| 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. |
