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  Glossary


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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.

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.

Accrue - The accumulation of interest charges.

Acquisition cost - Under an FHA loan, the purchase price or appraised value of the property plus the estimated closing costs.

Adjustable Rate Mortgage (ARM) - A mortgage in which the interest rate is adjusted periodically based on an index. Also called a variable rate mortgage.

Adjusted book basis - The purchase price of a property plus any capital improvements less accrued depreciation, if any, to the date of the sale.

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.

Adjustment_date - The date the interest rate changes on an ARM (adjustable rate mortgage).

Adverse Action - The refusal to grant credit to a person applying for credit.

Adverse Action Notice - A document that explains why credit has been denied.

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.

Amortization Table - A table showing the amount of a principal and interest due at regular payment intervals.

Amortization Terms - The amount of time required to amortize the loan. For example, for a 3-year fixed-rate loan, the amortization term is 36 months.

Amount Financed - The amount of credit provided by a lender.

Annual Percentage Rate (APR) - The Annual Percentage Rate (APR) is a yearly rate of interest that includes all of the fees and expenses paid to acquire a loan.

Annuity - A series of income payments of receipts over a period of years.

Application - An initial written statement of personal and financial information required for an evaluation of creditworthiness.

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.

Appraisal - An estimate of the value of property, made by a qualified professional called an `appraiser`.

Appreciation - Increases in property value due to fluctuations in the market, inflation, et al.

Approval - Conditional loan approval is based on information provided to ditech.com verbally and as set forth on the application. The conditional approval is subject to the verification and/or receipt of additional information. Once all closing conditions and lender requirements are satisfied, the loan will receive final approval.

APR (Annual Percentage Rate) - The annual percentage rate is a measure of the cost of credit on a yearly basis. The APR allows you to compare various kinds of mortgages based on the yearly cost of each loan.

ARM (Adjustable-Rate Mortgage) - A mortgage that has an initial rate that adjusts periodically, in accordance with a current interest rate index (a predetermined margin is added to the index to compute the interest rate). Payments can be low if interest rates are low and will increase as rates rise. CAPS govern the limit an ARM loan's rate can adjust to at one time and over the life of the loan. Generally, ARMs have lower rates than fixed-rate mortgages and are easier to qualify for - but because they're based on changing interest rates, your payment amounts can be unpredictable. ARM types include Two-Step and Convertible ARM.

Arm's-Length Transaction - A transaction negotiated by unrelated parties, each acting in his/her own best interest.

Assessment - A local tax levied against a property for a specific purpose, such as a sewer or street lights.

Asset - Valuable items, encumbered or not, owned by a person, corporation, or entity.

Assumable Loan - These loans may be passed on from a seller of a home to the buyer. The buyer `assumes` all outstanding payments.

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.

Assumption - Buying property and assuming the responsibility of the exiting mortgage.

Assumption - The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply.



Back-end Ratio - Your total debt-to-income ratio - That is, your total monthly obligations (debt), divided by your gross monthly income. Your monthly obligations include such items as your mortgage payment, property taxes, insurance premiums, installment loans, and revolving debt (credit cards). This ratio is used to determine your capacity to repay the mortgage and all other debts. Your debt-to-income ratio is a crucial calculation in determining the loan amount for which you can qualify. In conjunction with your expenses-to-income ratio, it represents your financial capacity to assume and repay debt.

Balloon (payment) mortgage - Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principle at a time specified in the contract.

Balloon Mortgage - A mortgage that has level monthly payments over a stated term but which provides for a lump-sum payment to be due at the end of a previously specified time (e.g., five and seven- year balloon mortgages, where the payment is fixed for 5 or 7 years, then the remaining balance becomes due and payable at the end of the term).

Balloon Payment - The final lump sum that is paid at the end of the balloon mortgage.

Bankrupt - When a person is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.

Bankruptcy - A legal procedure petitioned either by the debtor (voluntary) or by creditors (involuntary) when the debtor is unable to make his or her payments, in which the court distributes the debtor's property to creditors to fulfill repayment of debts.

Base Income - The borrower's salary. If the borrower is self-employed, it is the net income - that is, your income after expenses.

Basis Point - An interest rate or yield expressed as 1/100 of one percent.

Best Faith Estimate - An estimate of the total costs for securing a real estate loan, that is given to borrowers prior to closing.

Bill of Sale - A written document that transfers a title to personal property.

