. |
| |
|
| Default: |
Failure to
comply with the terms of any agreement. In real
estate, generally used in connection with a
mortgage obligation to refer to the failure to
comply with the terms of the Promissory Note.
Most often this default is a failure to make
payments, however, there are other means by
which a borrower may default, such as the
failure to pay real estate taxes. |
| |
|
|
Depreciation: |
A decline in
the value of property. The opposite of
appreciation. |
| |
|
| Discount
Points: |
A percentage
of the loan amount which is charged or credited
by the lender upon making a mortgage loan. Loans
that are made at the present market rate, with
no points, are considered to be made at "par."
Because of the lender's ability to charge or
credit points on an individual loan, the lender
is able to tailor a loan program and interest
rate to fit the needs of each individual
borrower. Discount points can be negotiated in
the Purchase Contract to be paid by either the
seller or the borrower.
Each point
equals 1% of the mortgage loan. For example, a
charge of 1 point on a $50,000 loan would result
in a charge of $500; 1/2 point would be $250
($50,000 x .50%). |
| |
|
|
Down Payment: |
The part of the
purchase price which the buyer pays in cash and
does not finance with a mortgage. |
| |
|
| Earnest
Money: |
Deposit made
by a purchaser of real estate as evidence of
good faith. |
| |
|
| Equal
Credit Opportunity Act (ECOA): |
Also known as
Regulation B. A federal law that prohibits a
lender from discriminating in mortgage lending
on the basis of race, color, religion, national
origin, sex, marital status, age, income derived
from public assistance programs, or previous
exercise of Consumer Credit Protection Act
rights. |
| |
|
| Equity: |
The difference
between the current market value of a property
and the principal balance of all outstanding
loans. |
| |
|
| Escrow
Account: |
An account
held by the lending institution to which the
borrower pays monthly installments for property
taxes, insurance, and special assessments, and
from which the lender disburses these sums as
they become due. |
| |
|
|
Fair Credit
Reporting Act: |
Regulated the
collection and distribution of information by
the consumer credit reporting industry. It also
affects how financial institutions collect and
convey credit information about loan applicants
or borrowers. |
| |
|
| Fair
Housing Act: |
Prohibits the
denial or variance of the terms of real estate
related transactions based on race, color,
religion, sex, national origin, disability, or
familiar status of the credit applicant. Real
estate related transactions include a mortgage,
home improvement, or other loans secured by a
dwelling. |
| |
|
|
Federal Home Loan
Mortgage Corporation (FHLMC): |
Also known as
Freddie Mac. A publicly owned corporation
created by Congress to support the secondary
mortgage market. It purchases and sells
conventional residential mortgages as well as
residential mortgages insured by the Federal
Housing Administration (FHA) or guaranteed by
the Veterans Administration (VA). |
| |
|
| Federal
National Mortgage Association (FNMA): |
Also known as
Fannie Mae. A privately owned corporation to
support the secondary mortgage market. It adds
liquidity to the mortgage market by investing in
home loans through the country. |
| |
|
| FICO Score: |
A credit score
given to a person that establishes
creditworthiness based on present financial
condition, experience and past credit history. |
| |
|
|
Finance Charge:
|
The cost of
credit as a dollar amount (i.e. total amount of
interest and specific other loan charges to be
paid over the term of the loan and other loan
charges to be paid by the borrower at closing).
Loan charges include origination fees, discount
points, mortgage insurance, and other applicable
charges. If the seller pays any of these
charges, they cannot be included in the finance
charge. |
| |
|
| Financial
Statement: |
A summary of
facts showing an individual's or company's
financial condition. For individuals, it states
their assets and liabilities as of a given date.
