Were also happy to help answer any of your questions just. The mortgage industry of the united states is a major financial sector. Glossary of mortgage terms 1003 form commonly used mortgage loan application developed by fannie mae. See private mortgage insurance or fha mortgage insurance. It can be expressed as the actual rate or as the amount of change allowed above the start rate. The cfpbs glossary of english spanish financial terms. For example, a bridge loan might be taken out by a borrower and secured by that borrowers present home so that the closing on a new house can take place before the present home is sold. Abandonment does not relieve obligations associated with ownership or lease. The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8. Mortgage terms define mortgage industry terms for home. Interest only mortgage a type of mortgage where the borrower pays only the accruing interest on the principal balance. Canadian glossary of mortgage terms first foundation. An amount equal to the replacement value of damaged property minus depreciation.
A fixedrate mortgage is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan. Getting started complete okanagan mortgage service. A type of mortgage financing between the termination of one loan and the start of another loan. Fannie mae singlefamily loan performance data glossary. Acceptance a verbal or written acceptance of an offer to buy a home, made from the seller to the buyer. An adjustablerate mortgage, also known as a variablerate mortgage, generally starts out with an interest rate lower than a fixedrate mortgage. Guide to settlement costs helpful information on understanding mortgage settlement costs. Mortgage dictionary glossary of key mortgage terms the. A mortgage insured by the fha that protects a lender if the borrower defaults on the loan. Learn the definitions of a variety of mortgage terms.
Canadian mortgage terms glossary for anyone trying to better understand a mortgage term definition. Payment on the second mortgage is often deferred and carries low interest rates if any. The federal government created several programs, or government sponsored entities, to foster mortgage lending, construction and encourage home ownership. Mortgage terminology glossary of some commonly used terms in mortgage lending. 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. It also explains what can happen if you fail to make a payment on time. Mortgage or deed of trust the mortgage or deed of trust is a legal document in which the borrower transfers the title to a third party. Basic mortgage terminology pdf best home equity loans of 2019. Refers to a subdivision of land as it is identified by the u. Mortgage has been advanced to or on behalf of the mortgagor or trustor hereinafter referred to as mortgagor, the mortgagor received consideration for the note and mortgage, and there are no defaults existing at the present time under any covenants contained in the said note and mortgage. This article needs additional citations for verification. These payments on interest leave the principal balance unchanged. The mortgage underwriter will approve or reject your mortgage. Mortgages are debt securities and can be conveyed and assigned freely to other holders. Mortgage terminology security national mortgage company. These programs include the government national mortgage association known as ginnie mae, the federal national mortgage. Cap the highest rate that an adjustable rate mortgage may reach.
Accounting and finance terminology public schools of. Some of the terms listed are identified by the abbreviation p. Mortgage terms define mortgage industry terms for home buyers. Useful mortgage terminology to learn about and understand. This az pocket guide to understanding financial terms is just one of the achievements of ebss partnership with nala. At common law, a mortgage was a conveyance for land that on its face was absolute and conveyed a fee simple estate, but which was in fact conditional, and would be of no effect if certain conditions were not met usually, but not necessarily, the repayment of a debt to the original landowner.
If a mortgage contains a dueonsale clause, it may not be assumed by a new buyer. Income statement financial statement of a business that reports the revenue, expenses and the net income loss of. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost. With this mortgage product, borrowers can qualify for loan amounts based on the ascompleted value of the property, up to the maximum loan limits.
Fannie mae singlefamily loan performance data glossary fannie mae provides loan performance data on a portion of its singlefamily mortgage loans to promote better understanding of the credit performance of fannie mae mortgage loans. Adjustable rate mortgages in which rate is fixed for three year, five year, seven year and. Glossary of commercial mortgage terminology created by lendingapps, the creators of brokerpro software brokerpro software for mortgage brokers is just one piece of the commercial mortgage process. More than likely, your mortgage professional is throwing many new terms. This document outlines the terms and required costs associated with your mortgage loan, including lenders fees, loan interest rate, points, title and transfer fees, and insurance. Learn more about home loans, credit scores, down payments, and mortgage rates at. The mortgage glossary directory of real estate terms. Apr is an industry standard calculation and enables direct comparison of mortgages from all lenders. What you should know about your mortgage loan application. The application is the true start of the loan process and usually occurs between days one and five of the start of the loan process. Your stepbystep mortgage guide freddie mac singlefamily.
