Browse the list alphabetically
for a specific term. The topical list groups terms by
steps in the home buying process.
| Adjustable
Rate Mortgage (ARM): |
Mortgage
loans under which the interest rate is periodically
adjusted to more closely coincide are agreed to at
the inception of the loan. |
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|
| Alternative
Documentation: |
The use of pay stubs,
W-2 forms, and bank statements in lieu of Verifications
of Employment (VOE) and Verifications of Deposit (VOD)
to qualify a borrower for a mortgage. |
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|
| Amortization: |
The systematic and
continuous payment of an obligation through installments
until the debt has been paid in full. |
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|
| Annual Percentage
Rate (APR): |
A term used in the
Truth-in-Lending Act to present the percentage relationship
of the total finance charge to the amount of the loan.
The APR reflects the cost of the mortgage loan as a
yearly rate. It could be higher than the interest rate
stated on the Note because it includes, in addition
to the interest rate, loan discount points, miscellaneous
fees and mortgage insurance. |
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|
| Appraisal: |
A report made by a
qualified person setting forth an opinion or estimate
of property value. (Appraisal also refers to the process
through which a conclusion on property value is derived.) |
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|
| Appraisal Amount
or Appraised Value: |
The fair market value
of a home determined by an independent appraisal. The
appraisal uses local real estate market sales activity
as a major basis for valuation. |
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|
| Appreciation: |
An increase in the
value of a property due to market conditions or other
causes. The opposite is depreciation. |
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|
| Balloon Mortgage: |
A fixed-rate mortgage
for a set number of years and then must be paid off
in full in a single "balloon" payment. Balloon
loans are popular with borrowers expecting to sell
or refinance their property within a definite period
of time. |
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|
| Bankruptcy: |
Legal relief from the
payment of all debts after the surrender of all assets
to a court-appointed trustee. Assets are distributed
to creditors as full satisfaction of debts, with certain
priorities and exemptions. A person, firm or corporation
may declare bankruptcy under one of several chapters
of the U. S. Bankruptcy Code: Chapter 7 covers liquidation
of the debtor's assets; Chapter 11 covers reorganization
of bankrupt businesses; Chapter 13 covers payment of
debts by individuals through a bankruptcy plan. |
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|
| Cap: |
The limit placed on
adjustments that can be made to the interest rate or
payments such as the annual cap on an adjustable rate
loan (ARM) or the cap on a rate over the life of the
loan. |
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|
| Cash-out Refinance: |
To refinance the mortgage
on a property for more than the principal owed. This
allows the borrower to get cash from the equity in
their home. Loan products may vary on how much can
be borrowed on a cash-out refinance. |
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|
| Closing: |
Also known as settlement,
the finalization of the process of purchasing or refinancing
real estate. The closing includes the delivery of a
Deed, the signing of Notes and the disbursement of
funds |
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|
| Closing Costs: |
Costs that are due
at closing, in addition to the purchase price of the
property. These costs normally include, but are not
limited to, origination fee, discount points, attorney's
fees, costs for title insurance, surveys, recording
documents, and prepayment of real estate taxes and
insurance premiums held by the lender. Sometimes the
seller will help the borrower pay some of these costs. |
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|
| Closing Statement: |
An accounting of the
debits and credits incurred at closing. All FHA, VA
and Conventional financing loans use a Uniform Closing
or Settlement Statement commonly referred to as the
HUD-1. |
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|
| Co-Borrower: |
A party who signs the
mortgage note along with the primary borrower, and
who also shares title to the subject real estate. |
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|
| Collateral: |
Property pledged as
security for a debt. For example, real estate that
secures a mortgage. Collateral can be repossessed if
the loan is not repaid. |
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|
| Combined Loan To
Value (CLTV): |
The mathematical relationship
between the total of all loan amounts (first mortgage
plus subordinate liens) and the value of the subject
property. |
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|
| Community Reinvestment
Act (CRA): |
This act requires financial
institutions to meet the credit needs of their community,
including low and moderate-income sections of the local
community. It also requires banks to make reports concerning
their investment in the areas where they do business. |
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|
| 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.
