Acceleration clause -
The clause in a mortgage or trust deed that stipulates the entire
debt is due immediately if the mortgagee defaults under the terms
of the contract. |
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Acquisition cost -
Under an FHA loan, the purchase price or appraised value of the
property plus the estimated closing costs. |
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Adjustable Rate Mortgage (ARM) -
A mortgage in which the interest rate is adjusted periodically
based on an index. Also called a variable rate mortgage. |
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Adjustment_date -
The date the interest rate changes on an ARM (adjustable rate
mortgage). |
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Adjustment Interval -
For an adjustable rate mortgage, the time between changes in the
interest rate charged. The most common adjustment intervals are
one, three or five years. |
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Adjusted book basis -
The purchase price of a property plus any capital improvements
less accrued depreciation, if any, to the date of the sale. |
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Amortization -
Literally to "kill off" (root: mort) the outstanding balance of a
loan by making equal payments on a regular schedule (usually
monthly). The payments are structured so that the borrower pays
both interest and principal with each equal payment. |
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Annual Percentage Rate (APR) -
A figure that states the total yearly cost of a mortgage as
expressed by the actual rate of interest paid. The APR includes
the base interest rate, points, and any other add-on loan fees and
costs. As a result the APR is invariably higher for the rate of
interest that the lender quotes for the mortgage but gives a more
accurate picture of the likely cost of the loan. Keep in mind,
however, that most mortgages are not held for their full 15 or 30
year terms, so the effective annual percentage rate is higher than
the quoted APR because the points and loan fees are spread out
over fewer years. |
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Annuity -
A series of income payments of receipts over a period of years.
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Application -
A mortgage application requires borrowers to submit
information regarding their income, savings, assets, debts, and
more. |
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Application Fee -
The fee charged by the lender to the borrower for applying for a
loan. Payment of this fee does not guarantee that a loan will be
approved. Some lenders may apply the cost of the application fee
to certain closing costs. |
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Appraisal -
The determination of property value based on recent sales
information of similar properties. |
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Assessment -
Determining a property's value for the purpose of taxation. |
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Assumable Loan -
These loans may be passed on from a seller of a home to the buyer.
The buyer "assumes" all outstanding payments. |
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Assumption -
Buying property and assuming the responsibility of the exiting
mortgage. |
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Appreciation -
Increases in property value due to fluctuations in the market,
inflation, et al. |
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Asset -
Valuable items, encumbered or not, owned by a person, corporation,
or entity. |
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Assumable Mortgage -
A mortgage that provides for a buyer to "assume" all outstanding
payments when a home is sold. The buyer usually must meet
qualification standards to assume a loan. |
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| B |
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Balloon Mortgage -
Behaves like a fixed-rate mortgage for a set number of years
(usually five or seven) and then must be paid off in full in a
single "balloon" payment. Balloon loans are popular with those
expecting to sell or refinance their property within a definite
period of time. |
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Balloon Payment -
The final lump sum that is paid at the end of the balloon
mortgage. |
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Bankruptcy -
A tactic that individuals use to relieve themselves of debts
and/or liabilities when they are no longer able to repay. The most
common form of individual bankruptcy is a Chapter 7, when an
individual frees himself from most of his/her debts. Borrowers who
have undergone bankruptcy usually cannot qualify for "A" paper
loans until after two years after declaration and a
re-establishment of credit. |
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Best Faith Estimate -
An estimate of the total costs for securing a real estate loan,
that is given to borrowers prior to closing. |
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Bill of Sale -
A written document that transfers a title to personal property.