Blanket Mortgage - A mortgage covering at least two pieces of real estate as security for the same mortgage.

Book Value - Acquisition costs less any accrued depreciation.

Borrower - An individual that obtains credit from a lender.

Borrower (Mortgagor) - One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

Bridge Loan - An equity loan secured to solve short-term financing problem.

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.

Budget Mortgage - A mortgage that includes a portion for taxes and insurance as well as principal and interest.



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.

Caps - Consumer safeguards on adjustable-rate mortgages that limit the increase or decrease of interest rate changes per year or during the life of the loan, and/or a limit on the amount that monthly payments can change. These safeguards protect you as interest rates rise.

Caps (interest) - Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Caps (payment) - Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

Carryback Loan - A loan in which a seller agrees to finance a buyer in order to complete a property sale.

Cash Flow - The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc).

Cash Reserves - The amount of liquid assets the borrower has remaining after the mortgage loan transaction is completed.

Cash-out Refinance - A transaction that provides cash proceeds to the borrower in excess of 1 percent of the mortgage amount or provides cash that is used to pay off non-mortgage debt.

Certificate of Eligibility - The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility).

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.

Certificate of veteran status - The document given to veterans or reservists who have served 90 days of continuous active duty (including training time) It may be obtained by sending DD 214 to the local VA office with form 26-8261a (request for certificate of veteran status). This document enables veterans to obtain lower down payments on certain FHA insured loans.

Charge-off: - The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.

Clear Title - A title that is free of liens or any legal question as to the ownership of the property.

Closing - Final arrangements to transfer title of property as well as allocate charges and credits.

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 usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount.

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.

Cloud - An outstanding claim or encumbrance, that, if valid, would affect or impair the owner's property title.

CLTV (Combined loan-to-value) - The CLTV is the ratio of the total mortgage liens against the subject property to the lesser of either the appraised value or the sales price.

Co-borrower - A person who is jointly and equally liable for repayment of the mortgage obligation. A co-borrower completes an application and submits all documentation and may or may not be on the security instrument.

Co-Buyer - An individual who purchases an auto jointly with a Buyer. This individual is jointly liable for repayment of the loan.

Co-Owner - A second owner of a vehicle.

Co-Signer - An individual who agrees to pay the amount due if the buyer fails to meet contractual obligations.

COFI (Cost of Funds Index) - An index used to determine interest rate changes for certain ARMs. It represents the weighted average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

Collateral - Assets that guarantees the repayment of a loan.

Collection - The efforts used to bring a delinquent account current..

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.

Common stock: - A security that represents ownership in a company but gives no legal claim to a definite dividend or to a return of capital.

Comparables - An estimate of value based on comparable sales (comps).

Conforming Loans - Loans that conform to Federal Home Loan Mortgage Corporation (FHLMC) and Fannie Mae (FNMA) requirement(s) and do not exceed the maximum loan amount and loan-to-value (LTV) limitations established by FNMA or FHLMC:

Construction loan - A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses.

Construction Perm - Construction-to-permanent financing involves the granting of a long-term mortgage for the purpose of replacing interim construction financing that the borrower obtained to fund the construction of a new residence. The transaction may be considered to be a purchase or a refinance.

Contract sale or deed: - A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional loan - A mortgage not insured by FHA or guaranteed by the VA.

Conventional mortgage: - A mortgage loan that is not insured or guaranteed by the federal government.

Conversion - The right of a borrower to convert an adjustable or balloon loan into a fixed loan. The Conversion Option column on Monstermoving.com balloon tables indicates the right of a borrower to convert this balloon loan. The possible options are as follows...

Convertible ARM - A type of adjustable rate mortgage that includes an option for the mortgagor to change the mortgage to a fixed-rate mortgage at specified intervals during a predetermined time.

Credit Bureau Company - An organization that prepares credit reports used by credit grantors to determine the creditworthiness of an individual.

Credit Bureau Repository - An organization that compiles credit history data directly from lenders and creditors to build in-file credit reports for individuals.

Credit enhancement: - A method to reduce credit risk by requiring collateral, letters of credit, mortgage insurance, corporate guarantees, or other agreements to provide an entity with some assurance that it will be recompensed to some degree in the event of a financial loss.

Credit History - A record of an individual's credit payment and debt history. A credit history helps a lender to determine the credit worthiness of an individual who has applied for credit.

Credit Loan - A credit loan is a mortgage that is issued on only the financial strength of a borrower, without great regard for collateral.