All condominiums must meet certain investor requirements. |
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|
| Conforming Loan: |
A loan with a mortgage
amount that does not exceed that which is eligible
for purchase by FNMA or FHLMC. All loans are considered
either as conforming or non-conforming, also known
as jumbo. |
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|
| Conventional Loan: |
A mortgage loan not
insured or guaranteed by the federal government. |
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|
| Conversion Option: |
Options to convert
an adjustable rate mortgage or balloon loan to a fixed
rate mortgage under specified conditions. |
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|
| Co-Signer: |
A party who signs the
mortgage note along with the borrower, but who does
not own or have any interest in the title to the property. |
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|
| Creditor: |
A person to whom debt
is owed by another person who is the "debtor". |
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|
| Credit Rating: |
A rating given a person
or company to establish credit-worthiness based upon
present financial condition, experience and past credit
history. |
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|
| Credit Report: |
A document completed
by a credit-reporting agency providing information
about the buyer's credit cards, previous mortgage history,
bank loans and public records dealing with financial
matters. |
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|
| Deal Structure: |
An Underwriters review
of certain aspects of a loan application that do not
meet standard guidelines. |
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|
| Debt to Income Ratio: |
Compares the amount
of monthly income to the amount the borrower will owe
each month in house payment (PITI) plus other debts.
The other debts may include but not limited to car
payment, credit cards, alimony, child support, and
personal loans. This ratio is commonly used to see
if the borrower has the capacity to repay the debt. |
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|
| Deed of Trust: |
A legal document that
conveys title to real estate to a disinterested third
party (trustee) who holds the title until the owner
of the property has repaid the debt. In states where
it is used, a Deed of Trust accomplishes essentially
the same purpose as a Mortgage. |
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|
| Default: |
Failure to comply with
the terms of any agreement. In real estate, generally
used in connection with a mortgage obligation to refer
to the failure to comply with the terms of the Promissory
Note. Most often this default is a failure to make
payments, however, there are other means by which a
borrower may default, such as the failure to pay real
estate taxes. |
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|
| Depreciation: |
A decline in the value
of property. The opposite of appreciation. |
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|
| Discount Points: |
A percentage of the
loan amount which is charged or credited by the lender
upon making a mortgage loan. Loans that are made at
the present market rate, with no points, are considered
to be made at "par." Because of the lender's
ability to charge or credit points on an individual
loan, the lender is able to tailor a loan program and
interest rate to fit the needs of each individual borrower.
Discount points can be negotiated in the Purchase Contract
to be paid by either the seller or the borrower.
Each point equals
1% of the mortgage loan. For example, a charge of
1 point on a $50,000 loan would result in a charge
of $500; 1/2 point would be $250 ($50,000 x .50%). |
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|
| Down
Payment: |
The
part of the purchase price which the buyer pays in
cash and does not finance with a mortgage. |
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|
| Earnest Money: |
Deposit made by a purchaser
of real estate as evidence of good faith. |
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|
| Equal Credit Opportunity
Act (ECOA): |
Also known as Regulation
B. A federal law that prohibits a lender from discriminating
in mortgage lending on the basis of race, color, religion,
national origin, sex, marital status, age, income derived
from public assistance programs, or previous exercise
of Consumer Credit Protection Act rights. |
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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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|
| Escrow Account: |
An account held by
the lending institution to which the borrower pays
monthly installments for property taxes, insurance,
and special assessments, and from which the lender
disburses these sums as they become due. |
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|
| Fair
Credit Reporting Act: |
Regulated
the collection and distribution of information by the
consumer credit reporting industry. It also affects
how financial institutions collect and convey credit
information about loan applicants or borrowers. |
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|
| Fair Housing Act: |
Prohibits the denial
or variance of the terms of real estate related transactions
based on race, color, religion, sex, national origin,
disability, or familiar status of the credit applicant.