For a company it should include a Profit and
Loss Statement (P&L) for a certain period of
time and balance sheet, stating assets and
liabilities as of a given date. |
|
|
|
First Mortgage: |
A real estate loan
that creates a primary lien against real
property. |
|
|
|
|
First
Rate Adjustment --
First rate adjustment after: |
In association
with an Adjustable Rate Mortgage loan, this is
the number of months after which the loan has
closed when the first interest rate adjustment
will occur. |
|
|
|
|
First
Rate Adjustment --
Maximum rate decrease: |
In association
with an Adjustable Rate Mortgage loan, this is
the most the interest rate can decrease during
the first adjustment period. |
|
|
|
|
First
Rate Adjustment --
Maximum rate increase: |
In association
with an Adjustable Rate Mortgage loan, this is
the most the interest rate can increase during
the first adjustment period. |
|
|
|
|
Fixed Rate
Mortgage: |
The type of loan
where the interest rate will not change for the
entire term of the loan. |
|
|
|
Floating: |
The term used when
a purchaser elects not to lock-in an interest
rate at the time of application. |
|
|
|
Flood Insurance: |
Insurance that
compensates for direct physical damages by or
from flood to the insured property subject to
the terms, provisions, conditions and losses not
covered provision of the policy. It is required
for mortgages on properties located in federally
designated flood areas. |
|
|
|
|
Good Faith
Estimate (GFE): |
An estimate of
settlement charges paid by the borrower at
closing. The Real Estate Settlement Procedures
Act (RESPA) requires a Good Faith Estimate of
settlement charges be provided to the borrower. |
|
|
|
|
Gift Letter: |
A letter or
affidavit that indicates that part of a
borrower's down payment is supplied by relatives
or friends in the form of a gift and that the
gift does not have to be repaid. |
|
|
|
Gross Income: |
A person's income
before deduction for income taxation. |
|
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|
|
Hazard
Insurance:
|
Insurance against
losses caused by perils which are commonly
covered in policies described as a "Homeowner
Policy". |
|
|
|
|
Home Maintenance: |
Costs associated
with maintaining a home. This may include, but
not limited to, general repairs, replacement or
repair of furnace, air conditioning, roof,
plumbing and electrical systems. |
|
|
|
|
Home
Mortgage Disclosure Act (HMDA):
|
Also known as
Regulation C. The purpose of HMDA is to provide
disclosure of mortgage lending application
activity (home purchase or improvement) to
regulators and the public. Information is
collected on each application, and is recorded
on a log that is compiled to produce a report on
application activity by geographic designation
(census tract). |
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|
|
Homeowners
Association (HOA): |
A non-profit
corporation or association that manages common
areas and services of a Condominium or Planned
Unit Development (PUD). |
|
|
|
Homeowners
Insurance: |
Insurance that
covers damage to the insureds' residence and
liability claims made against the insured
subject to the policy terms, conditions,
provisions, losses not insured provision and
exclusions. |
|
|
|
|
Housing Expense
Ratio: |
Ratio used to
determine the borrowers capacity to repay a home
loan. The ratio compares monthly income to the
house payment (Principal, Interest, Taxes and
Insurance). |
|
|
|
|
Index: |
In connection with
ARM loans, the external measurement used by a
Lender to determine future changes which are to
occur to an adjustable loan program. These will
typically be published rates that are
independent of the Lender's control, such as a
Treasury Bill. |
|
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|
|
Initial Interest
Rate: |
The beginning
interest rate at the start of an adjustable rate
mortgage (ARM). It may be lower than the fully
indexed rate or "going market rate" and it will
remain constant until it is adjusted up or down
on the adjustment date. |
|
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|
Interest: |
- The amount
paid by a borrower to a lender for the use
of the lender's money for a certain period
of time.