Credit loss ratio: - The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.

Credit Report - A report documenting the credit history and current status of a borrower's credit standing.

Credit Score - A assessment used to evaluate the amount of `risk` involved in a credit transaction.

Credit-Loss Ratio - The ratio of credit-related losses to the dollar amount of MBS outstanding and total mortgages owned by the corporation.

Credit-Related Expenses - The sum of foreclosed property expenses plus the provision for losses.

Credit-Related Losses - The sum of foreclosed property expenses plus charge-offs.

Creditor - A person or institution who extends credit and to whom the obligation is payable.

Creditworthiness - Determination of a consumer's eligibility to borrow money.



Debt - An amount owed to another person or organization.

Debt security: - A security in which the issuing company generally agrees to repay the principal (typically, the original amount borrowed) and make interest payments according to an agreed schedule.

Debt-to-Income Ratio (DTI) - The ratio of aggregate monthly debt to aggregate monthly income.

Deed - A legal document which affects the transfer of ownership of real estate from the seller to the buyer.

Deed of trust - In many states, this document is used in place of a mortgage to secure the payment of a note.

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.

Default: - The failure of a borrower to comply with the terms of a note or the provisions of a mortgage.

Deferred interest - When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization.

Delinquency - Failure to make payments on time. This can lead to foreclosure.

Delinquency - Late- or non-payments of principal, interest, taxes, or insurance.

Department of Veterans Affairs (VA) - An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.

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.`

Depreciation - In real estate and mortgage terms, the decline in the property value.

Derivative: - A financial instrument which derives its value from an underlying security or notional amount.

Direct Financing - A loan is originated directly between a lender and a consumer..

Discount - Difference between the face amount of a note or mortgage and the price at which the instrument is sold in the secondary market.

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.

Down Payment - Money paid by the borrower that is the difference between the purchase price of the property and the amount of the mortgage.

Drive-by Appraisal - An estimate of value from an independent appraiser that is based primarily on recent comparable sales.

Due Date - The date in a given month that a loan payment is due.

Due-on-Sale-Clause - A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

Duration: - The weighted-average life of the present value of all future cash flows, both principal and interest, of a security. It is used as a measure of the sensitivity of the value of a security to changes in interest rates.



Earnest Money - Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Earnest Money Deposit - A deposit made by a potential home buyer to show that they are serious about purchasing the property.

Earnings per share (EPS): - The net earnings of a corporation divided by the average number of shares of its common stock outstanding during a period. A common method of expressing a corporation's profitability.

Effective Gross Income - Normal annual income including overtime that is regular or guaranteed.

EFT - Electronic Fund Transfer

Eminent Domain - The government right to take private property for public use depended on the payment of its fair market value.

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.

Entitlement - The VA home loan benefit is called entitlement. Entitlement for a VA guaranteed home loan. This is also known as eligibility.

Equal Credit Opportunity Act (ECOA) - Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity - The difference between the current market value of a property and the principal balance of all outstanding loans.

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.

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.

Escrow Account - An account in which a portion of the monthly payment is held by the lender on the borrower's behalf for the payment of future taxes, mortgage and hazard insurance, special assessments insurance, and other on-going payments as they occur. Also called an Impound Account. Impound/escrow accounts allow one to make fractional payments for these charges as part of the monthly mortgage payments. The funds are gradually collected in the escrow account, then paid out in full when the charges become due.

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.

Escrow Closing - The deposit of funds or documents with an attorney or escrow agent to be disbursed upon closing of the real estate transaction.

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.

Esement - Giving other persons, other than the owner, access to a property.

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.

Eviction - The legal removal of real property occupants for unlawful actions carried out by those occupants.



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.

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.

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.

Farmers Home Administration (FmHA) - Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

Federal Home Loan Bank Board (FHLBB) - The former namefor the regulatory and supervisory agency forfederally chartered savings institutions. Agency is now called the Office of Thrift Supervision

Federal Home Loan Mortgage Corporation (FHLMC) also called `Freddie Mac` - Is a quasi-governmental agency that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers.

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.

Federal National Mortgage Association (FNMA) also know as `Fannie Mae` - A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.

Fee Simple - The best title that one can obtain; unqualified and conveys the highest bundle of rights.

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.

FHA loan - A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans ($155,250 as of 1/1/96), they are generous enough to handle moderately-priced homes almost anywhere in the country.

FHA mortgage insurance - Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.

FHLMC - The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as `Freddie Mac.`

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.

