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
Accelerate An option given to lenders through an "acceleration" clause in the mortgage or deed of trust requiring the borrower to pay the entire balance of the loan all at once if their loan is in default.
Adjustable Rate An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly. Affidavit A sworn statement in writing usually given while under oath or in the presence of a notary.
Amortization A repayment method in which the amount you borrow is repaid gradually though regular monthly payments of principal and interest. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.
Annual Membership An amount that may be charged annually for having a line of credit available. Often charged regardless of whether or not you use the line. Also referred to as a "participation fee."
Annual Percentage Rate (APR) The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report.
Application An initial statement of personal and financial information which is required to approve your loan.
Application Fee Fees that are paid upon application. An application fee may frequently include charges for property appraisal ($200-$400) and a credit report ($30-50).
Appraisal The process in which a licensed or authorized person gives an estimate of property value.
Appraisal A fee charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a loan.
Appreciation The difference between the increased value of the property and the original value.
Assignment The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders).
Assumption of Mortgage The agreement of a purchaser to become primarily liable for the payments on a mortgage loan. Unless otherwise specified by the lender, the seller may remain secondarily liable for payments.
Balloon Payment A lump sum payment for the unpaid balance of the loan.
Bid The offered amount for a property for sale at auction.
Cap The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.
Cash Out Receiving money back when refinancing your present mortgage.
Ceiling The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.
Certificate of Sale A document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.
Clear Title A title that is not burdened with defects.
Closing Costs Any fees paid by the borrowers or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.
Conforming Loan Generally, a mortgage loan under $203,150. Qualifying ratios and underwriting methods are standardized to a large degree.
Contract of Sale The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.
Credit Bid A bid on behalf of the lender at a foreclosure sale. The bid amount must be less than or equal to the balance of the loan in default.
Credit Limit The maximum amount that you can borrow under a home equity plan.
Debt Service The total amount of credit card, auto, mortgage or other debt upon which you must pay.
Decree A judicial decision.
Deed A signed document that transfers ownership of property from one party to another.
Deed of Trust A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The three parties included in a deed of trust are the borrower, lender and trustee.
Deed-in-lieu of Foreclosure An instance where borrowers voluntarily convey their rights in a property to the lender.
Default A mortgage or deed of trust is said to be in default when the borrower fails to make the payments as agreed to in the original promissory note.
Deficiency Judgment A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
Discount Points (or Points) The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).
Down Payment The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.
Due on Sale A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.
Effective Interest Rate The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.
Encumbrance A claim against a property by another party which usually affects the ability to transfer ownership of the property.
Equitable Title The present right to possession with the right to acquire legal title once a preceding condition has been met.
Equity The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.
Fair Market Value The price a property would sell for on the open market.
FHA Loan More appropriately termed "FHA Insured Loan." A loan for which the Federal Housing Administration insures the lender against losses the lender may incur due to your default.
First Mortgage A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances).
Fixed Rate An interest rate which is fixed for the term of the loan. Payments as well are fixed at one amount.
Foreclosure The forced sale of property pledged as security for a debt that is in default.
Free & Clear Ownership of property free of all indebtedness.
Good Faith Estimate A written estimate of closing costs which a lender must provide you within three days of submitting an application.
Grace Period A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report
Gross Income For qualifying purposes, the income of the borrower before taxes or expenses are deducted.
Hazard Insurance A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium.
Home Equity Line of Credit A loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Simple interest (interest-only payments on the out.
Home Equity Loan A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.
HUD 1 Settlement Statement A form utilized at loan closing to itemize the costs associated with purchasing the home. Used universally by mandate of HUD, the Department of Housing and Urban Development.
Index A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Common indexes include the Cost of Funds for the Eleventh Federal District of banks or the average rate of a one year Government Treasury Security.
Interest Rate The periodic charge, expressed as a percentage, for use of credit.
Judicial Foreclosure A foreclosure that is processed by a court action.
Jumbo Loan Mortgage loans over $203,150. Terms and underwriting requirements may vary from conforming loans.