Whether buying or selling a home it is important to know the terms that are being used when a mortgage is involved so you dont end up under water. Having launched it originally in 2004 we have now updated it with modern terminology. First and foremost the professionals you are working with should be telling you what these terms mean and what is the cost for you for the type of mortgage. While arms in many countries abroad allow rate changes at the lenders discretion discretionary arms, in the us. Glossary of mortgage terms adjustable rate mortgage arm. A mortgage loan amount that exceeds the loan limits set by the office of federal housing enterprise oversight and therefore cannot be guaranteed, purchased or securitized by fannie mae or freddie mac. This page gives descriptions of uk mortgage terminology which can often confuse borrowers. Browse and search thousands of mortgage abbreviations and acronyms in our comprehensive reference resource. When the prime rate of interest is higher on short term loans than on mortgage loans the mortgage.
We welcome your comments about this publication and your suggestions for future editions. Laurie and tracy are the mortgage professionals that will help find the right mortgage solution for you. We provide complimentary consultations and offer advice and guidance to help you realize your goal of home ownership sooner. Dec 01, 2010 mortgage terminology explained when you first apply for a mortgage, you may feel youve stepped into a different culture with a language all its own. The following list consists of the most commonly used terms, but you can get additional definitions from the u. These terms are for use in tax forms and publications intended for circulation exclusively in puerto rico. Use bank of americas comprehensive mortgage terms glossary to get. Mortgage glossary mortgage term definitions explained. Apr is an industry standard calculation and enables direct comparison of mortgages. A mortgage holder is an individual or entity who owns the mortgage loan that was extended to a homeowner, and is the party entitled to enforce the terms of the mortgage. Glossary and terms federal deposit insurance corporation.
Mortgage dictionary adjustablerate mortgage an adjustablerate mortgage arm is a product with a floating or variable rate that adjusts based on some index. Mortgage in which the rate of interest is adjusted based on a standard rate index. A mortgage in which the interest rate is adjusted periodically according to a preselected index. A mortgage deed is a document in which the mortgagor transfers an interest in real estate to a mortgagee for the purpose of providing a mortgage loan. Money paid to insure the mortgage when the down payment is less than 20 percent. Oct 25, 2016 please help us continue to provide you with free, quality journalism by turning off your ad blocker on our site. Mortgage lending is a major sector finance in the united states, and many of the guidelines that loans must meet are suited to satisfy investors and mortgage insurers. With the aid of a mortgage professional, the borrower completes the application and provides all required documentation. A governmentbacked mortgage loan supported by the us fha and the. Interest rate and program terms are subject to change without notice. A mortgage on which the interest rate, after an initial period, can be changed by the lender. Most arms have caps on how much the interest rate may increase.
We dont expect you to be an expert thats what were here for. A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. The various fees and closing cost estimates will have been discussed while examining the many mortgage. Our experienced mortgage lenders have helped us develop a glossary, if you will, to help define mortgagese for you. Mortgage terminology explained when you first apply for a mortgage, you may feel youve stepped into a different culture with a language all its own. Mortgage underwriter the mortgage underwriter is the professional authorized to assess if you are eligible for the mortgage loan you are applying for. The interest rate can change at a specified time, known as an adjustment period. One or more of a series of bank services designed to aid a deposit customer in the reconciliation of its bank account balance. Department of agriculture usda mortgages, borrowers also pay money upfront plus an ongoing premium. Amortization amortization is a decrease in the value of assets with time, which is normally the useful life of tangible assets. Not all loan programs are available in all states for all loan amounts.
Loan approval is subject to credit approval and program guidelines. Appendix n glossary of mortgage servicing terms new appendix the following is a glossary of terms related to the servicing of consumer mortgages. Sometimes called the uniform residential loan application. A mortgage loan with an interest rate on the note that is periodically adjusted. Home equity reverse mortgage information technology. While arms in many countries abroad allow rate changes at the lenders discretion discretionary arms, in the us most arms base rate changes on a preselected interest rate index over which the lender has no control.