Firm Commitment - A lender's agreement to provide a loan to a specific borrower on a specific property.

First Mortgage - A mortgage that has priority over other mortgages.

Fixed Rate Loan - A loan in which the interest rate remains constant throughout the life of a loan.

Fixed-Rate Mortgage - A mortgage where the interest rate does not change for the life of the loan.

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.

FNMA - The Federal National Mortgage Association is a secondary mortgage institution which is the largest single holder of home mortgages in the United States. FNMA buys VA, FHA, and conventional mortgages from primary lenders. Also known as `Fannie Mae.`

Forbearance: - The lender's postponement of legal action when a borrower is delinquent. It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments up to date.

Foreclosure: - The legal process by which property that is mortgaged as security for a loan may be sold to pay a defaulting borrower's loan.

Freddie Mac - See Federal Home Loan Mortgage Corporation.

Front-end Ratio - The ratio of house payment(s) - including insurance, PMI, and property taxes - to income.



Gift Funds - Funds donated on behalf of the borrower from certain eligible sources to assist the borrower in meeting closing costs. Generally, eligible sources are relatives, churches, municipalities, or nonprofit organizations.

Ginnie Mae - See Government National Mortgage Association.

Global Debt Facility: - A debt issuance facility through which U.S. dollar and foreign currency debt securities may be offered to investors worldwide with the feature of clearing and settlement through a variety of clearing systems.

Good Faith Estimate - An estimate of the closing costs.

Government Loan - A type of mortgage insured by the FHA (Federal Housing Authority), VA (Veteran's Administration), or RHS (Rural Housing Authority).

Government National Mortgage Association (Ginny Mae) - Provides funds for government loans and takes over special assistance and liquidation functions of Fannie Mae.

Grace Period - A time allowed, usually 15 days, for making late payments without a penalty.

Graduated Payment Mortgage (GPM) - A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.

grantee - The person to whom an interest in real property is conveyed.

grantor - The person conveying an interest in real property.

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.

Guarantor - A person who agrees to pay the debt of another.

Guaranty - A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

Guaranty fee: - Compensation paid by a lender to Fannie Mae for the guarantee of timely payments of principal and interest to MBS security holders.



Hard-Money Mortgage - Cash loan to a borrower.

Hazard Insurance - A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.

HELOC (Home Equity Line of Credit) - A real estate loan, usually in a second lien position, allowing a borrower to withdraw equity in real estate owned with specific limitations. Basically, one can draw cash against his or her line of credit to use when needed.

HOA (Homeowners Association) - A nonprofit association whose directors and officers are elected by the unit owners of a condominium or PUD project. Primary responsibilities are to manage the common areas, expenses, and services of the condominium or PUD project.

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.

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.

Home Equity Loan - A loan in which the lender acquires an interest in one's home up to the amount of this loan, giving the borrower the funds he or she needs for a purchase opportunity, home maintenance, debt consolidation, or major expenses.

Home Inspection - A thorough assessment by a professional regarding the structural and mechanical condition of a property.

homeowner's insurance - An insurance policy that combines personal liability insurance and hazard insurance for a home and its contents.

homeowner's warranty - An insurance policy that is purchased by a buyer that covers certain repairs, should they be necessary over a certain period.

Housing Debt-to-Income Ratio - The sum of all monthly housing mortgage expenses, such as PITI, homeowners dues, private mortgage insurance, and any special assessments, as a percentage of the borrower's gross qualifying income.

Housing Expenses-to-Income Ratio - The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her gross monthly income. See debt-to-income ratio.

Housing Ratio - The ratio of the monthly housing payment to total gross monthly income. Also called Payment-to-Income Ratio or Front-End Ratio.

HUD - Department of Housing and Urban Development; regulates Fannie Mae and Ginny Mae.



Impound - That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.

Impound Account or Escrow Account - An account in which a portion of the monthly payment is held by the lender on the borrower's behalf for the payment of future taxes, mortgage and hazard insurance, special assessments insurance, and other ongoing payments as they occur. Impound/escrow accounts allow one to make fractional payments for these charges as part of the monthly mortgage payments. The funds are gradually collected in the escrow account, then paid out in full when the charges become due.

Income-to-Expenses Ratio - The ratio of your monthly income (gross unless self-employed - in which case net income) to monthly expenses. It is used to determine one's ability to repay debt and thus is a crucial consideration in determining if, and for how large a loan, one can qualify to borrow.

