Glossary

12 MTA

12 Months’ Treasury Average – It is an interest rate index which is used by some ARMs for benchmarking. It is the 12 month average of the monthly average yields of US treasury securities adjusted to a constant maturity period of one year.

12 MTA Pay Option Arm

See options ARM. It is a special option ARM designed for sophisticated borrowers who understand finance and economy and the need of financial flexibility. If used correctly, it can improve your cash flows significantly.

120+ Days Late

Although it does not affect your credit score directly but after 120+ days late, your debt is usually charged off or sold to a third party collection agency. This is also reported to the credit rating agency and thus indirectly lowers your credit score further.

125% Loan

A mortgage loan for 125% of property value. Since they are only partly secured, they charged higher interest rates.

3.95% Arm

A monthly adjustable rate mortgage on which the initial interest rate is 3.95% but will then vary depending upon the terms and conditions of the modern age.

3/2 Downpayment

These programs are offered by some lenders under which a borrower, who is able to secure a grant or gift equal to 2% of the down payment, will only have to provide a 3% loan down payment from their own funds.

30-Day Late

Whenever one is more than 30 days late to make payments after the due date. Late payments are reported to the credit rating agency after the 30 day period and it affects one’s credit score badly.

40-Year Mortgage

A mortgage with a term of 40 years.

60-Day Late

When you are more than 60 days late to make payments after the due date. After the period, late payments are reported to the credit rating agency and eight affects your credit score badly.

90-Day Late

When you are more than 90 days to make payments after the due date. It affects your credit score significantly for up to 7 years. It is understood that you are more likely to do it a game if you have done it even once.

Acceleration Clause

A provision that allows a lender to demand payment of the two outstanding balance or demand additional collateral under certain circumstances, such as failure to make payments, bankruptcy, non-payment of taxes on mortgage the property or breaking of loan convenants.

Acceleration Clause

A term that fully matures the performance from a party upon a breach of the contract. This is a contractual provision that allows a lender to ask for full repayment or a part of not standing loan if certain conditions are not met by the borrower.

Accrued Interest

It is the amount of interest that has actually been earned but not paid, thus adding to the amount owed. See negative amortization for better understanding.

A-Credit

The highest credit grade assigned to a borrower qualifying him to deserve the lowest interest rates will stop most lenders require you to have a FICO score above 720.

Affordability

It is the buyers of capacity to afford a house. It usually is mentioned by the maximum prize the buyer can pay for a house. Lenders use this before approving his mortgage application.

Agreement Of Sale

It is the legal contract signed by the seller and the buyer which mention of all the terms and conditions under which the property is being sold.

Alt-A Mortgage

Short for alternative A- paper. Considered riskier than A- paper or prime and less riskier than sub-prime. Is considered to be the riskiest category.

Alternative Documentation

A simpler documentation requirements designed to be expedite and speed up the loan approval process end generally includes documents of such as W-2s, paycheque and bank statements as verification of income.

Amortization

The way a loan is paid off over time in installments, detailing how much goes toward interest, and how much is paid toward principal. The scheduled payment lest the interest equals amortization.

Amortization Schedule

A table which details of each periodic payment on an amortising loan. A portion of each payment is meant for interest while the remaining amount is applied towards the principal balance. The percentage of interest to version as principal in each payment is determined in an amortization schedule.

Amount Financed

It is the actual amount of credit given to the borrower. Specifically, it is the amount of the loan principal less prepaid finance charges and any required deposit balance. It is used to calculate the annual percentage rate.

Annual Percentage Rate (APR)

The actual interest rate paid on your mortgage which factors in fees, points and any other costs associated with the loan.

Annual Percentage Yield (APY)

It is the annual interest rate taking into account the frequency and cost of compounding interest.

A-Paper

A mortgage loan for which the asset and the borrower meet the following criteria. The borrower is accredited score of 680 or higher. The borrower fully documents with incomes and assets. The borrowers debt to income ratio does not exceed 35%. The borrower is retains two months of mortgage payments in reserve after closing. The borrower injects at least 20% equity.

Application

A formal request from the borrower which mentions details about the potential borrower, the property in question and the requested loan. It facilitates the lender to make a decision.

Application Fee

Fees charged to buy some lenders with the loan application. It may sometimes include other costs such as appraisal fees or credit report fees. Some lenders make it a refundable in case they choose to decline the application.

Appraisal

It is the comprehensive report that it determines the value of your property based upon several valuation factors used for evaluation purposes.

Appraisal Fee

The fees charged by the property appraiser for appraising that.