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Biweekly Mortgage -
Mortgage loan payments that requires a payment twice monthly,
yielding thirteen payments per year instead of twelve. This
significantly reduces the time a principal is paid off. |
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Blanket Mortgage -
A mortgage secured by the pledging of more than one property or
collateral. |
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Book Value -
Acquisition costs less any accrued depreciation. |
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Broker -
An individual in the business of assisting in arranging funding or
negotiating contracts for a client but who does not loan the money
himself. Brokers usually charge a fee or receive a commission for
their services. |
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Bridge Loan -
An equity loan secured to solve short-term financing problem. |
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Budget Mortgage -
A mortgage that includes a portion for taxes and insurance as well
as principal and interest. |
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Buydown -
Allows loans to be made at less-than-market interest rates by
paying front-end discounts. The interest rate is brought down for
a temporary period, usually from one to three years. In oder to
acquire this discount, a lump sum is paid and held in an account
used to supplement the borrower's monthly payment. After the
discount period, the payment is calculated as the note rate. |
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| C |
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Callable Debt -
A debt security in where the issuer has the right to redeem the
security at a specified price on or after a specified date, but
prior to its stated final maturity date. |
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Caps -
A set percentage amount by which an adjustable rate mortgage may
adjust each adjustment period. For adjustable loans, caps are
usually quoted as two numbers as in 2/6. The first number
indicates how much a loan may adjust at each adjustment period
while the second number indicates how much a loan may adjust over
its lifetime.
Loans like the 3/1 and 5/1 adjustable which have an initial
fixed period are quoted with 3 numbers as in 3/2/6 which would
mean that the first adjustment may be as much as 3%, subsequent
adjustments are capped at 2% each, and the lifetime cap is 6%.
Two-Step loans are quoted with a single cap, which is the
amount by which the loan may adjust at its single
adjustment date. |
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Carryback Loan -
A loan in which a seller agrees to finance a buyer in order to
complete a property sale. |
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Certificate of Eligibility -
A veteran's evidence of entitlement for a VA-guaranteed loan. |
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Certificate of Reasonable Value (CRV) -
An appraisal that has been performed on a property that is being
paid for a VA loan. After the property has been appraised, the
Veterans Administration issues a CRV. |
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Clear Title -
A title that is free of liens or any legal question as to the
ownership of the property. |
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Closing -
Final arrangements to transfer title of property as well as
allocate charges and credits. |
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Closing Costs -
Closing costs are fees paid by the borrower when a property is
purchased or refinanced. Costs incurred include a loan origination
fee, discount points, appraisal fee, title search, title
insurance, survey, taxes, deed recording fee, and credit report
charges. All closing costs are separated into "non-recurring," and
"pre-paid." Non-recurring charges are any items that are paid only
once because a loan was obtained or a property bought, such as a
loan origination fee. Pre-paid charges are those that recur over
time, like insurance and property taxes. These are summarized in
the Good Faith Estimate. |
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Cloud -
An outstanding claim or encumbrance, that, if valid, would affect
or impair the owner's property title. |
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Collateral -
Property, real or personal, pledged as a security to back up a
promise. In a home loan, the property is considered collateral
that can be revoked if loan is not repaid according to the terms
of the mortgage or deed of trust. |
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Commitment -
A written letter of agreement detailing the terms and conditions
by which the lender will lend and the borrower will borrow funds
to finance a home. |
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Conforming Loan -
A loan for up to and including $417,000 in the continental United
States (Alaska and Hawaii limits are higher). |
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Construction Loan -
A short term loan for funding the cost of construction. The lender
advances funds to the builder as the work progresses. |
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Conventional Mortgage -
A mortgage loan that is obtained without any additional guarantees
for repayment, such as FHA insurance, VA guarantees, or private
insurance. This is usually given at an 80% loan-to-value ratio.
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Conversion -
The right of a borrower to convert an adjustable or balloon loan
into a fixed loan. The Conversion Option column
on Moving.com balloon tables indicates the right of a borrower to
convert this balloon loan. The possible options are as follows...
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Option |
Description |
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| Not Available |
Borrower May Not Convert
This Loan. |
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| Must Requalify |
Borrower May Convert But
Must Requalify.