- The amount
paid by a bank on some deposit accounts.
|
|
|
|
|
Interest Income: |
The potential
income from funds which would have been used for
the down payment, closing costs, and any
difference (increase) between monthly rental
payment and monthly mortgage payment. |
|
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|
Interest Rate: |
The percentage of
an amount of money that is paid for its use for
a specific time; usually expressed as an annual
percentage. |
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|
Judgment: |
Decree of a court
declaring that one individual is indebted to
another and fixing the amount of such
indebtedness. |
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|
|
Jumbo Loan: |
A loan above the
limit set by the Federal National Mortgage
Association (Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie Mac). Also
referred to as a non-conforming loan. |
|
|
|
|
Late
Charge:
|
An additional
charge a borrower is required to pay as a
penalty for failure to pay a regular mortgage
loan installment when due; a penalty for a
delinquent payment. |
|
|
|
|
Lien: |
A legal claim
against a property that must be paid off when
the property is sold. A lien is created when you
borrow money and use your home as collateral for
the loan. |
|
|
|
|
Life of
Loan -- Maximum rate
decrease: |
In association
with an Adjustable Rate Mortgage loan, this is
the most the interest can decrease over the life
of the mortgage loan. |
|
|
|
|
Life of
Loan -- Maximum rate
increase: |
In association
with an Adjustable Rate Mortgage loan, this is
the most the interest can increase over the life
of the mortgage loan. |
|
|
|
|
Loan Application: |
A source of
information on which the lender bases a decision
to make or not make a loan; defines the terms of
the loan contract, gives the names of the
borrower(s), place of employment, salary, bank
accounts, credit references, real estate owned,
and describes the property to be mortgaged. |
|
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|
|
Loan Balance: |
The amount of
remaining unpaid principal balance owed by the
borrower. |
|
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|
|
Loan Term: |
Number of years a
loan is amortized. Mortgage loan terms are
generally 15, 20, or 30 years. |
|
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|
|
Loan-to-Value
(LTV): |
The ratio of the
total amount borrowed on a mortgage against a
property, compared to the appraised value of the
property. A LTV ratio of 90 means that the
borrower is borrowing 90% of the value of the
property and paying 10% as a down payment. For
purchases, the value of the property is the
lesser of the purchase price or the appraised
value. For refinances the value is determined by
an appraisal. |
|
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|
|
Loan-to-Value
Ratio: |
The ratio,
expressed as a percentage, of the amount of the
loan (numerator) to the value or selling price
of real property (denominator). For example, if
you have an $80,000 1st mortgage on a home with
an appraised value of $100,000, the LTV is 80%
($80,000 / $100,000 = 80%). |
|
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|
Lock-In: |
A written
agreement between the lender and borrower for a
specified period of time in which the lender
will hold a specific interest rate, origination
and/or discount point(s). |
|
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|
|
Margin: |
Under the terms of
an adjustable rate mortgage (ARM), the margin is
a set adjustment to the index. The particular
loan product determines the amount of the
margin. |
|
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|
|
Median Income: |
The middle income
level. Half of the incomes would be higher than
the median income and half of the incomes would
be below the median income. This is not to be
confused with an average income. |
|
|
|
|
Mortgage: |
The written
instrument used to pledge a title to real estate
as security for repayment of a Promissory Note. |
|
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|
Mortgage
Insurance: |
Insurance written
in connection with a mortgage loan that
indemnifies the lender in the event of borrower
default. In connection with conventional loan
transactions, this insurance is commonly
referred to as Private Mortgage Insurance (PMI). |
|
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|
|
Mortgage Note: |
A written promise
to pay a sum of money at a stated interest rate
during a specified term. It is typically secured
by a mortgage. |
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|
Mortgage
Servicing: |
Controlling the
necessary duties of a mortgagee, such as
collecting payments, releasing the lien upon
payment in full, foreclosing if in default, and
making sure the taxes are paid, insurance is in
force, etc. The lender or a company acting for
the lender, for a servicing fee, may do
servicing. (Also called Loan Servicing.) |
|
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|
Mortgagee: |
The institution,
group, or individual that lends money on the