Real estate related transactions include a mortgage,
home improvement, or other loans secured by a dwelling. |
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|
| Federal
Home Loan Mortgage Corporation (FHLMC): |
Also
known as Freddie Mac. A publicly owned corporation
created by Congress to support the secondary mortgage
market. It purchases and sells conventional residential
mortgages as well as residential mortgages insured
by the Federal Housing Administration (FHA) or guaranteed
by the Veterans Administration (VA). |
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|
| Federal National
Mortgage Association (FNMA): |
Also known as Fannie
Mae. A privately owned corporation to support the secondary
mortgage market. It adds liquidity to the mortgage
market by investing in home loans through the country. |
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|
| FICO Score: |
A credit score given
to a person that establishes creditworthiness based
on present financial condition, experience and past
credit history. |
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|
| Finance Charge: |
The cost of credit
as a dollar amount (i.e. total amount of interest and
specific other loan charges to be paid over the term
of the loan and other loan charges to be paid by the
borrower at closing). Loan charges include origination
fees, discount points, mortgage insurance, and other
applicable charges. If the seller pays any of these
charges, they cannot be included in the finance charge. |
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|
| Financial Statement: |
A summary of facts
showing an individual's or company's financial condition.
For individuals, it states their assets and liabilities
as of a given date. For a company it should include
a Profit and Loss Statement (P&L) for a certain
period of time and balance sheet, stating assets and
liabilities as of a given date. |
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| First
Mortgage: |
A
real estate loan that creates a primary lien against
real property. |
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|
| First
Rate Adjustment -- First
rate adjustment after: |
In
association with an Adjustable Rate Mortgage loan,
this is the number of months after which the loan has
closed when the first interest rate adjustment will
occur. |
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|
| First
Rate Adjustment -- Maximum
rate decrease: |
In
association with an Adjustable Rate Mortgage loan,
this is the most the interest rate can decrease during
the first adjustment period. |
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|
| First
Rate Adjustment -- Maximum
rate increase: |
In
association with an Adjustable Rate Mortgage loan,
this is the most the interest rate can increase during
the first adjustment period. |
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|
| Fixed
Rate Mortgage: |
The
type of loan where the interest rate will not change
for the entire term of the loan. |
|
|
| Floating: |
The
term used when a purchaser elects not to lock-in an
interest rate at the time of application. |
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|
| Flood
Insurance: |
Insurance
that compensates for direct physical damages by or
from flood to the insured property subject to the terms,
provisions, conditions and losses not covered provision
of the policy. It is required for mortgages on properties
located in federally designated flood areas. |
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|
| Good
Faith Estimate (GFE): |
An
estimate of settlement charges paid by the borrower
at closing. The Real Estate Settlement Procedures Act
(RESPA) requires a Good Faith Estimate of settlement
charges be provided to the borrower. |
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|
| Gift
Letter: |
A
letter or affidavit that indicates that part of a borrower's
down payment is supplied by relatives or friends in
the form of a gift and that the gift does not have
to be repaid. |
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|
| Gross
Income: |
A
person's income before deduction for income taxation. |
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| Hazard
Insurance: |
Insurance
against losses caused by perils which are commonly
covered in policies described as a "Homeowner
Policy". |
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|
| Home
Maintenance: |
Costs
associated with maintaining a home. This may include,
but not limited to, general repairs, replacement or
repair of furnace, air conditioning, roof, plumbing
and electrical systems. |
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|
| Home
Mortgage Disclosure Act (HMDA): |
Also
known as Regulation C. The purpose of HMDA is to provide
disclosure of mortgage lending application activity
(home purchase or improvement) to regulators and the
public. Information is collected on each application,
and is recorded on a log that is compiled to produce
a report on application activity by geographic designation
(census tract). |
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| Homeowners
Association (HOA): |
A
non-profit corporation or association that manages
common areas and services of a Condominium or Planned
Unit Development (PUD). |
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|
| Homeowners
Insurance: |
Insurance
that covers damage to the insureds' residence and liability
claims made against the insured subject to the policy
terms, conditions, provisions, losses not insured provision
and exclusions. |
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|
| Housing
Expense Ratio: |
Ratio
used to determine the borrowers capacity to repay a
home loan. The ratio compares monthly income to the
house payment (Principal, Interest, Taxes and Insurance). |
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|
| Index: |
In
connection with ARM loans, the external measurement
used by a Lender to determine future changes which
are to occur to an adjustable loan program. These will
typically be published rates that are independent of
the Lender's control, such as a Treasury Bill. |
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|
| Initial
Interest Rate: |
The
beginning interest rate at the start of an adjustable
rate mortgage (ARM). It may be lower than the fully
indexed rate or "going market rate" and it
will remain constant until it is adjusted up or down
on the adjustment date. |
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| Interest: |
- The amount paid by
a borrower to a lender for the use of the lender's
money for a certain period of time.