Conversion Fee Applies |
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| Auto-Qualify |
Borrower May Convert And Is
Automatically Qualified.
Conversion Fee Applies |
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Credit Loan -
A credit loan is a mortgage that is issued on only the financial
strength of a borrower, without great regard for collateral. |
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Credit-Loss Ratio -
The ratio of credit-related losses to the dollar amount of MBS
outstanding and total mortgages owned by the corporation. |
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Credit Rating -
Borrowers are rated by lenders according to the borrower's
credit-worthiness or risk profile. Credit ratings are expressed as
letter grades such as A-, B, or C+. These ratings are based on
various factors such as a borrower's payment history,
foreclosures, bankruptcies and charge-offs. There is no exact
science to rating a borrower's credit, and different lenders may
assign different grades to the same borrower. |
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Credit-Related Expenses -
The sum of foreclosed property expenses plus the provision for
losses. |
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Credit-Related Losses -
The sum of foreclosed property expenses plus charge-offs. |
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Credit Report -
A report to a prospective lender on the credit standing of a
prospective borrower. Used to help determine creditworthiness.
Information regarding late payments, defaults, or bankruptcies
will appear here. |
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| D |
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Debt-to-Income Ratio (DTI) -
The ratio of aggregate monthly debt to aggregate monthly income.
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Deed -
A legal document which affects the transfer of ownership of real
estate from the seller to the buyer. |
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Deed of Trust -
Synonymous to a mortgage. A deed of trust or mortgage is obtained,
depending on the state in which the borrower will reside. |
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Default -
The failure to make payments on a loan. |
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Delinquency -
Late- or non-payments of principal, interest, taxes, or insurance.
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Deposit -
A lump sum given in advance as security. A deposit is always paid
of a larger amount to be paid in the future. In mortgage and real
estate terms, this is called the "earnest money deposit." |
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Depreciation -
In real estate and mortgage terms, the decline in the property
value. |
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Discount -
Difference between the face amount of a note or mortgage and the
price at which the instrument is sold in the secondary market.
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Discount Points -
A term used in government subsidized loans, such as FHA and VA
loans. Refers to any "points" (one percent of the loan amount)
paid in addition to the one percent loan origination fee. |
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Down Payment -
Money paid by a buyer from his own funds, as opposed to that
portion of the purchase price which is financed. |
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| E |
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Earnest Money Deposit -
A deposit made by a potential home buyer to show that they are
serious about purchasing the property. |
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Esement -
Giving other persons, other than the owner, access to a property.
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Eminent Domain -
The government right to take private property for public use
depended on the payment of its fair market value. |
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Encumbrance -
Any lien against a property or any restriction it its use, such as
an easement; a right or interest in a property held by one who is
not the legal owner. |
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Equal Credit Opportunity Act (ECOA) -
The act declaring the elimination of discrimination on the basis
of age, sex, and race in finance. |
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Equity -
The difference between the current market value of a property and
the principal balance of all outstanding loans. |
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Escalator Clause -
A clause in a loan providing for increases in payments or interest
based on pre-determined schedules or on a specific economic index,
such as the consumer price index. |
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Escrow -
A third party agent that receives, holds, and/or disburses certain
funds or documents upon the performance of certain conditions. For
example, an earnest money deposit is put into escrow until the
transaction is closed. Only then can the seller receive the
deposit. |
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Escrow Account (impound account) -
An account that a borrower can hold with a lender once a purchase
transaction is closed. This requires borrowers to pay more than
the principal and interest each month. The overage is put into
escrow, which the lender uses to pay items like property taxes and
homeowner's insurance when they are due. This eliminates the
actual number of payments that a homeowner has to worry about, but
not the amount that has to actually be paid. |
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Escrow Analysis -
An analysis performed by a lender each year to escrow
accountholders to ensure that the correct amount of money is being
collected to cover anticipated payments. |
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Escrow Fee -
These costs cover the preparation and transmission of all home
purchased-related documents and funds. Escrow fees range from
several hundred to over a thousand dollars, based on the purchase
price of your home. Not all states require funds to be put into
escrow accounts for closing. |
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Estate -
The ownership interest an individual holds in real property. This
is also the sum total of all the real property and personal
property owned by an individual at time of death. |
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Eviction -
The legal removal of real property occupants for unlawful actions
carried out by those occupants. |
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| F |
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Fair Credit Reporting Act -
A law that protects consumer that regulates the reporting of
consumer credit by agencies and establishes procedures for
correcting errors on an individual record. |
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Fannie Mae (FNMA) -
The Federal National Mortgage Association is a congressionally
chartered, shareholder-owned company. This organization is the
nation's largest supplier of home mortgage funds. |
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Fannie Mae's Community Home Buyer's Program -
A program that offers flexible underwriting guidelines to
subsidize a low- to moderate-income family's purchase of a home.
