Mortgage Terms
|
Fixed Rate
Mortgage
|
An interest rate which does not change for the life
of the loan.
|
Balloon
Mortgage
|
A loan whose interest rate is fixed for a period of
time with a large payment due at some specified point in the
future.
|
Adjustable Rate
Mortgage (ARM)
|
A loan whose rate changes, usually annually, after
the initial rate set elapses. The initial rate is typically
offered at a discount.
|
One Year
Treasury Index
|
The instrument which oftentimes is used
to recalculate rate changes for ARM loans.
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Margin
|
The amount of interest that is added to the One Year
Treasury Index to compute your new ARM rate. (TCM + x%)
|
FNMA
|
Federal National Mortgage Association; a publicly
traded company who, along with FHLMA, sets the national
underwriting guidelines for residential mortgage loans.
FNMA and FHLMC facilitate the buying and selling of mortgages in
the secondary market.
|
FHLMC
|
Federal Home Loan Mortgage Corp.; similar to FNMA,
they set underwriting guidelines and facilitate the buying and
selling of mortgages in the secondary market.
|
Jumbo Loan
|
Per FNMA & FHLMC; a single family loan over
$240,000.
|
Title
Insurance
|
An insurance policy which protects the owner or
lender from any defects in the chain of ownership.
|
Rate Lock
|
A commitment to guarantee an agreed upon rate and
cost for a specified time.
|
Extended
Rate Lock
|
For new construction/conversion, a rate lock which
can be offered up to 360 days. An extended lock fee of 1% is
normally collected at application and reimbursed at closing.
|
Mortgage
Contingency
|
The date specified in a sales contract by which you
are contractually obligated to obtain loan approval.
|
Equity Line
|
A second or junior mortgage, taking second priority
to your first mortgage.
|
NIV Loan
|
A No Income Verification loan; a loan in which you
are not required to reveal your income. A credit decision is made
without W2's, tax returns or income statements. An equity position
of 20%-30% is typically needed.
|
B, C & D Loans
|
Loans for people with less than "A"
credit. Interest rates are usually higher than conventional rates.
|
Portfolio
Lender
|
A lender who underwrites for themselves with no
intention of selling or transferring the loan.
|
Value
|
The lesser of the purchase price or appraised value.
For a refinance, simply the current market appraisal. |