Appraiser

The professional who appraises the property. He is supposed to have sufficient knowledge of real estate markets and killed with the practice of appraisal. He is usually appointed by the lender but the professional fees is paid by the borrower.

Approval

Acceptance of the loan application for the placement of the loan. It signifies that the borrower meets the qualifications and underwriting requirements. Sometimes the approval is conditional on further verification of information sought from the borrower.

Arm

Adjustable rate mortgage – A mortgage with variable interest rates changing after fixed duration is a monthly, quarterly, half yearly or annually.

Asset Value Reserves

The capital required to be set aside in order to cover a company against unexpected debt. It serves as a backup for equity and credit losses. It usually will have capital gains or losses credited or debited against the reserve account.

Assumable Mortgage

A type of financing arrangement they are the outstanding mortgage in its terms can be transferred from the current owner to the buyer. By resuming the previous owner.s remaining debt, the buyer can avoid having to opt in his or her own mortgage.

Assumption

An arrangement of real state selling beer the buyer agrees to repay an existing loan against the property.

Auction Site

A website with a purpose to provide the leads of potential customers to the lenders. Lenders usually post their prices directly to the consumers.

Automated Underwriting

A computer-based loan underwriting decision, which retrieves relevant data such as borrower’s credit history and uses algorithms to arrive at a logic-based loan decision.

Back-End Fee Or Commission

It is the income earned by the Mortage broker and paid by the lender.

Bad-Faith Estimate

Luring in people shopping for Mortage is with the lowball estimate on settlement costs of the good Faith estimate. The low estimate makes the figures seem more appealing to the potential customers.

Bail-Out

The support given to a firm in financial problems, which is usually limited to protect the interests of the employees and creditors.

Balance

The amount of the loan remaining yet to be paid. It is calculated as the difference of the loan amount in the does some of all previous payments of principal.

Balloon

The outstanding amount of loan remaining at the time when the full repayment is made as per the loan contract.

Balloon Mortgage

A short-term mortgage with small monthly instalments and a large lump sum paid at the end of loan term. For instance a righty due in 15, which means that the amortization will work like a 30 year fixed mortgage but is due to be fully repaid after 15 years.

Biweekly Mortgage

A mortgage where 26 numbers of half payments or 30 numbers of full payments are made annually. Please note the difference between biweekly mortgage and bimonthly mortgage.

Biweekly Mortgage

A special mortgage on which the borrower pays half of the monthly payment on the first day of the month. The second half is paid on the 15th of the month. Please note the difference between bimonthly mortgage in the biweekly mortgage.

Blemished Borrowers

They are the borrowers with significant risk factors. For instance – the documentation of the income and assets is not proper; the credit score is low; the intention of obtaining loan is to raise cash or to purchase an investment property; the income levels are not adequate to cover the expected payment obligations; the mortgage carries an adjustable rate of interest which might result in significantly higher payments in coming years.

Bridge Loan

A short term loan taking out against one property to finance the purchase of a new property. Also sometimes – a short-term loan that bridges the period between the closing date of a home purchase and the closing date of a home sale.

Builder-Financed Construction

Having the builder finance the construction is termed as builder financed construction.

Buy-Down

A mortgage financing technique where the buyer attempts to obtain a lower interest rate for at least the first few years. The seller usually provides payments to the lender, which in turn lowers the buyer’s monthly interest rate and therefore monthly payments.

Buy-Up

Points paid by a lender to a borrower for a loan with an above market interest rate. When the points are paid to the borrower, it is known as a rebate. When the points are paid to the mortgage, it is known as yield spread premium, which is part of the broker’s compensation.

Caps

The initial, periodic and lifetime payment which limit how much and how frequently and interest rate can change in an adjustable rate mortgage.

Cash-In Refinance

A refinance transaction, we are borrowers bring money to the closing table to lower their mortgage balance.

Cash-Out Refinance

Refinancing for an amount which is more than the outstanding balance on the old loan added to the settlement costs. Thus the borrower takes some cash out of the transaction. It is a way to raise cash and an alternative of taking out a home equipped the loan.

Certificate Of Reasonable Value (CRV)

It is a document issued by veterans administration, based on an approved appraisal. It establishes the maximum value of the property for VA purposes and the maximum size of the VA loan.

Closing

The final step of the mortgage process we are loan documents are signed. In the context of refinancing, there is no transfer of ownership but the closing in tools repayment of the old lender.

Closing Costs

These are the costs that the borrower is to pay at the time of closing in addition to the down payment.

Cmg Plan

A nontraditional mortgage loan, which is as a checking account combined with a debt facility. The borrower will deposit their pay check into the CMG plan account and get that balance is automatically reduced.