The program usually decreases the total amount of cash needed to
purchase a home. |
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Federal Housing Administration (FHA) -
An agency under the U.S. Department of Housing and Urban
Development (HUD), it insures loans made by approved lenders to
qualified borrowers, in accordance with its regulations. |
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Fees -
Up-front costs associated with a loan. Clicking on the word VIEW
shown under the "Fees Detail" column on the quotes results page
will display detailed information about the financial
institution's fees and requirements pertaining to that rate. |
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Fee Simple -
The best title that one can obtain; unqualified and conveys the
highest bundle of rights. |
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FHA Loan -
A government-backed mortgage loan supported by the US FHA and the
Department of Housing and Urban Development (HUD). |
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Finance Charge -
The total dollar amount your loan will cost you. It includes all
interest payments for the life of the loan, any interest paid at
closing, your origination fee and any other charges paid to the
lender and/or broker. Appraisal, credit report and title search
fees are not included in the finance charge calculation. |
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Firm Commitment -
A lender's agreement to provide a loan to a specific borrower on a
specific property. |
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First Mortgage -
A mortgage that has priority over other mortgages. |
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Fixed-Rate Mortgage -
A mortgage where the interest rate does not change for the life of
the loan. |
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Float -
Between the time of application and closing, a borrower may choose
to bet on interest rates decreasing by electing to float. Floating
is essentially choosing not to lock the
interest rate. Since it is the borrower's responsibility to lock
his or her rate before (or at) closing, choosing to float is
considered risky and may result in a higher interest rate. Request
information from your lender regarding lock procedures. |
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Forbearance -
The postponement for a limited time of a portion or all the
payments on a loan when a borrower is delinquent. |
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Foreclosure -
A legal procedure in which real estate is sold by the lender to
pay a defaulting borrower's debt . |
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401(k)/403(b) -
An investment plan sponsored by employers that allows individuals
to set aside tax-deferred income for retirement or emergency
purposes. A 401(k) applies to private corporations, while a 403(b)
applies to non-profit organizations. |
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401(k)/403(b) loan -
A loan that can be taken against the amount accumulated in the
401(k)/403(b) plans, if so allowed by the plan administrator.
Loans against these plans are an acceptable source of down payment
for most types of other loans. |
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| G |
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Good Faith Estimate -
An estimate of charges which a borrower is likely to incur in
connection with a loan closing. |
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Government Loan -
A type of mortgage insured by the FHA (Federal Housing Authority),
VA (Veteran's Administration), or RHS (Rural Housing Authority).