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.

Installment Debt - Borrowed money that is repaid in successive payments, usually at regular intervals; the monthly debt service is sometimes excluded for debt-to-income calculator purposes if 10 or fewer payments remain to be made.

Interest - The cost of borrowing money.

Interest Only - A term loan arrangement calling for payments of interest only, not to include any amount for principal.

Interest Rate - The percentage of an amount of money that's paid for its use over a specified time period.

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.

Interim Financing - A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion.

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.

Investment Property - A nonowner occupied residential property used to generate income.

Investor - A money source for a lender.



Jumbo Loan - A loan for $359,651 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.





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.

Late Fee - A charge assessed by a lender for payments received after a specific due date.

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.

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.

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.

Lender - The bank, mortgage company, or mortgage broker offering the loan. Many institutions only `originate` loans and then resell the obligation to third parties.

Lender option commitments: - An agreement giving a lender the option to deliver loans or securities by a certain date at agreed-upon terms.

Leverage - Using someone else's money for the purchase of property.

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.

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.

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.

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).

Limited Cash-out Loan - For Fannie Mae, a refinance transaction in which the mortgage amount is limited to the sum of the unpaid principal balance of the existing first mortgage, closing costs, prepaid items, points, and the amount required to satisfy any subordinate mortgage liens that are more than one year old, and funds back to the borrower that do not exceed 1 percent of the principal amount of the new mortgage.

Loan - The principal, or amount of total borrowed money, that is repaid with interest.

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.

Loan Application - A document required by a lender before issuing a loan commitment. It includes information such as the name of the borrower, terms and amount of loan, and details of the property being mortgaged. It's the first and foremost measure of one's ability to qualify for a loan, so it's crucial that one submit complete and accurate information.

Loan Balance - The amount owed on a loan after deducting the amount of payments made.

Loan Commitment - An agreement to lend money, usually for a specific amount to be repaid by a specific date. This commitment is contingent upon the accuracy of the information submitted by the applicant.

Loan Officer - An intermediary between lending institutions and borrowers, loan officers solicit loans, represent creditors to borrowers, and represent borrowers to creditors.

Loan Origination - What the process of obtaining new loans is called.

Loan Servicing - A service performed by a lender to protect a mortgage investment, including collecting monthly payments from borrowers and dealing with delinquencies.

Loan Term - The length of the loan, usually broken down into months (24, 36, 48, and 60 months, etc).

Loan-to-value (LTV) ratio: - The relationship between the dollar amount of a borrower's mortgage loan and the value of the property.

Loan-to-Value Ratio - A ratio used to determine the amount of money a lender will loan based on the value of a car

Lock-in Rate - The interest rate percentage for the loan that will remain the same until funding.

Loss mitigation: - Activities designed to reduce either the likelihood of the corporation suffering financial losses on a loan or the final dollar value of those losses in the event of a borrower default.



Office of Thrift Supervision (OTS) - The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board.

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.

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.

Owner Financing - A property purchase that is partly or wholly financed by the seller.

Owner's Title Policy - A policy protecting the buyer for the amount of the purchase price in the event of a future title dispute.



Mandatory delivery commitment: - An agreement that a lender will deliver loans or securities by a certain date at agreed-upon terms.

Margin - The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.

Market Value - The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.

Maturity - The `Due Date` of a loan.

Medium-term notes: - Unsecured general obligations of Fannie Mae with maturities of one day or more and with principal and interest payable in U.S. dollars.

Merged Credit Report - A credit report that reports data from two or more major credit repositories.

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.

MIP (Mortgage Insurance Premium) - It is insurance from FHA to the lender against incurring a loss on account of the borrower's default.

Modification - Any change to the original terms of a mortgage.

Monthly Housing Expense -

Monthly Payment - The amount of principal and interest the borrower is obligated to pay back each month.

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.

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.

Mortgage Broker - A mortgage company that originates loans, joining the borrower and lender for a real estate loan, earning a placement fee.

Mortgage Constant - The factor used for rapid computation of the annual payment needed to amortize a loan.

Mortgage Insurance (MI) - Insurance that protects a mortgage lender against loss in the event of default by the borrower. This insurance allows lenders to make loans with lower down payments (loan-to-value ratios above 80 percent - that is, when a down payment is less than 20 percent of the total selling price of the property).

Mortgage-Backed Security (MBS): - A Fannie Mae security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the MBS holders.

Mortgagee - The lender.