- The amount paid by
a bank on some deposit accounts.
|
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| Interest
Income: |
The
potential income from funds which would have been used
for the down payment, closing costs, and any difference
(increase) between monthly rental payment and monthly
mortgage payment. |
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|
| Interest
Rate: |
The
percentage of an amount of money that is paid for its
use for a specific time; usually expressed as an annual
percentage. |
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| Judgment: |
Decree
of a court declaring that one individual is indebted
to another and fixing the amount of such indebtedness. |
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| Jumbo
Loan: |
A
loan above the limit set by the Federal National Mortgage
Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac). Also referred to
as a non-conforming loan. |
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|
| Late
Charge: |
An
additional charge a borrower is required to pay as
a penalty for failure to pay a regular mortgage loan
installment when due; a penalty for a delinquent payment. |
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| Lien: |
A
legal claim against a property that must be paid off
when the property is sold. A lien is created when you
borrow money and use your home as collateral for the
loan. |
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| Life
of Loan -- Maximum rate
decrease: |
In
association with an Adjustable Rate Mortgage loan,
this is the most the interest can decrease over the
life of the mortgage loan. |
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| Life
of Loan -- Maximum rate
increase: |
In
association with an Adjustable Rate Mortgage loan,
this is the most the interest can increase over the
life of the mortgage loan. |
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| Loan
Application: |
A
source of information on which the lender bases a decision
to make or not make a loan; defines the terms of the
loan contract, gives the names of the borrower(s),
place of employment, salary, bank accounts, credit
references, real estate owned, and describes the property
to be mortgaged. |
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| Loan
Balance: |
The
amount of remaining unpaid principal balance owed by
the borrower. |
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| Loan
Term: |
Number
of years a loan is amortized. Mortgage loan terms are
generally 15, 20, or 30 years. |
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|
| Loan-to-Value
(LTV): |
The
ratio of the total amount borrowed on a mortgage against
a property, compared to the appraised value of the
property. A LTV ratio of 90 means that the 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 the lesser of the purchase price or
the appraised value. For refinances the value is determined
by an appraisal. |
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|
| Loan-to-Value
Ratio: |
The
ratio, expressed as a percentage, of the amount of
the loan (numerator) to the value or selling price
of real property (denominator). For example, if you
have an $80,000 1st mortgage on a home with an appraised
value of $100,000, the LTV is 80% ($80,000 / $100,000
= 80%). |
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| Lock-In: |
A
written agreement between the lender and borrower for
a specified period of time in which the lender will
hold a specific interest rate, origination and/or discount
point(s). |
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|
| Margin: |
Under
the terms of an adjustable rate mortgage (ARM), the
margin is a set adjustment to the index. The particular
loan product determines the amount of the margin. |
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|
| Median
Income: |
The
middle income level. Half of the incomes would be higher
than the median income and half of the incomes would
be below the median income. This is not to be confused
with an average income. |
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|
| Mortgage: |
The
written instrument used to pledge a title to real estate
as security for repayment of a Promissory Note. |
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| Mortgage
Insurance: |
Insurance
written in connection with a mortgage loan that indemnifies
the lender in the event of borrower default. In connection
with conventional loan transactions, this insurance
is commonly referred to as Private Mortgage Insurance
(PMI). |
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|
| Mortgage
Note: |
A
written promise to pay a sum of money at a stated interest
rate during a specified term. It is typically secured
by a mortgage. |
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|
| Mortgage
Servicing: |
Controlling
the necessary duties of a mortgagee, such as collecting
payments, releasing the lien upon payment in full,
foreclosing if in default, and making sure the taxes
are paid, insurance is in force, etc. The lender or