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Government National Mortgage Association (Ginny Mae) -
Provides funds for government loans and takes over special
assistance and liquidation functions of Fannie Mae. |
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Grace Period -
A time allowed, usually 15 days, for making late payments without
a penalty. |
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grantee -
The person to whom an interest in real property is conveyed. |
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grantor -
The person conveying an interest in real property. |
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Gross Monthly Income -
The total amount the borrower earns per month, not counting any
taxes or expenses. Often used in calculations to determine whether
a borrower qualifies for a particular loan. |
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| H |
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Hard-Money Mortgage -
Cash loan to a borrower. |
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Hazard Insurance -
A form of insurance in which the insurance company protects the
insured from certain losses, such as fire, vandalism, storms and
certain other natural causes. |
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Home Equity Conversion Mortgage (HECM) -
Also known as the reverse annuity mortgage. This mortgage provides
that instead of making payments to a lender, the lender makes
payments to the individual. Older homeowners are able to convert
home equity into cash this way, in the form of monthly payments.
Borrowers don't qualify on the basis of income, but on the value
of his or her home. Such a loan does not have to be repaid until
the borrower no longer occupies the property. |
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home equity line of credit -
A mortgage loan in second position that allows a borrower to
obtain cash drawn against home equity, up to a certain amount.
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Home Inspection -
A thorough assessment by a professional regarding the structural
and mechanical condition of a property. |
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homeowner's insurance -
An insurance policy that combines personal liability insurance and
hazard insurance for a home and its contents. |
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homeowner's warranty -
An insurance policy that is purchased by a buyer that covers
certain repairs, should they be necessary over a certain period.
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Housing Ratio -
The ratio of the monthly housing payment to total gross monthly
income. Also called Payment-to-Income Ratio or Front-End Ratio.
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HUD -
Department of Housing and Urban Development; regulates Fannie Mae
and Ginny Mae. |
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Hybrid Financing -
The joining together of two forms of finance, such as combining a
convertible loan with a participation loan, under which the lender
has the right at loan maturity to convert the debt to a 50 percent
ownership in the property. |
| # 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
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Index -
A published interest rate against which lenders measure the
difference between the current interest rate on an adjustable rate
mortgage and that earned by other investments (such as one-
three-, and five-year U.S. Treasury Security yields, the monthly
average interest rate on loans closed by savings and loan
institutions, and the monthly average Costs-of-Funds incurred by
savings and loans), which is then used to adjust the interest rate
on an adjustable mortgage up or down. |
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Interest -
Consideration in the form of money paid for the use of money,
usually expressed as an annual percentage. Also, a right, share,
or title in property. |
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Interest Only -
A term loan arrangement calling for payments of interest only, not
to include any amount for principal. |
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Interest Rate -
The percentage of an amount of money that's paid for its use over
a specified time period. |
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Interest Rate Swap -
A transaction between two parties, in which each agrees to
exchange payments tied to different interest rates or indices for
a specified period of time. |
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Intermediate-Term Mortgage -
A mortgage loan with a stated maturity at the time of purchase
that it is equal to or less than 20 years. |
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| J |
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Judicial Foreclosure -
A court procedure used by lenders to secure clear title to a
property under a defaulted real estate loan. |
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Jumbo Loan -
A loan for $417,001 or more in the continental United States
(Alaska and Hawaii limits are higher). These limits are set by the
Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation. Because jumbo loans cannot be funded by
these two agencies, they usually carry a higher interest rate.
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| L |
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Last Updated -
The Last Update column on a quotes results table tells you when
the information was last provided by the lender to our site. We
always place new listings at the top of each table so that you,
the borrower, may have immediate access to the most timely
information. Times provided are all Eastern Standard Time. |
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lease -
A written agreement between a property owner and a tenant that
stipulates the payment and conditions under which the tenant may
possess the real estate for a specified period of time. |
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Leasehold Estate -
An estate for a fixed length of time, established when a landlord
gives up possession of real estate to a tenant, giving the tenant
an equitable interest in the property, as defined by lease terms.
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Lease Option -
A rental agreement indicating a tenant's option to purchase a
property. Monthly payments consists not only of rent, but an
overage that can be applied towards a down payment on an already
established amount. |
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Lender -
The bank, mortgage company, or mortgage broker offering the loan.