Mortgagor - The borrower.

Multifamily housing: - A building with more than four residential rental units.



Negative Amortization - A gradual increase in the mortgage debt caused by unpaid interest that is added to the mortgage principal because the payment is not sufficient to cover the full amount of interest due.

Net Effective Income - Gross income less federal income tax.

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.

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.

Non Assumption Clause - A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. Note: The signed obligation to pay a debt, as a mortgage note.

Non-Prime Lender - A lending organization that loans money to individuals with a poor credit history.

Nonconforming Loans - Loans that do not conform to traditional Fannie Mae or Freddie Mac conditions. Generally, loans above $359,650 (for all states except Alaska and Hawaii) are nonconforming loans. They are also known as Jumbo loans.

Nonperforming asset: - An asset such as a mortgage that is not currently accruing interest or on which interest is not being paid.

Note - A legal instrument in which a borrower promises to repay his or her loan under a specific set of circumstances (e.g., interest rate or late charge information).

Note Rate - The stated interest rate on a mortgage note.

Notional principal amount: - The hypothetical amount on which interest rate swap payments are based. The notional principal amount in an interest rate swap generally is not paid or received by either party.



Package Mortgage - A mortgage that /includes equipment and appliances located on the premises in addition to the real property itself.

Partial Entitlement - Under VA loans, the amount of guarantee still available to an eligible veteran who has used his previous entitlement.

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.

Payback Period - The amount of time it takes to pay back the fees for obtaining a loan on a property.

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.

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.

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.

Permanent Loan - A long term mortgage, usually ten years or more. Also called an `end loan.`

Personal Property - Movable property that does not fit the definition of realty.

Piggyback - Borrowers often use a `piggyback` second mortgage in conjunction with a first mortgage so that they do not have to provide a 20 percent down payment in order to avoid PMI.

PITI - Principal, Interest, Taxes and Insurance. Also called monthly housing expense.

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.

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.

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.

PMI (Private Mortgage Insurance) - Insurance coverage a lender requires the borrower to obtain to protect the lender against loss in the event of a mortgage default. It's mandatory for higher loan-to-value mortgages (those above 80 percent LTV in most cases - that is, where the loan amount is 80 percent or more of the property's appraised value).

Points - A prepaid finance charge assessed by the lender at closing. Paying points will decrease the loan's interest rate. One point equals 1 percent of the loan amount. They are also called discount points.

Power of Attorney - A legal document authorizing one person to act on behalf of another.

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.

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.

Pre-Payment - Any amount paid so as to reduce the principal before the due date.

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.

Preferred stock: - Stock that takes priority over common stock with regard to dividends and liquidation rights. Preferred stockholders typically have no voting rights.

Prepaid Expenses - Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.

Prepaid Items - Items that generally must be paid for at the time of closing and are generally recurring charges. Prepaid items may include taxes; first-year premiums for hazard, flood, and mortgage insurance; prorated interest, any special assessments that must be prepaid (e.g., water/sewer connection); escrow account for any of the above.

Prepayment - A privilege in a mortgage permitting the borrower to make payments in advance of their due date.

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.

Primary Mortgage Market - Lenders making mortgage loans directly to borrower's such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc.

Prime Rate - Interest charged by financial institutions to top-rate borrowers.

Principal - The remaining debt on a loan, not counting interest.

Principal Balance - The unpaid balance of a loan.

Promissory Note - A written promise to repay a specified amount over a specified period of time.

Property Value - The value of a piece of real property - either the appraised amount or the purchase amount, whichever is lower.

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.

PUD (Planned Unit Development) - A real estate project in which each unit owner has title to a residential lot and a nonexclusive easement on the common areas of the project.

Purchase Agreement - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Purchase Money Mortgage - A mortgage used to purchase real property where the title is conveyed from one individual to another.

Purchase-Money Transaction - The acquisition of property through the payment of money or its equivalent.



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.

Quitclaim Deed - A deed that transfers, without warranty, whatever interest or title a grantor may have at the time the conveyance is made.



Rate - The annual rate of interest on a loan expressed as a percentage of 100.

Rate and Term Refinance - A refinance of any mortgage in which the new mortgage amount is limited to the unpaid principal balance of the existing first mortgage plus any closing costs.

Rate Lock - A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.

Real Estate - A portion of the earth's surface extending downward to the center to the earth and upward into space, including all things permanently attached thereto by nature or man and all legal rights therein.

