| 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. |
| |
|
| 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. |
| |
|
| Amortization: |
The systematic and continuous payment of an obligation
through installments until the debt has been paid in full. |
| |
|
| Annual Percentage Rate (APR): |
Represents 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 will usually be higher
than the interest rate stated on the Note because it includes
the interest rate, loan discount points, miscellaneous fees and
mortgage insurance. |
| |
|
| Appraisal: |
A report by a certified appraiser setting forth an opinion
or estimate of property value. (Also refers to the process
through which a conclusion on property value is derived.) |
| |
|
| 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 the basis for valuation. |
| |
|
| Appreciation: |
An increase in the value of a property due to market
conditions or other causes. The opposite is depreciation. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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 |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Co-Borrower: |
A party who signs the mortgage note along with the primary
borrower, and who also shares title to the subject real estate. |
| |
|
| 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. |
| |
|
| Combined Loan To Value (CLTV): |
The percentage relationship between the total of all loan
amounts (first mortgage plus subordinate liens) and the value of
the subject property. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Conventional Loan: |
A mortgage loan not insured or guaranteed by the federal
government. |
| |
|
| Conversion Option: |
Options to convert an adjustable rate mortgage or balloon
loan to a fixed rate mortgage under specified conditions. |
| |
|
| 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. |
| |
|
| Creditor: |
A person to whom debt is owed by another person who is the
"debtor". |
| |
|
| Credit Rating: |
A rating given a person or company to establish
credit-worthiness based upon present financial condition,
experience and past credit history. |
| |
|
| 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. |
| |
|
| Deal Structure: |
An Underwriters review of certain aspects of a loan
application that do not meet standard guidelines. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Depreciation: |
A decline in the value of property. The opposite of
appreciation. |
| |
|
| 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%). |
| |
|
| Down Payment: |
The part of the purchase price which
the buyer pays in cash and does not finance with a mortgage. |
| |
|
|
Earnest Money: |
Deposit made by a purchaser of real estate as evidence of
good faith. |
| |
|
| 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. |
| |
|
| Equity: |
The difference between the current market value of a
property and the principal balance of all outstanding loans. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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). |
| |
|
| 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. |
| |
|
| FICO Score: |
A credit score given to a person that establishes
creditworthiness based on present financial condition,
experience and past credit history. |
| |
|
| 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. |
| |
|
| 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. |
|
|
| First Mortgage: |
A real estate loan that creates a
primary lien against real property. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
|
|
| 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. |
| |
|
|
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. |
| |
|
| 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. |
|
|
| Gross Income: |
A person's income before deduction
for income taxation. |
| |
|
| Hazard Insurance: |
Insurance against losses caused by
perils which are commonly covered in policies described as a
"Homeowner Policy". |
| |
|
| 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. |
| |
|
| 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). |
| |
|
| Homeowners Association (HOA): |
A non-profit corporation or
association that manages common areas and services of a
Condominium or Planned Unit Development (PUD). |
|
|
| 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. |
| |
|
| 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). |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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.
|
| |
|
| 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. |
|
|
| 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. |
| |
|
| Judgment: |
Decree of a court declaring that one
individual is indebted to another and fixing the amount of such
indebtedness. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| LIBOR: |
LIBOR is an abbreviation for the "London
Interbank Offered Rate," and is the interest rate offered by a
specific group of London banks for U.S. dollar deposits of a
stated maturity. LIBOR is used as a base index for setting rates
of some adjustable rate financial instruments, including
Interest only loans and other adjustable rate mortgage programs. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Loan Balance: |
The amount of remaining unpaid
principal balance owed by the borrower. |
| |
|
| Loan Term: |
Number of years a loan is amortized.