Many institutions only "originate" loans and then resell the
obligation to third parties. |
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Leverage -
Using someone else's money for the purchase of property. |
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Liability Insurance -
Insurance that protects property owners against claims that
alleges negligence or inappropriate action that resulted in bodily
injury or property damage to another party. |
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LIBOR -
The London Interbank Offered Rate Index (LIBOR) is an average of
the interest rates that major international banks charge each
other to borrow U.S. dollars in the London money market. Like the
U.S. treasury the CD indexes, LIBOR tends to move and adjust quite
rapidly to changes in interest rates. |
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Lien -
A legal claim by one party against the property of another as
security for a debt. Must be paid off when property is sold. A
mortgage or a first trust deed is a lien. |
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Life of Loan Cap -
The maximum interest rate that can be charged during the life of
the loan. Also called Lifetime Cap. This value is often expressed
as an increment above the initial loan rate. For example, an
adjustable rate loan with an initial rate of 7.25% and a 6%
lifetime cap will never adjust above a rate of 13.25% (7.25+6.0).
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Loan -
The principal, or amount of total borrowed money, that is repaid
with interest. |
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Loan Amount -
The amount of money that you intend on borrowing from a financial
institution for the purchase of your home. Subtracting the down
payment from the purchase price of the home will provide you with
the loan amount. |
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Loan Officer -
An intermediary between lending institutions and borrowers, loan
officers solicit loans, represent creditors to borrowers, and
represent borrowers to creditors. |
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Loan Origination -
What the process of obtaining new loans is called. |
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Loan Servicing -
A service performed by a lender to protect a mortgage investment,
including collecting monthly payments from borrowers and dealing
with delinquencies. |
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Loan-To-Value Ratio -
The relationship between the amount of the mortgage loan and the
appraised value of the property expressed as a percentage. A LTV
ratio of 90 means that a borrower is borrowing 90% of the value of
the property and paying 10% as a down payment. For purchases, the
value of the property is assumed to be the purchase price, for
refinances the value is determined by an appraisal. |
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Lock noun -
The period, expressed in days, during which a lender will
guarantee a rate. Some lenders will lock rates at the time of
application while others will allow the borrower to lock the rate
after the application is taken. Request information from your
lender regarding lock procedures. |
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Lock verb -
The act of committing to a mortgage rate. This action, taken by a
borrower some time between the application and the closing dates,
is sometimes accompanied by a payment by the borrower to the
lender. |
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Lock-in Clause -
Clause in a loan agreement that states that the borrower cannot
repay a loan prior to a specified date. |
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| M |
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Margin -
The amount a lender adds to the quoted index rate for an
adjustable rate loan to determine the new interest rate. |
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Maturity -
The "Due Date" of a loan. |
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Merged Credit Report -
A credit report that reports data from two or more major credit
repositories. |
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Minimum Credit -
This field on the table refers to the minimum
credit rating a borrower must have in order to qualify for the
listed loan. |
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Modification -
Any change to the original terms of a mortgage. |
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Monthly Housing Expense -
Total principal, interest, taxes, and insurance paid by the
borrower on a monthly basis. Used with gross income to determine
affordability. |
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Mortgage -
A legal document that pledges property to a creditor for the
repayment of the loan, and is the term used to describe the loan
itself. Some states use the term First Trust Deeds to refer to
mortgage loans. |
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Mortgagee -
The lender in a mortgage agreement. |
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Mortgage Banker -
A financial intermediary that originates or funds loans, collects
payments, inspects the property, and forecloses if necessary. The
main difference between a mortgage banker and a loan officer is a
banker funds their own loans and sell them on the secondary
market, usually to Fannie Mae, Freddie Mac, or Ginny Mae. |
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Mortgage Broker -
A mortgage company that originates loans, joining the borrower and
lender for a real estate loan, earning a placement fee. |
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Mortgage Constant -
The factor used for rapid computation of the annual payment needed
to amortize a loan. |
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Mortgage Insurance -
Insurance that covers the lender against losses incurred as a
result of a default on a home loan. This is usually required on
all loans that have a loan-to-value higher than eighty percent.