security of pledged real estate; the
association, the lender. |
|
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|
Mortgagee Clause: |
This is the clause
that is typically used for hazard insurance and
flood insurance. For loans originated by the
State Farm BankŪ it will read: State Farm Bank,
F.S.B., Its Successor and/or Assigns, P.O. Box
2583, Ft. Wayne, IN 46801-2583. |
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|
Mortgagor: |
The owner of real
estate who pledges his property as security for
the repayment of a debt; the borrower. |
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|
Net Income: |
The difference
between effective gross income and expense
including taxes and insurance. The term is
qualified as net income before depreciation and
debt. |
|
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|
Non-Conforming: |
A loan with a
mortgage amount that exceeds that which is
eligible for purchase by FNMA or FHLMC. All
other loans above this amount are considered to
be non-conforming or jumbo loans. |
|
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|
Non-Owner-Occupied Property:
|
Property purchased
by a borrower not for a primary residence but as
an investment with the intent of generating
rental income, tax benefits, and profitable
resale. |
|
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|
|
Note: |
A written promise
by one party to pay a specific sum of money to a
second party under conditions agreed upon
mutually. Also called "promissory note." |
|
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|
Note Rate: |
The interest rate
on the mortgage loan. |
|
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|
Origination Fee: |
A fee paid to a
lender for processing a loan application; it is
stated as a percentage of the mortgage amount.
|
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|
Origination
Process: |
Process in which a
lender solicits business, gathers required
information and commits to loan money, for the
purchase of real estate. |
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|
|
Owner-Occupied
Property: |
The borrower or a
member of the immediate family lives in the
property as a primary residence. |
|
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|
PITI: |
Term commonly used
to refer to a mortgage loan payment. Acronym
stands for Principal, Interest, Taxes, and
Insurance. |
|
|
|
|
PITI Ratio: |
Compares the
amount of the monthly income to the amount the
borrower will owe each month in principal,
interest, real estate tax and insurance on a
mortgage. Lenders use it in deciding whether to
give the borrower a loan. Also called
"income-to-debt" ratio. |
|
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|
Planned Unit
Development (PUD): |
A housing project
that may consist of any combination of homes
(one-family to four-family), condominiums, and
various other styles. In a PUD, often the
individual unit and the land upon which it sits
are owned by the unit/homeowner; however, the
homeowner's association owns common facilities. |
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|
Pre-Approval: |
A process in which
a customer provides appropriate information on
income, debts and assets that will be used to
make a credit only loan decision. The customer
typically has not identified a property to be
purchased, however, a specific sales price and
loan amount are used to make a loan decision.
(The sales price and loan amount are based on
customer assumptions) |
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|
Pre-Qualification: |
A process designed
to assist a customer in determining a maximum
sales price, loan amount and PITI payment they
are qualified for. A pre-qualification is not
considered a loan approval. A customer would
provide basic information (income, debts,
assets) to be used to determine the maximum
sales price, etc. |
|
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|
Prepaid Expenses
or Prepaids: |
The term used to
describe the funds the Lender requires to be
deposited to establish the escrow account for
taxes and insurance at the time of closing (also
refers to Prepaid Interest). |
|
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|
Prepaid Interest: |
Interest that the
borrower pays the lender before it becomes due. |
|
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|
Prepayment: |
A loan repayment
made in advance of its contractual due date. |
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|
Prepayment
Penalty: |
A penalty under a
Note, Mortgage or Deed of Trust imposed when the
loan is paid before its maturity date. |
|
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|
Principal and
Interest: |
Two components of
a monthly mortgage payment. Principal refers to
the portion of the monthly payment that reduces
the remaining balance for the mortgage. Interest
is the fee charged for borrowing money. |
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|
Principal Balance: |
The outstanding
balance of a mortgage, not counting interest.
