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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. ARMs are attractive when short-term interest rates
are trending lower.
Balloon
Mortgage
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. Whenever the
balloon mortgage becomes due, the entire unpaid balance is due. Generally,
the homeowner must either refinance or sell the property.
Buy-Down
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. To buy-down a mortgage, the buyer pays additional points
to the lender, which will decrease the interest rate for a specific period.
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).
Construction
Loan
A structured, short-term loan to provide funds necessary
to begin construction on buildings or homes.
Conventional
Mortgage
A mortgage loan made by an institutional lender without
the inclusion of government guarantees such as VA or FHA loans.
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.
Deferred
Interest Mortgage
A mortgage in which the payment is not sufficient
to cover the principal and the interest and the payment portion of the
interest is postponed until a certain date at which time the interest
postponed is added to the principle owing.
Federal
Home Loan Mortgage Corporation (FHLMC)
The Federal National Mortgage Association, which
is a congressionally chartered, shareholder-owned company that is the
largest national supplier of home mortgage funds. It is commonly known
as Freddie Mac. The company buys mortgages from lending institutions,
pools them with other loans, and sells shares to investors. Detailed information
may be found at http://www.freddiemac.com.
Federal
Housing Administration (FHA)
An agency of the federal government, the Division
of the Department of Housing and Urban Development, both sets standards
for the underwriting of private mortgages and insures residential mortgages
made by private lenders.
Federal
Housing Administration (FHA) Loans
Federal Housing Administration (FHA) low-rate loans
are available to Americans with smaller incomes who are interested in
modestly priced homes. Down payment requirements are usually lower than
the prevailing ones.
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Federal
National Mortgage Association (FNMA)
The U.S.'s largest supplier of mortgages to home
buyers and owners, a corporation established by Congress and owned by
stockholders. It is commonly referred to as 'Fannie Mae,' this government-sponsored
enterprise is chartered by Congress. This federally chartered agency buys
mortgages from lending institutions, pools them with other loans, and
sells shares to investors. Detailed information may be found at http://www.fanniemae.com
Fixed-Rate
Mortgage
The interest rate you pay and the monthly principal
and interest payments are agreed upon from the outset and will not change
throughout the entire term of the mortgage.
Government
National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department
of Housing and Urban Development, it is also referred to as 'Ginnie Mae,’.
This government agency guarantees the payment of principal and interest
on all of its pass-through securities, and its guarantee is backed in
turn by the full faith and credit of the U.S. Government.
Graduated
Payment Mortgage (GPM)
A mortgage that usually starts the borrower with
low payments that are gradually increased over five to ten years, before
leveling off for the remainder of the term of the loan until the loan
is fully amortized. Negative amortization usually occurs until the payment
reaches the level payment stage. Usually government insured loans (VA
or FHA)
Growing
Equity Mortgage (GEM)
This is a long-term mortgage whereby the borrower
agrees to increase his payment each year by an agreed amount. The added
money per payment is applied directly to the outstanding principal on
the mortgage. The mortgage thereby is paid off in a shorter number of
years.
Renegotiable
Rate Mortgage (RRM)
Similar to an Adjustable Rate Mortgage, this type
of mortgage allows the interest rates and payments to be adjusted periodically
according to an index.
Reverse
Annuity Mortgage (RAM)
A type of mortgage where the property's equity serves
as security for periodic payments made by the lender to the borrower.
Mortgage is generally paid out upon the sale of the property.
Rollover
Mortgage (ROM)
A mortgage where the payments are only guaranteed
for three, four, or five years. The borrower is allowed to refinance at
the end of the term at the interest rate then applicable.
Shared
Appreciation Mortgage (SAM)
It is a loan arrangement where two or more parties
participate in the purchase of real estate and share the appreciation
and tax deduction. Similar to shared equity mortgages.
Veterans'
Administration Loans
Mortgage loans to veterans by banks, savings and
loans, or other lenders that are guaranteed by the Veterans' Administration,
enabling veterans to buy a residence with little or no money down.
Wraparound
Mortgage
A secondary financing option in which a new larger
mortgage is created to encompass the first mortgage. This large second
mortgage is used to preserve the low interest rate on the first mortgage
for a potential buyer.
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description of the property and the exact street address