However, since banking is a significant part of our business and personal life, it is useful for consumers to learn some common banking terms. Mortgage insurance mortgage insurance is a product that guarantees debt repayment in the event of permanent disability or death of the policyholder. While arms in many countries abroad allow rate changes at the lenders discretion discretionary arms, in the us most. A contract in which a borrowers property is pledged as security for a loan that is to be repaid on an installment basis. The calculation assumes that you maintain the mortgage for the full term. Piggyback mortgage a second mortgage that closes simultaneously with the first mortgage. Unfortunately for most of us, the mortgage field is jammed with jargon and fraught with fiscal pitfalls. Mortgage terminology pdf best home equity loans of 2019. Consumer information information from the ftc on a variety of mortgage topics.
Payment shock a sudden, large increase in the monthly mortgage payment as a result of an adjustablerate mortgage or through a refinance with new financing terms. Alternative financing option for low and moderateincome households that also includes a down payment and a first mortgage, with funds for the second mortgage provided by city, county or state housing agencies, foundations or nonprofit corporations. This is a document that promises you will repay the loan according to the terms to which you agreed. A home equity loan hel is a type of loan in which you use the equity of your property, basic mortgage terminology pdf or a portion of the equity thereof, as collateral. Contact us today to find out how we can make owning your home and managing your mortgage more affordable and worryfree. Mortgage terminology abandonment the voluntary surrender of property, owned or leased. Traditional mortgage credit report occ office of the comptroller of the currency opa original principal amount ots office of thrift supervision pdf. Ortgage arm also known as a variable rate loan, an arm usually offers a lower initial rate than a fixed rate loan. Payment amounts and the duration of the loan are fixed. This glossary of common financial terms was created and is used by the bureau for translating consumer education materials from english to spanish. Assumption an agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Housing apr annual percentage rate the total cost of a loan, including interest charges and product fees, shown as a percentage rate. Sometimes lenders offer an introductory rate, which is a temporarily discounted rate for home equity lines of credit or adjustablerate mortgages.
Please help improve this article by adding citations to reliable sources. A cashout refinance is when you replace your current home loan with a new mortgage. You will deal with mortgage options, credit reports. The uk mortgage market is one of the most innovative and competitive in. Mortgage broker a mortgage broker is a professional who acts as an intermediary between homebuyers and financial entities and helps clients to find a suitable mortgage product. When that person borrows the money, they are making a commitment to pay back that amount in full, on time, and with interest. Sep, 2015 a mortgage on which the interest rate, after an initial period, can be changed by the lender. Banking terms list of important banking terminology pdf.
Glossary of terms useful listing of terms from the u. On an adjustable rate mortgage, the time between changes in the interest rate andor monthly payment, typically one, three or five years. How to talk the talk buying a home can be exciting. The mortgage loan process explained in simple steps. Main two types origination and refinancing origination. Lenders are required to provide a gfe to all mortgage. The annual percentage rate is the cost of borrowing money from the lender, shown as a percentage of your.
Mortgage lending is a major category of the business of finance in the united states of america. This rate is usually low and lasts only for a short. Mortgage terminology mortgage training loan originators. Our glossary of mortgage loan terminology defines a variety of terms. This type of loan is different to loans where the interest rate may adjust or float. If you own or want to own real estate, you need to understand mortgages. Mortgage, home equity and credit products are offered through u. It also can be somewhat daunting, even if youve done it before. More than likely, your mortgage professional is throwing many new terms and expressions your way. A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change. Usually relates to a decrease in taxes or payments due.
In legal terms, the creation of a mortgage gives the legal title of the land to the mortgagee and an equitable title. Use this glossary of mortgage terms to better understand the overall mortgage process as well as any specific mortgage terms that may be unfamiliar to you. You will deal with mortgage options, credit reports, loan applications, contracts, points, appraisals, change orders, inspections, warranties, walkthroughs, settlement. A first mortgage that enables borrowers to purchase or refinance and rehabilitate homes. The mortgage underwriter will approve or reject your mortgage loan application based on your credit history, employment history, assets, debts and other factors. The balloon payment mortgage does not fully amortize over the term of the note, which leaves a balance due at maturity, known as a balloon payment. A term used in the truthinlending act to represent the percentage relationship of the total finance charge to the amount of the loan. Whether youre purchasing your first home or already have a mortgage, there are a lot of mortgage loan terms to know. Our lenderpro software and online lender pipeline is currently used by 80 of the top commercial mortgage lenders in the industry.
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