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