Co-Borrowers

All the other persons who have signed the loan documents and are equally responsible for the repayment of the loan.

Cofi

Cost of funds index, COFI, is a regional average of interest expenses incurred by financial institutions, which is used as a basis for calculating variable rate loans.

Collateral

A borrower’s pledge of specific property the lender to secure the repayment of the loan. It serves as a protection for the lender against a borrower’s default.

Conforming Loan

A loan that needs Fannie Mae and Freddie Mac guidelines, which also falls under a certain loan amount.

Conservatorship

A legal concept, we are an entity is subjected to legal control of an external entity, known as a conservative. It is a stub list either by a court order or by a statutory or a regulatory authority.

Construction Loan

A short-term loan given to a builder during the period of construction process; the repayment is due upon completion of the project.

Contagion

Types of contagion effects are there. Positive content GM is that ended in the during a bubble period when new players are attracted by the profit earned by others. Negative contagion is seen during the periods of financial crisis arising out of the fear of inability of major players to meet their contractual obligations and payments.

Contract Knavery

A dubious practice involving insertion of clauses into the loan agreement by the lender that are disadvantages to the borrower and are not brought to the attention of the borrower before signing of the loan document.

Conventional Mortgage

Any mortgage loan that is not insured or guaranteed by the federal government.

Conversion Option

A clause that allows the borrower is to convert the variable interest rate to a fixed rate within a certain time period. It is usually associated with some fees.

Correspondent

A lender who delivers loans to a wholesale lender against prior price commitments. These commitments protect the first lender against risks.

COSI

Cost of savings index – it is one among several interest rate indexes used for adjustment of the interest rates in ARM.

Co-Signing A Note

Co-signing involves a promise to pay another person’s debt in case that person fails to meet his contractual obligations. Many lenders require a cosigner for college students, people with bad credit or people whose income is less than a certain level.

Credit Report

A tool used by the lenders or banks to review your credit profile and your inability to carry and repay debt.

Credit Score

A numerical score, which measures someone’s creditworthiness. They are calculated by credit rating agencies through complex algorithms primary lease based on his credit history. The most widely used credit score is FICO score.

Cumulative Interest

The sum total of all interest payments made on a loan over a certain period of time. It does not include upfront cash payments

Current Index Value

The most recently published a value of the index which is being used for the adjustment of the interest rate in case of an ARM.

Current Projected Rate

The expected value of the ARM on next adjustment.

Deadbeat

The term used to indicate a borrower who doesn’t pay.

Debt Consolidation

Taking out one loan to pay off many others this is often done the cure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt Elimination

Elimination of your debt. This can be done by a number of strategies but the most widely used vague is to either file bankruptcy or consolidate your loans. Sometimes the term is also used for deceptive promises devised to relieve borrowers of their money. These scams make claims of totally eliminating one’s mortgage debt.

Debtaholic

A person who borrows money and struggles to control the amount of debt incurred, so the only way to handle debt is to completely stay away from temptations such as credit cards.

Debt-To-Income Ratio

The issue of monthly liabilities and housing expenses and the monthly cost income of the borrower.

Deed In Lieu Of Foreclosure

An instrument in which the mortgage conveys all interest in real property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings.

Deed of Trust

A security instrument between the borrower and the lender is recorded in public records as a lien on the subject property. It differs from a mortgage in that the bank can foreclose on the property without judicial proceedings.

Default

Failure of the borrower to meet the commitments of the loan agreement. 90 day late is usually considered as default.

Deferred Interest

It is the amount of interest added to the principal balance of a loan when the contract allows a scheduled remained to be made which is less than the interest due.

Deferred Interest Mortgage

A mortgage that allows the borrower to make minimum payments that are less than the entire amount of interest owed. The remaining interest is added to the amount of loan to be paid off.

Deficiency Judgment

An unsecured money judgement against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note in full.

Delinquency

A mortgage payment that is more than 30 days late.

Demand Clause

A clause in the contract that allows the lender to demand repayment of the balance in full. It is even better for the lender then the acceleration clause.

Desecuritization

See securitisation. Opposite to the securitisation process by segregating a security back into individual loans.

Direct Lender

Same as lender

Disaster Myopia

It is the tendency of lenders’ to overlook possible shocks that could produce huge losses if a long period has gone by since a shock has occurred.

Discount Mortgage Broker

Those mortgage brokers who doesn’t take commissions from the borrower. In stead of bad they claim to be compensated entirely by the lender.