a company acting for the lender, for a servicing fee,
may do servicing. (Also called Loan Servicing.) |
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|
| Mortgagee: |
The
institution, group, or individual that lends money
on the security of pledged real estate; the association,
the lender. |
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|
| Mortgagee
Clause: |
This
is the clause that is typically used for hazard insurance
and flood insurance. For loans originated by the State
Farm Bank® it will read: State Farm Bank, F.S.B.,
Its Successor and/or Assigns, P.O. Box 2583, Ft. Wayne,
IN 46801-2583. |
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|
| Mortgagor: |
The
owner of real estate who pledges his property as security
for the repayment of a debt; the borrower. |
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| Net
Income: |
The
difference between effective gross income and expense
including taxes and insurance. The term is qualified
as net income before depreciation and debt. |
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|
| Non-Conforming: |
A
loan with a mortgage amount that exceeds that which
is eligible for purchase by FNMA or FHLMC. All other
loans above this amount are considered to be non-conforming
or jumbo loans. |
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|
| Non-Owner-Occupied
Property: |
Property
purchased by a borrower not for a primary residence
but as an investment with the intent of generating
rental income, tax benefits, and profitable resale. |
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|
| Note: |
A
written promise by one party to pay a specific sum
of money to a second party under conditions agreed
upon mutually. Also called "promissory note." |
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|
| Note
Rate: |
The
interest rate on the mortgage loan. |
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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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|
| Origination
Process: |
Process
in which a lender solicits business, gathers required
information and commits to loan money, for the purchase
of real estate. |
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|
| Owner-Occupied
Property: |
The
borrower or a member of the immediate family lives
in the property as a primary residence. |
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|
| PITI: |
Term
commonly used to refer to a mortgage loan payment.
Acronym stands for Principal, Interest, Taxes, and
Insurance. |
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|
| PITI
Ratio: |
Compares
the amount of the monthly income to the amount the
borrower will owe each month in principal, interest,
real estate tax and insurance on a mortgage. Lenders
use it in deciding whether to give the borrower a loan.
Also called "income-to-debt" ratio. |
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|
Planned
Unit
Development (PUD): |
A
housing project that may consist of any combination
of homes (one-family to four-family), condominiums,
and various other styles. In a PUD, often the individual
unit and the land upon which it sits are owned by the
unit/homeowner; however, the homeowner's association
owns common facilities. |
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|
| Pre-Approval: |
A
process in which a customer provides appropriate information
on income, debts and assets that will be used to make
a credit only loan decision. The customer typically
has not identified a property to be purchased, however,
a specific sales price and loan amount are used to
make a loan decision. (The sales price and loan amount
are based on customer assumptions) |
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|
| Pre-Qualification: |
A
process designed to assist a customer in determining
a maximum sales price, loan amount and PITI payment
they are qualified for. A pre-qualification is not
considered a loan approval. A customer would provide
basic information (income, debts, assets) to be used
to determine the maximum sales price, etc. |
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|
| Prepaid
Expenses or Prepaids: |
The
term used to describe the funds the Lender requires
to be deposited to establish the escrow account for
taxes and insurance at the time of closing (also refers
to Prepaid Interest). |
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|
| Prepaid
Interest: |
Interest
that the borrower pays the lender before it becomes
due. |
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|
| Prepayment: |
A
loan repayment made in advance of its contractual due
date. |
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|
| Prepayment
Penalty: |
A
penalty under a Note, Mortgage or Deed of Trust imposed
when the loan is paid before its maturity date. |
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|
| Principal
and Interest: |
Two
components of a monthly mortgage payment. Principal
refers to the portion of the monthly payment that reduces
the remaining balance for the mortgage. Interest is
