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

Adjustable-rate mortgage (ARM). A mortgage that permits the lender to adjust it's interest rate periodically

on the basis of changes in a specified index.

Amortization. The gradual repayment of a mortgage by installments.

Annual percentage rate (APR). The total yearly cost of a mortgage stated as a percentage of the

loan amount; includes such items as the base interest rate, primary mortgage insurance, and loan origination fee (points).

Appraisal. A professional opinion of the market value of a property.

Assumable mortgage. A mortgage that can be taken over ("assumed") by the buyer when a home is sold.

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Cap. A provision of an ARM limiting how much the interest rate or mortgage payments may increase or decrease.

Clear title. A title that is free of liens or legal questions as to ownership of property.

Closing. A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and

paying closing costs. Also called "settlement."

 

Closing costs. Expenses (over and above the price of the property) incurred by buyers and sellers in

transferring ownership of a property. Also called "settlement costs."

 

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.

Contingency. A condition that must be met before a contract is legally binding.

Convertional mortgage. Any mortgage that is not insured or guaranteed by the federal government.

Cooperative. A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

Credit report. A report of an individual's credit history prepared by a credit bureau and used by a lender in

determining a loan applicant's creditworthiness.

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Deed. The legal document conveying title to a property.

Default. The failure to make a mortgage payment on a timely basis or to otherwise comply with other requirements of a mortgage.

Depreciation. A decline in the value of property; the opposite of "appreciation."

Down payment. The part of the purchase price which the buyer pays in cash and does not finance with a mortgage.

Due-on-sale clause. A provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property securing the mortgage.

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Earnest money. A deposit made by the potential home buyer to show that he or she is serious about buying the house.

Equal Credit Opportunity Act (ECOA). A federal law that prohibits lenders from denying mortgages on the basis of the borrower's race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Escrow. The holding of documents and money by a neutral third party prior to closing; also, an account held by the lender

(or servicer) into which a homeowner pays money for taxes and insurance.

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FHA mortgage. A mortgage that is insured by the Federal Housing Administration. Also referred to as a "government" mortgage.

Fixed-rate mortgage. A mortgage in which the interest rate does not change during the entire term of the loan.

Flood insurance. Insurance that compensates for physical property damages resulting from flooding. It is required for properties located in federally designated flood areas.

Foreclosure. The legal process by which a mortgaged property may be sold when a mortgage is in default.

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Graduated payment mortgage. A mortgage that starts with low monthly payments that increase at a predetermined

rate. The initial monthly payments are set at an amount lower than that required for full amortization of the debt.

 

Hazard insurance. Insurance coverage that compensates for physical damage to a property from fire, wind,

vandalism, or other hazards.

Homeowner's insurance. An insurance policy that combines personal liability coverage and hazard insurance coverage dwelling and its contents.

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Interest. The fee charged for borrowing money.

Interest rate cap. A provision of an ARM limiting how much interest rates may increase or A provision of an ARM limiting how much interest rates may increase or decrease per adjustment  period or over the life of a mortgage.

See also Lifetime cap.

Late charge. The penalty a borrower must pay when a payment is made after the due date.

Lifetime cap. A provision of an ARM that limits the highest rate that can occur over the life of the loan.

Loan-to-value percentage (LTV). The relationship between the unpaid principal balance of the mortgage and the

appraised value (or sales price if it is lower) of the property.

Lock-in. A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

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Mortgage. A legal document that pledges a property to the lender as security for payment of a debt.

Mortgage banker. A company that originates mortgages exclusively for resale in the secondary market.

Mortgage broker. An individual or company that, for a fee, acts as an intermediary between borrowers and lenders.

Mortgage insurance premium (MIP). The fee paid by a borrower to FHA or a private insurer for mortgage insurance.

Mortgage note. A legal document obligating a borrower to repay a loan at a stated interest rate during a specified

period of time; the mortgage note is secured by a mortgage.

Mortgage interest rate. The rate of interest in effect for the monthly payment due.

Mortgagee. The lender in a mortgage agreement.

Mortgagor. The borrower in a mortgage agreement.

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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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PITI. Stands for principal, interest, taxes, and insurance- the components of a monthly mortgage payment.

Planned unit developments (PUDs). A planned unit development is a project or subdivision that consists of common property that is owned and maintained by an owner's association for the benefit and use of the individual PUD unit owners.

Points. A one-time charge by the lender to increase the yield of the loan; a point is 1% of the amount of the mortgage.

Prepayment penalty. A fee that may be charged to a borrower who pays off a loan before it is due.

Prequalification. The process of determining how much money a prospective home buyer will be eligible to borrow

before a loan is applied for.

Principal. The amount borrowed or remaining unpaid- also, that part of the monthly payment that reduces the outstanding balance of a mortgage.

Private mortgage insurance (PMI). Insurance provided by nongovernment insurers that protects lenders against loss of a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80 percent

Purchase and sale agreement. A written contract signed by the buyer and seller stating the terms and

conditions under which a property will be sold.

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Qualifying ratios. Guidelines applied by the lenders to determine how large a loan to grant a home buyer.

Real Estate Settlement Procedures Act (RESPA). A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Refinancing. The process of paying off one loan with the proceeds from a new loan using the same property as security.

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Second mortgage. A mortgage that has a lien position subordinate to the first mortgage

Survey. A drawing or map showing the precise legal boundaries of a property, the location of improvements,

easements, rights of way, encroachments, and other physical features.

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Tenancy by entirety. A type of joint ownership in a property that provides right of survivorship and is available only to a husband and wife.

Tenancy in common. A type of joint ownership in a property without right of survivorship

Title. A legal document evidencing a persons right to or ownership of a property.

Title company. A company that specializes in examining and insuring titles to real estate.

Title insurance. Insurance to protect the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of property.

Title search. A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

Truth-in-Lending. A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.

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Underwriting. 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.

VA loan. A loan that is guaranteed by the Departrnent of Veterans Afffairs. Also referred to as a "government" mortgage.

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

				Trinity MI 1551 West Dupont Rd. Fort Wayne, IN 46825 Phone: (260) 485-3660 Toll Free: 1-800-818-2037 Fax: (260) 485-2038 E-Mail: info@trinitymi.com