Mortgages that have an 80% LTV that do not require mortgage
insurance have higher interest rates. The lenders then pay the
mortgage insurance themselves. In addition, FHA loans and some
first-time homebuyer programs require mortgage insurance
regardless of the loan-to-value. |
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Mortgagor -
The borrower in a mortgage agreement. |
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Multidwelling Units -
Properties that provide separate housing units for more than one
family, although only a single mortgage is secured. |
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Negative Amortization -
Essentially occurs when a borrower makes a minimum payment that
may not cover the interest that is due. Loan balance then
increases as a result. |
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Net Effective Income -
Gross income less federal income tax. |
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No Cash-out Refinance -
A refinance transaction that is not intended to put cash in the
hand of the borrower, but instead calculates a new balance to
cover the balance due on a current loan and any costs with
obtaining a new mortgage. |
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No-Cost Loan -
A no-cost loan can either be: 1) a loan that has no "lender costs"
associated with it or, 2) a loan that also covers purchases or
refinancing costs, which may be incurred in buying a home,
obtaining and/or refinancing a loan, but are not directly charged
by the lender. The interest rate on this type of loan is higher.
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Note -
A legal document that obligates a borrower to repay a mortgage
loan at a stated interest rate during a specified period of time.
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Note Rate -
The stated interest rate on a mortgage note. |
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Origination Fee -
The fee imposed by a lender to cover certain processing expenses
in connection with making a loan. Usually a percentage of the
amount loaned. |
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Owner Financing -
A property purchase that is partly or wholly financed by the
seller. |
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Owner's Title Policy -
A policy protecting the buyer for the amount of the purchase price
in the event of a future title dispute. |
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Package Mortgage -
A mortgage that /includes equipment and appliances located on the
premises in addition to the real property itself. |
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Partial Entitlement -
Under VA loans, the amount of guarantee still available to an
eligible veteran who has used his previous entitlement. |
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partial payment -
A payment that is not sufficient enough to cover the month
payment. During times of economic hardship, a borrower can make
this request of the loan servicing collection department. |
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Participation Financing -
A loan in which more than one mortgagee or more than one mortgagor
harbors an interest. It can also be a loan in which the mortgagee
receives partial ownership of the property being financed. |
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Payment Change Date -
The date when a new monthly payment amount takes effect on an
adjustable rate mortgage (ARM) or a graduated payment mortgage (GPM).
The payment change date occurs the month immediately after the
interest rate adjustment date. |
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Periodic Payment Cap -
The limit on the amount that payments can increase or decrease
during any one adjustment period for an adjustable-rate mortgage
(ARM) where the interest rate and principal fluctuate
independently of one another. |
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Periodic Rate Cap -
The limit on the amount that payments can increase or decrease
during any one adjustment period in an ARM (adjustable rate
mortgage), regardless of how high or low the index fluctuates.
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Personal Property -
Movable property that does not fit the definition of realty. |
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Phone -
The table list the correct telephone numbers to access the loan
department of each institution. |
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PITI -
PITI stands for principal, interest, taxes, and insurance. An
"impounded" loan means that the monthly payment covers all of
these, and perhaps mortgage insurance, if your loan so calls for
it. If one does not have an "impounded" account, then the lender
still calculates these amounts separately and uses it as part of
determining one's debt-to-income ratio. |
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PITI Reserves -
A cash amount that a borrower must have on hand after making a
down payment and paying all closing costs for the purchase of a
home. The PITI (principal, interest, taxes, and insurance) must
equal the amount that the borrower would have to pay for PITI for
a determined number of months. |
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Planned Unit Development (PUD) -
A type of ownership where individuals actually own the building or
unit they reside in, but shared areas are owned jointly with the
other members of the development or established association. |
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Pledge Account Mortgage (PAM) -
Combines GPM (graduated payment mortgage) with a subsidizing
savings account to provide the borrower with a low payment plan,
the lender with amortizing payments and the seller with cash. |
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Points -
The site allows lenders to post rates via point ranges. Points are
broken out on the site for Discount and Origination. The
definitions for each are as follows:
- Discount Points = Interest Charges paid up-front when
a borrower closes a loan. A point is equal to 1 percent of the
loan amount (e.g. 1.5 points on a $100,000 mortgage would cost
the borrower $1,500). Generally, by paying more points at
closing, the borrower reduces the interest rate of his loan and
thus future monthly payments.