the fee charged for borrowing money. |
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|
| Principal
Balance: |
The
outstanding balance of a mortgage, not counting interest. |
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|
| Principal,
Interest, Real Estate Tax, Insurance Payment: |
The
total mortgage payment which includes principal, interest,
taxes and insurance. |
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|
| Private
Mortgage Insurance (PMI): |
Insurance
against a loss by a lender in the event of default
by a borrower (mortgagor). A private insurance company
issues this insurance. The premium is paid by the borrower
and is included in the mortgage payment. |
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|
| Processing: |
Gathering
the loan application and all required supporting documents
(including the property appraisal, credit report, credit
history, and income and expenses) so that a lender
can consider the borrower for a loan. |
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|
| Promissory
Note: |
A
document in which the borrower promises to pay a stated
amount on a specific date. The note normally states
the name of the lender, the terms of payment and any
interest rate. |
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|
| Property
Taxes: |
Taxes
assessed on real estate. Property taxes are based on
valuations by local and or state governments. |
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|
| Purchase
Agreement: |
A
written agreement between a buyer and seller of real
property, that states the price and terms of the sale. |
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| Purchase
Price: |
The
total amount paid for a home. |
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|
| Qualifying
Income Ratios: |
Income
analysis used by lenders in deciding whether to offer
the borrower a loan. One type of analysis compares
only the amount of the proposed monthly mortgage payment
to the monthly income. Another compares the amount
of the total monthly payments (for example car, credit
card and proposed mortgage payments) to the monthly
income. |
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|
| Rate
Index: |
An
index used to adjust the interest rate of an adjustable
mortgage loan. |
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|
| Real
Estate Appreciation Rate: |
Percentage
increase in the value of real estate, expressed at
an annual rate. |
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|
| Real
Estate Settlement Procedures Act (RESPA): |
A
consumer protection law that requires, among other
things, lenders to give borrowers advance notice of
closing costs. |
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|
| Realtor: |
A
person licensed to negotiate and transact the sale
of real estate on behalf of the property owner. A real
estate broker or associate must hold active membership
in a real estate board affiliated with the National
Association of Realtors. |
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|
| Recording
Fee: |
The
amount paid to the recorder's office in order to make
a document a matter of public record. |
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|
| Regulation
Z: |
Federal
Reserve regulation issued under the Truth-in-Lending
Act, which, among other things, requires that a credit
purchaser be advised in writing of all costs connected
with the credit portion of the loan. |
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|
| Rental
Payment: |
A
payment made to use another's property. The amount
of the rent is determined in a contract and is typically
paid monthly. |
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|
| Renters
Insurance: |
Insurance
against perils which are commonly covered in policies
described as a "Renters Policy". |
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|
| Repayment: |
The
payment of a mortgage loan over a period of time established
when the loan is originated. |
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|
| Rescind: |
To
avoid or cancel in such a way as to treat the contract
or other object of the rescission as if it never existed. |
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|
| Sales
Contract: |
A
written agreement between parties stating all terms
and conditions of a sale. |
|
|
| Savings
Rate: |
The
interest rate a person expects to earn on a savings
account or investment account. |
|
|
| Secondary
Market: |
An
informal market where existing mortgages are bought
and sold. It is the traditional aftermarket for mortgage
loans that brings together lenders that sell mortgages
with lenders, investors and agencies that buy mortgages. |
|
|
| Seller
Contribution: |
The
seller may be paying some or all of the borrower's
cost. The amount of the contribution has limitations. |
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|
| Selling
Costs: |
The
costs incurred in selling a home. This could include
Realtor expenses and other miscellaneous expenses such
as painting or minor repairs to prepare the home for