Mortgage loan terms are generally 15, 20, or 30 years. |
| |
|
| 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. |
| |
|
| 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%). |
| |
|
| 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). |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Mortgage: |
The written instrument used to
pledge a title to real estate as security for repayment of a
Promissory Note. |
| |
|
| 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). |
| |
|
| 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. |
| |
|
| 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.) |
| |
|
| Mortgagee: |
The institution, group, or
individual that lends money on the security of pledged real
estate; the association, the lender. |
| |
|
| Mortgagee Clause: |
This is the clause that is typically
used for hazard insurance and flood insurance. For loans
originated by the State Farm BankŪ it will read: State Farm
Bank, F.S.B., Its Successor and/or Assigns, P.O. Box 2583, Ft.
Wayne, IN 46801-2583. |
| |
|
| Mortgagor: |
The owner of real estate who pledges
his property as security for the repayment of a debt; the
borrower. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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." |
| |
|
| Note Rate: |
The interest rate on the mortgage
loan. |
| |
|
| Origination Fee: |
A fee paid to a lender for
processing a loan application; it is stated as a percentage of
the mortgage amount. |
| |
|
| Origination Process: |
Process in which a lender solicits
business, gathers required information and commits to loan
money, for the purchase of real estate. |
| |
|
| Owner-Occupied Property: |
The borrower or a member of the
immediate family lives in the property as a primary residence. |
| |
|
| PITI: |
Term commonly used to refer to a
mortgage loan payment. Acronym stands for Principal, Interest,
Taxes, and Insurance. |
| |
|
| 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. |
| |
|
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. |
| |
|
| 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) |
| |
|
| 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. |
| |
|
| 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). |
| |
|
| Prepaid Interest: |
Interest that the borrower pays the
lender before it becomes due. |
| |
|
| Prepayment: |
A loan repayment made in advance of
its contractual due date. |
| |
|
| Prepayment Penalty: |
A penalty under a Note, Mortgage or
Deed of Trust imposed when the loan is paid before its maturity
date. |
| |
|
| 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. |
| |
|
| Principal Balance: |
The outstanding balance of a
mortgage, not counting interest. |
| |
|
| Principal, Interest, Real Estate
Tax, Insurance Payment: |
The total mortgage payment which
includes principal, interest, taxes and insurance. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Property Taxes: |
Taxes assessed on real estate.
Property taxes are based on valuations by local and or state
governments. |
| |
|
| Purchase Agreement: |
A written agreement between a buyer
and seller of real property, that states the price and terms of
the sale. |
| |
|
| Purchase Price: |
The total amount paid for a home. |
| |
|
| 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. |
| |
|
| Rate Index: |
An index used to adjust the interest
rate of an adjustable mortgage loan. |
| |
|
| Real Estate Appreciation Rate: |
Percentage increase in the value of
real estate, expressed at an annual rate. |
| |
|
| Real Estate Settlement Procedures
Act (RESPA): |
A consumer protection law that
requires, among other things, lenders to give borrowers advance
notice of closing costs. |
| |
|
| 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. |
| |
|
| Recording Fee: |
The amount paid to the recorder's
office in order to make a document a matter of public record. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Renters Insurance: |
Insurance against perils which are
commonly covered in policies described as a "Renters Policy". |
| |
|
| Repayment: |
The payment of a mortgage loan over
a period of time established when the loan is originated. |
|
|
| 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. |
|
|
| 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. |
| |
|
| 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. |
| |
|
| 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 |
| |
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| 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. |
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| Subordinate Financing: |
An additional lien against the real
estate securing borrowers first mortgage. This lien takes second
priority to the first mortgage. |
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| 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. |
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| 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. |
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| Subsequent Rate Adjustment --
Next ARM Adjustment Date: |
In association with an Adjustable
Rate Mortgage loan, this is the date scheduled for the next
possible payment adjustment. |
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| 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. |
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| 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. |
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| Tax Savings: |
The amount saved on taxes by
itemizing deductions on income tax returns. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Verification of Mortgage (VOM): |
Form used in mortgage lending to
verify the existing mortgage balance, monthly payments and late
payments, if any. |
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| Verification of Rent: |
Form used in mortgage lending to
verify monthly rents paid and late payments, if any. |