Discount Points

Same as points

Discretionary Arm

An adjustable rate mortgage on which the lender has a right to change the interest rate at any given time, for any given reason, by any amount subject to the only requirement that the borrower be notified well in advance.

Documentation Requirements

The requirements put forth by the lender specifying what information about a loan applicant’s income and assets is required along with the application and how that information will be used by the lender.

Down Payment

The payment made in cash at the time of onset of the purchase. It typically represents only a percentage of the full purchase price. It, sometimes, is also expressed as absolute amount.

Dual Apper

A potential borrower, who submits to mortgage applications simultaneously with different lenders, without the two lenders’ knowledge. Here the word ‘apper’ is used as a slang for application submitter.

Dual Index Mortgage

A mortgage based on two different indexes. While the interest rate is adjustable based on an interest rate index, the monthly payments are just based upon a wage or salary index.

Due-On-Sale Clause

A contractual clause that stipulates that the full balance may be called due upon sale or transfer of ownership of the property used to secure the note. This class the seller from transferring responsibility for and exist in loan to the buyer when the interest rate on the old loan is below the current market rate.

Earnest Money

A deposit amount paid by the buyer as a pledge to complete the real state transaction. The amount is held usually in escrow and applied to closing costs when the deal is closed.

EMI

Acronym for equated monthly instalments. It is a term which is used in many countries like India for the monthly payments required to be made by the borrower while serving a mortgage loan.

Equal Credit Opportunity Act

A federal law that prevents lenders from discriminating applications based on race, religion, national origin, sex, age, marital status or involvement in public assistance programs.

Equity

The difference between the value of the home and the balance of the outstanding loans on the home.

Equity Grabbing

A type of predatory lending way the lender wants the borrower to default so that he or she can seize equity from the borrower.

Escrow

A financial instrument held by a third party on the behalf of the other two parties. The funds are kept in an escrow service until the obligations have been fulfilled.

Escrow Abuse

It is the habit of some lenders to produce considerably more income from unsuspecting borrowers by inappropriately using their escrow accounts.

Fallout

This refers to the loan application is withdrawn by the borrowers usually because they have found a better deal.

FAMEMP

It is an acronym for fully amortising mortgage with equal monthly payments.

Fannie Mae

The full form is Federal National mortgage Association. It was founded in 1938 during the great depression. It is a government sponsored enterprise though it has been a publicly traded company since 1968.

Federal Funds Rate

The interest rate charged by banks to one another for overnight use of excess reserves.

Fees

It is usually the sum of all a front page moments to be made by the borrower as part of the charge for the loan. Origination fees and points are expressed as a percentage of the loan.

FHA Mortgage

FHA stands for Federal Housing Administration. FHA mortgage is insured by the Administration and is provided by a FHA approved lender. These are usually considered as a type of federal assistance and have allowed lower income group cities is to borrow money for the purchase of a home that they would not otherwise be able to afford.

FICO Score

See credit score. FICO score is a number that summarises your credit risk. Lenders use it to make credit decisions, such as the interest rate you get when you apply for a loan.

Final Price

The price actually paid by the borrower. This may be quite different from the posted price.

Financial Services Authority

A quasi-judicial body responsible for the regulation of financial services industry in the United Kingdom. It is structured as a company limited by guarantee and is funded entirely by fees charged to to the financial services industry.

Financing Points

Adding points, or fees to the amount of the loan taken out.

First Mortgage

A mortgage in a first lien position on the property that secures the mortgage. It has priority over all other liens are claims in the event of a default.

Fixed-Markup UML

An upfront mortgage lender or UML is a lender that will actually state their wholesale price and the markup from the mortgage products that they offer. This is normally only revealed to mortgage brokers.

Fixed-Rate Mortgage

A mortgage with the cost and interest rate that will not exist at any point during the life of the loan.

Flexible Payment Arm

Same as option ARM

Float

Allowing the rate and points to change as per market conditions. The borrower is given the freedom to choose the rate and points at any given point of time was the only condition is that he must know few days before the closing.

Float Down

A float down provides the same upside protection as a rate lock, plus an option to reduce the rate if market rates decline.

Forbearance Plan

Written repayment agreement between a lender and the borrower, which contains a plan to reinstate an asset loan that is minimum three mortgage payments due and unpaid. It is an agreement that the lender will not exercise their legal right to foreclose in exchange for an agreement that the borrower will stick to a payment plan that will cure the borrower’s delinquency.

Foreclosure

The legal process by which a bank or lender sells a property after a borrower fails to meet the repayment terms of the loan.

