Acceleration
The right of the mortgagee (lender) to demand
the immediate repayment of the mortgage loan
balance upon the default of the mortgagor
(borrower), or by using the right vested
in the Due-on-Sale Clause.
Adjustment interval
On an adjustable rate mortgage, the time
between changes in the interest rate and/or
monthly payment, typically one, three or
five years, depending on the index.
Amortization
Means loan payment by equal periodic payment
calculated to pay off the debt at the end
of a fixed period, including accrued interest
on the outstanding balance.
Annual
Percentage
Rate (APR)
A stated interest rate that reflects all
the financing costs of a mortgage. The APR
includes points, origination fees, and other
finance charges in addition to the interest
on the mortgage, and includes them all in
a yearly interest rate. As a result, the
APR is usually higher than the interest rate
alone It also provides a benchmark for comparing
different types of mortgages based on the
annual cost for each loan.
Appraisal
An estimate of the value of a property, made
by a State Licensed professional appraiser
Closing
The meeting between the buyer, seller, and
lender (or their agents) where the property
and funds legally change hands. Also called
settlement.
Closing Costs (Settlement Costs)
The costs and fees associated with the official
change in ownership of the property and with
obtaining your mortgage that are assessed
at the closing or settlement. Closing costs
include required certifications, insurance,
taxes, and other fees, and typically total
between 3 and 6 percent of the mortgage amount.
Credit Report
A report that documents a borrower's credit
history and current status. Borrowers can
examine their own credit reports, although
most credit reporting companies charge a
fee to provide a report.
Equity
The value of your home after the outstanding
balance of any loans are subtracted.
Escrow
A special account set up by the lender in
which money is held to pay for taxes and
insurance. "Escrow" can also refer
to a third party who carries out the instructions
of both the buyer and seller to handle the
paperwork at the settlement.
Interest
The sum paid for borrowing money, which pays
the lender's costs of doing business.
Loan Origination Fee
The fee charged by a lender to prepare all
the documents associated with your mortgage.
Points (Loans Discount Points)
Points are prepaid interest on your mortgage,
charged by the lender at the time of the
closing. Each point is one percent of the
loan amount that is, 2 points on a $100,000
mortgage would be $2,000.
Pre-Paids
The expenses that are put into escrow at
closing, usually including real estate taxes,
insurance, and interest.
Principal
The amount of debt, not including interest,
left on a loan; also the face amount of the
mortgage.
Private Mortgage Insurance (PMI)
An insurance policy the borrower buys to
protect the lender from non-payment of the
loan. Private mortgage insurance policies
are usually required if you make a down payment
that is below 20% of the appraised value
of the home.
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 buildings.
Title Insurance
An insurance policy which insures you against
errors in the title search (to determine
legal ownership), essentially guaranteeing
your and your lender's financial interest
in the property.
Underwriting
The process of deciding whether to make a
loan based on credit, employment, assets,
and other factors.
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Bad Credit Mortgages