Real Estate Agent - A person licensed to negotiate and transact the sale of real estate.

Real Estate Mortgage Investment Conduit (REMIC): - A security that represents a beneficial interest in a trust having multiple classes of securities. The securities of each class entitle investors to cash flows structured differently from the payments on the underlying mortgages.

Real Estate Settlement Procedures Act (RESPA) - An act requiring the revelation of all costs involved in a real estate closing to all participants.

Realtor - A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.

Recision - The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.

Reconciliation - Determining the final estimate of value by weighing the results of the various approaches in an appraisal.

Reconveyance Clause - The clause in a trust deed that gives the title back to the borrower when the loan is paid in full.

Recording - The formal filing of documents affecting a property's title.

Recording Fees - Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.

Refinance - The process in which one replaces the original mortgage loan with a new one to take advantage of lower interest rates or better terms or to get cash. An alternative is taking out a second mortgage, which involves the same process as refinancing, but adds a junior lien on the property.

Refinancing - The process of paying off one loan with the proceeds from a new loan, using the same property as security.

Regulation Z - A truth-in-lending provision that requires lenders to reveal the actual costs of borrowing.

Renegotiable Rate Mortgage - A loan in which the interest rate is adjusted periodically. See adjustable rate mortgage.

Rent-Loss Insurance - Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty, resulting in the tenant being excused from paying rent.

Repayment Plan - An agreement between a lender and a delinquent borrower regarding mortgage payments, in which the borrower agrees to make additional payments to pay down past due amounts while still making scheduled payments.

Residual Qualifying - Under a VA loan, using specified housing expenses to qualify for a loan payment.

RESPA - Short for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only.

Restrictions - Rules imposed on the use of real estate in an effort to preserve property values.

Return on average common equity: - Net income available to common stockholders, as a percentage of average common stockholders' equity.

Reverse Annuity Mortgage (RAM) - A system developed for an elderly property owner in which regular monthly payments can be received from a lender. When the total reaches a pre-determined amount, the owner begins repaying the loan or sells the property.

Reverse mortgage: - A financial tool which provides seniors with funds from the equity in their homes. Generally, no payments are made on a reverse mortgage until the borrower moves or the property is sold. The final repayment obligation is designed to not exceed the proceeds from the sale of the home.

Revolving Debt - A debt that does not have a fixed payment, although repayment is usually a percentage of the outstanding balance and made at regular intervals; most common are credit cards issued by banks and department stores.

Right-of-First Refusal - A provision that states that a property to be first offered to a specific person before it can be offered for sale or lease to other parties.

Risk-based capital: - The amount of capital necessary to absorb losses throughout a hypothetical ten-year period marked by severely adverse circumstances.

Rolldown - The interest rate on the loan is higher so that there are no closing costs.

Rollover Loan - A loan that /includes a call date earlier than its normal amortization period.



Sale-Buyback - A financing arrangement in which an investor buys property from a developer and immediately sells it back under a long-term sales agreement, wherein the investor retains legal title.

Sale-Leaseback - A financing arrangement whereby an investor purchases real estate owned and used by a business corporation, then leases the property back to the business.

Second Mortgage - A mortgage that has a lien position subordinate to the first mortgage.

Secondary Mortgage Market - A market where mortgage originators may sell them, freeing up funds for continued lending and distributes mortgage funds nationally from money-rich to money poor areas.

Secured Loan - A loan that is backed by collateral.

Security - Something given, deposited, or pledged to make secure the fulfillment of an obligation, usually the repayment of a debt.

Security Interest - An interest in property that secures performance of a credit obligation.

Self-Employed Borrower - A borrower whose income is derived from a business source in which he or she has an ownership interest of 25 percent or more.

Seller Carry-Back - An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.

Senior Loan - A real estate loan in first priority position.

Serious delinquency: - A single-family mortgage that is 90 days or more past due, or a multifamily mortgage that is two months or more past due.

Servicer - An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing - The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

Settlement Costs - See Closing Costs. v Sinking Fund - Monies deposited in advance in anticipation of satisfying a debt in the future.

SFR (Single-Family Residence) - A structure intended to house one family.

Shared Appreciation Mortgage (SAM) - A mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.

Simple Interest - Interest which is computed only on the principal balance.

Stockholders' equity: - The sum of proceeds from the issuance of stock and retained earnings less amounts paid to repurchase common shares.

Stop Date - Date on a term loan when the balloon payment is due.