Legal Description A formal description of real property sufficient to locate it by reference to government surveys or approved recorded maps.
Lender A person who lends money for temporary use on condition of repayment with interest (i.e., the bank, mortgage company, etc.).
Lien A charge upon real or personal property for the satisfaction of a debt.
Lis Pendens A recorded notice of pending lawsuit.
Loan to Value Ratio (LTV) A ratio determined by dividing the sales price or appraised value into the loan amount, expressed as a percentage. For example, with a sales price of $100,000 and a mortgage loan of $80,000, your loan to value ratio would be 80%. Loans with an LTV over 8.
Lock or Lock In A commitment you obtain from a lender assuring you a particular interest rate or feature for a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.
Margin An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.
Minimum Payment The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be "interest only," (simple interest). In other plans, the minimum payment may include principal and interest (amortized).
Mortgage A written pledge of property that is used as security for the repayment of a loan.
Mortgage Banker Originates mortgage loans, loaning you their funds and closing the loan in their name.
Mortgage Broker As do mortgage bankers, takes loan application and processes the necessary paperwork. Unlike a mortgage banker, brokers do not fund the loan with their own money, but work on behalf of several investors, such as mortgage bankers, S and L's, banks, or investment bankers.
Mortgage Insurance (MIP or PMI) Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.
Mortgage Loan A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or Deed of Trust is your agreement to pledge your home or other real estate as security.
Mortgagee The lender in a mortgage loan transaction.
Mortgagor The borrower in a mortgage loan transaction.
Negative Amortization Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance owed may increase, rather than decrease over the life of the loan.
Non-judicial Foreclosure The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default.
Notary A public officer licensed by the state to attest to and certify the validity of signatures of others. A notary is often referred to as a notary public.
Notice of Sale A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.
Personal Property Property other than real property consisting of things temporary or movable.
PITI Principal, interest, taxes and insurance, which comprise your monthly mortgage payment.
Points The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000)
Posting To publish, announce or advertise by physically attaching a notice to an object.
Postponement Postponement means to put off to a later time. In the case of a foreclosure sale, this is generally done by announcement at the original sale or by posting notices establishing the new date and time the foreclosure sale will take place.
Prepayment Penalty A fee paid to the lending institution for paying a loan prior to the scheduled maturity date.
Qualifying Ratios Comparisons of a borrower's debts and gross monthly income.
Request for Notice A recorded document requiring a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.
Right of Redemption A borrower's right to reacquire property lost due to a foreclosure.
Right to Rescission The legal right to void or cancel your mortgage contract in such a way as to treat the contract as if it never existed. Right of rescission is not applicable to mortgages made to purchase a home, but may be applicable to other mortgages, such as home equity loans.
Security Interest An interest that a lender takes in the borrower's property to assure repayment of a debt.
Servicing a Loan The ongoing process of collecting your monthly mortgage payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills.
Subject To The purchase of a property with an existing lien against the title without assuming any personal liability for the liens payment.
Title The written evidence that proves the right of ownership of a specific piece of property.
Title Insurance Protection for lenders or homeowners against financial loss resulting from legal defects in the title.
Transaction Fee A fee which may be charged each time you draw on a home equity credit line.
Trustee A neutral party who advertises the foreclosure property for sale and conducts the auction to sell said property to the highest bidder.
Trustee Sale An auction of real property conducted by a trustee. Also known as a Sheriff's Sale.
Underwriting The process of verifying data and approving a loan.
Upset Bid A recorded bid placed after a foreclosure sale has ended that is higher than the highest bid received at the actual foreclosure sale.
VA Loan More appropriately termed "VA Insured Loan." A loan for which the Veteran's Administration insures the lender against losses the lender may incur due to your default. Available only to veterans possessing a Certificate of Eligibility.
Variable Rate An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.
Writ An order or mandatory process in writing issued in the name of a court or judicial officer commanding the person to whom it is directed to perform or refrain from performing a specified act.
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