|
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|
Principal,
Interest, Real Estate Tax, Insurance Payment: |
The total mortgage
payment which includes principal, interest,
taxes and insurance. |
|
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|
Private
Mortgage Insurance (PMI):
|
Insurance against
a loss by a lender in the event of default by a
borrower (mortgagor). A private insurance
company issues this insurance. The premium is
paid by the borrower and is included in the
mortgage payment. |
|
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|
Processing: |
Gathering the loan
application and all required supporting
documents (including the property appraisal,
credit report, credit history, and income and
expenses) so that a lender can consider the
borrower for a loan. |
|
|
|
|
Promissory Note:
|
A document in
which the borrower promises to pay a stated
amount on a specific date. The note normally
states the name of the lender, the terms of
payment and any interest rate. |
|
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|
|
Property Taxes: |
Taxes assessed on
real estate. Property taxes are based on
valuations by local and or state governments. |
|
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|
Purchase
Agreement: |
A written
agreement between a buyer and seller of real
property, that states the price and terms of the
sale. |
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|
Purchase Price: |
The total amount
paid for a home. |
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|
Qualifying Income
Ratios: |
Income analysis
used by lenders in deciding whether to offer the
borrower a loan. One type of analysis compares
only the amount of the proposed monthly mortgage
payment to the monthly income. Another compares
the amount of the total monthly payments (for
example car, credit card and proposed mortgage
payments) to the monthly income. |
|
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|
Rate Index: |
An index used to
adjust the interest rate of an adjustable
mortgage loan. |
|
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|
Real Estate
Appreciation Rate: |
Percentage
increase in the value of real estate, expressed
at an annual rate. |
|
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|
Real Estate
Settlement Procedures Act (RESPA): |
A consumer
protection law that requires, among other
things, lenders to give borrowers advance notice
of closing costs. |
|
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|
Realtor: |
A person licensed
to negotiate and transact the sale of real
estate on behalf of the property owner. A real
estate broker or associate must hold active
membership in a real estate board affiliated
with the National Association of Realtors. |
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Recording Fee: |
The amount paid to
the recorder's office in order to make a
document a matter of public record. |
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Regulation Z: |
Federal Reserve
regulation issued under the Truth-in-Lending
Act, which, among other things, requires that a
credit purchaser be advised in writing of all
costs connected with the credit portion of the
loan. |
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Rental Payment: |
A payment made to
use another's property. The amount of the rent
is determined in a contract and is typically
paid monthly. |
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Renters Insurance: |
Insurance against
perils which are commonly covered in policies
described as a "Renters Policy". |
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Repayment: |
The payment of a
mortgage loan over a period of time established
when the loan is originated. |
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Rescind: |
To avoid or cancel
in such a way as to treat the contract or other
object of the rescission as if it never existed. |
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Sales Contract: |
A written
agreement between parties stating all terms and
conditions of a sale. |
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Savings Rate: |
The interest rate
a person expects to earn on a savings account or
investment account. |
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Secondary Market: |
An informal market
where existing mortgages are bought and sold. It
is the traditional aftermarket for mortgage
loans that brings together lenders that sell
mortgages with lenders, investors and agencies
that buy mortgages. |
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Seller
Contribution: |
The seller may be
paying some or all of the borrower's cost. The
amount of the contribution has limitations.