sale. |
| |
|
| Servicing: |
All
the management and operational procedures that the
mortgage company handles for the life of the loan,
up through foreclosure if necessary, including: collecting
the mortgage payments, ensuring that the taxes and
insurance charges are paid promptly, and sending an
annual report on the mortgage and escrow accounts. |
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|
| Servicing
Released: |
A
stipulation in the agreement for the sale of mortgages
in which the Lender is not responsible for servicing
the loan. |
| |
|
| Servicing
Retained: |
A
loan sale in which the original lender's servicing
department continues to service the loan after the
sale to a secondary institution or investor. |
| |
|
| Settlement
Statement: |
Also
referred to as a HUD-1 Settlement Statement. The complete
breakdown of costs involved in the real estate transaction
for both the seller and buyer. |
| |
|
| Single-Family
Attached Home: |
A
single-family dwelling that is attached to other single-family
dwellings. |
| |
|
| Single-Family
Detached Home: |
A
freestanding dwelling for a single family |
| |
|
| 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 improvements. |
| |
|
| Subordinate
Financing: |
An
additional lien against the real estate securing borrowers
first mortgage. This lien takes second priority to
the first mortgage. |
| |
|
| Subsequent
Rate Adjustment -- Maximum
rate decrease: |
In
association with an Adjustable Rate Mortgage loan,
this is the most the interest rate can decrease when
it is scheduled for reevaluation and possible adjustment. |
| |
|
| Subsequent
Rate Adjustment -- Maximum
rate increase: |
In
association with an Adjustable Rate Mortgage loan,
this is the most the interest rate can increase when
it is scheduled for reevaluation and possible adjustment. |
| |
|
| Subsequent
Rate Adjustment -- Next
ARM Adjustment Date: |
In
association with an Adjustable Rate Mortgage loan,
this is the date scheduled for the next reevaluation
and possible adjustment. |
| |
|
| Subsequent
Rate Adjustment -- Rate
Change Frequency: |
In
association with an Adjustable Rate Mortgage loan,
this is the frequency in which possible adjustments
may be made to the interest rate amount for Adjustable
Rate Mortgages after the initial adjustment. |
| |
|
| Tax
Rates: |
Tax
levied by the federal government and some states based
on a person's income. Federal income tax rates vary
depending on a person's adjusted gross income. |
| |
|
| Tax
Savings: |
The
amount saved on taxes by itemizing deductions on income
tax returns. |
| |
|
| Title: |
The
evidence to the right to or ownership in property.
In the case of real estate, the documentary evidence
of ownership is the title deed, which specifies in
whom the legal state is vested and the history of ownership
and transfers. Title may be acquired through purchase,
inheritance, devise, gift or through the foreclosure
of a mortgage. |
| |
|
| Title
Insurance Policy: |
A
contract by which the insurer, usually a title company,
indicates who has legal title and agrees to pay the
insured a specific amount of any loss caused by clouds,
claims or defects of title to real estate, which the
insured has an interest as owner, mortgagee or otherwise.
(a) Owner's Title Policy: Usually issued to the landowner himself. The
owner's title insurance policy is bought and paid for only once and then
continues in force without any further payment. Owner's Title Insurance
policies are not assignable.
(b) Mortgagee's Title Policy: Issued to the mortgagee and terminates when
the mortgage debt is paid. In the event of foreclosure, or if the mortgagee
acquires title from the mortgagor in lieu of foreclosure, the policy continues
in force, giving continued protection against any defects of title which
existed at, or prior to, the date of the policy. |
| |
|
| Treasury
Bills: |
Interest
bearing U.S. Government obligations sold at a weekly
sale. The change in interest rates paid on these obligations
is frequently used as the Rate Index for Adjustable
Mortgage Loans. |
| |
|
| Truth
in Lending (TIL): |
The
name given to the federal statues and regulations (Regulation
Z) which are designed primarily to insure that prospective
Borrowers of credit received credit and cost information
before concluding a loan transaction. |
| |
|
| Underwriting
(Mortgage Loans): |
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. |
| |
|
| Verification
of Deposit (VOD): |
Form
used in mortgage lending to verify the deposits or
assets of a prospective borrower when monthly statements
are unavailable or unusable. |
| |
|
| Verification
of Employment (VOE): |
Form
used in mortgage lending to verify the employment and
income of a prospective borrower when pay stubs and
W2 forms are unavailable or unusable. |
| |
|
| Verification
of Mortgage (VOM): |
Form
used in mortgage lending to verify the existing mortgage
balance, monthly payments and late payments, if any. |
| |
|
| Verification
of Rent: |
Form
used in mortgage lending to verify monthly rents paid
and late payments, if any. |