Stripped MBS (SMBS): - Securities created by `stripping` or separating the principal and interest payments from the underlying pool of mortgages into two classes of securities, with each receiving a different proportion of the principal and interest payments.

Subordinate Financing - Any mortgage or other lien that has a priority lower than that of the first mortgage, or senior loan. See second mortgage.

Supplemental Income - Income derived from sources such as interest/dividends, capital gains, and rental properties; these sources require tax returns to support the qualifying income.

Survey - A drawing or map the shows the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Survey - A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.

Sweat Equity - The exchange of labor or services in lieu of paying cash for the purpose of receiving credit toward the down payment. Not generally an eligible source of down payment.



Takeout Mortgage - A permanent mortgage, obtained by pre-arrangement between a builder and a financial institution, to repay the interim mortgagee at the completion of construction.

Tax Lien - A claim against real estate for the amount of its unpaid taxes.

Tax Service Contract - The lender's verification of payment of property taxes.

Temporary Buydown - A loan on which the interest rate has been `bought down` for a temporary period of time at the beginning of the loan by escrowing funds at the time of closing, which will be applied to the total monthly mortgage payment as each becomes due. See Buy Down.

The Back-End Ratio - 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.

The Front-End Ratio - 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.

Third-Party Origination - A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

Time-share - A real estate development in which a buyer can purchase the exclusive right to occupy a unit for a specified period of time each year. Not eligible for financing with Ditech.

Title - A document that gives evidence of an individual's ownership of property.

Title Company - A company that specializes in examining and insuring titles to real estate.

Title Insurance - Title Insurance policies typically insure a homebuyer against any title-search errors or mistakes, and against loss due to disputes over property ownership. Title Insurance can additionally offer protection to the lender under similar circumstances. The cost of title insurance is usually a set value per thousand of dollars of the total loan amount.

Title Search - A process providing proof of legal ownership of a property by researching municipal record - usually performed by a title company.

Total Debt Ratio - Monthly debt and housing payments divided by gross monthly income. Also known as Back-End Ratio.

Townhouse - An architectural type of construction; a row house on a small lot that has exterior limits common to other similar units; title to the unit and its lot is vested in the individual owner with a fractional interest in common areas.

Transfer agent - A bank or trust company charged with keeping a record of a company's stockholders and canceling and issuing certificates as shares are bought and sold.

Transfer of Ownership - The means by which the ownership of a property changes hands. Examples of such include the purchase of a property `subject to` the mortgage, the assumption of the mortgage debt by the property purchases, and any exchange of possession of the property under a land sales contract or any other land trust device.

Transfer Tax - State or local tax payable when the title passes from one owner to another.

Truth-In-Lending - A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.

Two-step ARM - An ARM (adjustable-rate mortgage) that has a fixed interest rate for the first five or seven years of the mortgage term, then adjusts at the current market rate plus a predetermined margin, then remains fixed at that rate for the remainder of the term. See also ARM (Adjustable-Rate Mortgage).

Two-Step Mortgage - A loan where the interest rate is fixed for the first seven years and then is adjusted one time for the balance of the loan period.

Two-to-Four Family Properties - A structure that provides dwelling units for two, three, or four families, although ownership is evidenced by a single deed.



Underwriter - An analyst who reviews the supportive documentation to determine the risk associated with the loan request. The person who gives final loan approval.

USURY - Interest charged in excess of the legal rate established by law.



VA Loan - A long-term, low-or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.

VA Loan - A long-term, no-down-payment or low-down-payment loan guaranteed by the Department of Veterans Affairs. Individuals usually qualify by proof of military service.

VA Mortgage Funding Fee - A premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed.

Verification of Deposit (VOD) - A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.

Verification of Employment (VOE) - A document signed by the borrower's employer verifying his/her position and salary.

Vested - Means that one has a right to use a portion of a fund, such as an individual's retirement fund.



Warehouse Fee - Many mortgage firms must borrow funds on a short term basis in order to originate loans which are to be sold later in the secondary mortgage market (or to investors). When the prime rate of interest is higher on short term loans than on mortgage loans, the mortgage firm has an economic loss which is offset by charging a warehouse fee.

Wraparound mortgage - Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.







Zero Percent Financing - A loan with no interest in the contract. The IRS imputes 10 percent for both borrower and lender.

Zoning - The creation of districts by local governments in which specific types of property uses are authorized (e.g., commercial, industrial, residential, high density, mixed use).
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