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Selling Costs: |
The costs incurred
in selling a home. This could include Realtor
expenses and other miscellaneous expenses such
as painting or minor repairs to prepare the home
for sale. |
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Servicing: |
All the management
and operational procedures that the mortgage
company handles for the life of the loan, up
through foreclosure if necessary, including:
collecting the mortgage payments, ensuring that
the taxes and insurance charges are paid
promptly, and sending an annual report on the
mortgage and escrow accounts. |
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Servicing
Released: |
A stipulation in
the agreement for the sale of mortgages in which
the Lender is not responsible for servicing the
loan. |
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Servicing
Retained: |
A loan sale in
which the original lender's servicing department
continues to service the loan after the sale to
a secondary institution or investor. |
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Settlement
Statement: |
Also referred to
as a HUD-1 Settlement Statement. The complete
breakdown of costs involved in the real estate
transaction for both the seller and buyer. |
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Single-Family
Attached Home: |
A single-family
dwelling that is attached to other single-family
dwellings. |
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Single-Family
Detached Home: |
A freestanding
dwelling for a single family |
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Survey: |
A measurement of
land, prepared by a registered land surveyor,
showing the location of the land with reference
to known points, its dimensions and the location
and dimensions of any improvements. |
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Subordinate
Financing: |
An additional lien
against the real estate securing borrowers first
mortgage. This lien takes second priority to the
first mortgage. |
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Subsequent Rate Adjustment --
Maximum rate decrease: |
In association
with an Adjustable Rate Mortgage loan, this is
the most the interest rate can decrease when it
is scheduled for reevaluation and possible
adjustment. |
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Subsequent Rate Adjustment --
Maximum rate increase: |
In association
with an Adjustable Rate Mortgage loan, this is
the most the interest rate can increase when it
is scheduled for reevaluation and possible
adjustment. |
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Subsequent Rate Adjustment --
Next ARM Adjustment Date: |
In association
with an Adjustable Rate Mortgage loan, this is
the date scheduled for the next reevaluation and
possible adjustment. |
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Subsequent Rate Adjustment --
Rate Change Frequency: |
In association
with an Adjustable Rate Mortgage loan, this is
the frequency in which possible adjustments may
be made to the interest rate amount for
Adjustable Rate Mortgages after the initial
adjustment. |
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Tax Rates: |
Tax levied by the
federal government and some states based on a
person's income. Federal income tax rates vary
depending on a person's adjusted gross income. |
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Tax Savings: |
The amount saved
on taxes by itemizing deductions on income tax
returns. |
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Title: |
The evidence to
the right to or ownership in property. In the
case of real estate, the documentary evidence of
ownership is the title deed, which specifies in
whom the legal state is vested and the history
of ownership and transfers. Title may be
acquired through purchase, inheritance, devise,
gift or through the foreclosure of a mortgage. |
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Title Insurance
Policy: |
A contract by
which the insurer, usually a title company,
indicates who has legal title and agrees to pay
the insured a specific amount of any loss caused
by clouds, claims or defects of title to real
estate, which the insured has an interest as
owner, mortgagee or otherwise.
(a) Owner's Title Policy: Usually issued to the
landowner himself. The owner's title insurance
policy is bought and paid for only once and then
continues in force without any further payment.
Owner's Title Insurance policies are not
assignable.
(b) Mortgagee's Title Policy: Issued to the
mortgagee and terminates when the mortgage debt
is paid. In the event of foreclosure, or if the
mortgagee acquires title from the mortgagor in
lieu of foreclosure, the policy continues in
force, giving continued protection against any
defects of title which existed at, or prior to,
the date of the policy. |
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Treasury Bills: |
Interest bearing
U.S. Government obligations sold at a weekly
sale. The change in interest rates paid on these
obligations is frequently used as the Rate Index
for Adjustable Mortgage Loans. |
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Truth in Lending
(TIL): |
The name given to
the federal statues and regulations (Regulation
Z) which are designed primarily to insure that
prospective Borrowers of credit received credit
and cost information before concluding a loan
transaction. |
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Underwriting
(Mortgage Loans): |
The process of
evaluating a loan application to determine the
risk involved for the lender. It involves an
analysis of the borrower's creditworthiness and
the quality of the property itself. |
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Verification of
Deposit (VOD): |
Form used in
mortgage lending to verify the deposits or
assets of a prospective borrower when monthly
statements are unavailable or unusable. |
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Verification of
Employment (VOE): |
Form used in
mortgage lending to verify the employment and
income of a prospective borrower when pay stubs
and W2 forms are unavailable or unusable. |
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Verification of
Mortgage (VOM): |
Form used in
mortgage lending to verify the existing mortgage
balance, monthly payments and late payments, if
any. |
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Verification of
Rent: |
Form used in
mortgage lending to verify monthly rents paid
and late payments, if any. |