- Origination Points = A fee imposed by a lender to
cover certain processing expenses in connection with making a
real estate loan. Usually a percentage of the amount loaned,
such as one percent.
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Pre-Approval -
A term used to mean that a borrower has completed a loan
application and provided debt, income, and savings information
that has been reviewed and pre-approved by an underwriter. |
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Pre-Foreclosure Sale -
A procedure in which the borrower is allowed to sell his or her
property for an amount less that what is owed on it to avoid
foreclosure, fully satisfying the borrower's debt. |
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Pre-Paids -
Expenses such as taxes, insurance, and assessments, which are paid
in advance of their due date, and on a prorated basis at closing.
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Pre-Payment -
Any amount paid so as to reduce the principal before the due date.
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Prepayment Penalty -
Lenders who impose prepayment penalties will charge borrowers a
fee if they wish to repay part or all of their loan in advance of
the regular schedule. |
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Pre-Qualification -
After a loan officer has made inquiries about a borrower's debt,
income, and savings, he or she can write a written statement
(pre-qualification) about the borrower's chances for qualifying
for a home loan. |
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Prime Rate -
Interest charged by financial institutions to top-rate borrowers.
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Principal -
The amount of debt, not counting interest, left on a loan. |
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Private Mortgage Insurance (PMI) -
Paid by a borrower to protect the lender in case of default. PMI
is typically charged to the borrower when the Loan-to-Value Ratio
is greater than 80%. |
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Prorations -
The allocation of charges and credits to the appropriate parties
at a real estate sale and/or loan closing at a real-estate sale
and/or loan closing. |
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Promissory Note -
A written promise to repay a specified amount over a specified
period of time. |
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Purchase 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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Purchase-Money Mortgage -
Mortgage given by a borrower to the seller as part of the purchase
price of the property. |
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Purchase-Money Transaction -
The acquisition of property through the payment of money or its
equivalent. |
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Qualifying Ratio -
The ratio of the borrower's fixed monthly expenses to his gross
monthly income. Ratios are expressed as two numbers like 28/36
where 28 would be the Front-End Ratio and 36 would be the
Back-End Ratio.
The Front-End Ratio is the percentage of a borrower's gross
monthly income (before income taxes) that would cover the cost of
PITI (Mortgage Principal Payment + Mortgage
Interest Payment + Property Taxes
+ Homeowners Insurance). In the case of a 28%
Front-End Ratio a borrower could qualify if the proposed monthly
PITI payments were 28% or less than the borrower's gross monthly
income.
The Back-End Ratio is the percentage of a borrower's gross
monthly income that would cover the cost of PITI plus any
other monthly debt payments like car or personal loans and credit
card debt.
Please note that qualifying ratios are only a rough guideline
in determining a potential borrower's credit-worthiness. Many
factors such as excellent or poor credit history, amount of down
payment, and size of loan will influence the decision to approve
or disapprove a particular loan. Moving.com urges all borrowers to
discuss their particular situation with a qualified lender
regardless of the outcome of any self-qualification exercise. |
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Quitclaim Deed -
A deed that transfers, without warranty, whatever interest or
title a gran |