Freddie Mac

Federal home loan mortgage Corporation – it is one of the largest financers of conventional mortgage on the secondary market. The other one is Fannie Mae.

Front-End Fee

Compensation paid to the mortgage brokers by the borrower. When this compensation is paid by the lender it is called back-end fees.

Fully Amortizing Payment

The monthly mortgage payment of which, if maintained unchanged through the remaining life of the loan at the then existing interest rate, will pay off the loan at term. A part of the periodic loan payment is principal and the rest is the interest component.

Fully Indexed Interest Rate

The interest rate on an adjustable rate loan that is calculated by adding the margin to an index level. Some of the popular indexes for loans are: the prime rate, LIBOR and various US treasury bills and note rates.

Generic Prices

Prices that are almost standardised. They are distinguished from transaction specific prices, which changed as per the characteristics of a specific transaction.

Gift Of Equity

Selling home to a family member or someone with whom the seller has had a previous relationship and stuff it is generally at a price below the current market value was the big difference between the actual sale price and the market value is called the gift of equity.

Good Fairy Syndrome

Having failed that there is a good fairy some way in the world who will get people out of their financial dilemmas.

Good Faith Estimate

Provided by a mortgage lender or broker to a potential borrower. It must include an itemised list of fees and costs and must be provided within three business days of applying for a loan.

Government National Mortgage Association

Nicknamed as Ginnie Mae, a wholly owned government corporation. Its mission is to expand affordable housing in the US by channelising global capital into the nation’s housing finance markets. It also guarantees mortgage securities that are issued against pools of FHA and VA mortgages.

Grace Period

The period after the due date during which the borrower is allowed to pay without adding the late fees et cetera. They are appliqué bail only when the interest is calculated monthly.

Graduated Payment Mortgage

Often referred to as GPM, it is a mortgage with low initial monthly payments which gradually increased over a specified timeframe. These plants are mostly geared towards young man and woman who cannot afford large payments now, but can realistically expect to do better financially in the future.

Graduation Period

In the context of graduated payment mortgage, it refers to the time period in which the payment rises.

Graduation Rate

In the context of graduated payment mortgage, it refers to the percentage increase in the payments.

Guaranteed Mortgage Price Agreement

A presentation for action by HUD in 2002 to let lenders and other financiers provide loan packages and settlement services at one price.

Hard Money Loan

A mortgage of last resort for borrowers who can’t obtain financing in the standard market would credit.

HARP Program

Acronymed as HARP, it is a federal program setup by the Federal Housing Finance Agency in March 2009 to help underwater and near underwater homeowners refinance their mortgages. It targets homeowners who are current on their monthly mortgage payments but are unable to refinance due to dropping home prices.

Hazard Insurance

Insurance, which protects a property owner from damages caused by fire or severe weather.

HECM

Acronym for Home Equity Conversion Mortgage. This program enables older homeowners to withdraw some of the equity in their home in the form of monthly payments for life or a fixed term, or in a lump sum, or through a line of credit.

Historical Scenario

An assumption that the index value with which the ARM loan interest rates are tied, will follow the same pattern as followed in some previous period.

Home Equity

The value of a property less any and all exist in Lien. If a borrower owns a property worth US$ 400,000 and has Lien of US$ 200,000 then the home equity will be US$ 200,000.

Home Equity Line Of Credit (HELOC)

A line of credit that uses the value of a property as collateral. In other words it is a mortgage setup in which a borrower can draw up to a maximum amount, as opposed to a loan for a fixed dollar amount.

Home Equity Loan

A consumer loan secured by a second mortgage using equity in the home as collateral. These loans are often used to finance major expenses such as home ratepayers, medical bills or college education.

Home Keeper

A reverse mortgage program administered by Fannie Mae.

Home Owners Loan Corporation

A former US government agency established in 1933 to help stabilise real estate that had depreciated during the depression and the refinance urban mortgage debt stock it granted long-term mortgage loans to some 1 million homeowners facing loss of the property. HOLC ceased its lending at activities in June 1936.

Home Valuation Code Of Conduct (HVCC)

A rule which stipulates that Freddie Mac will no longer purchase mortgages from sellers that do not adopt the code with respect to single-family mortgages.

Homebuyer Protection Plan

A plan which protects FHA home buyers against property defects.

Homeowners Insurance

The insurance purchased by the borrower as per the lending requirements to protect the property against damage or loss.

Housing Bank

A government owned or affiliated bank giving housing loans to borrowers. US government has generally avoided giving loans directly to consumers but such housing banks are widespread in many other developing countries.

Housing Bubble

Also termed as real estate bubble or property bubble, it is an economic bubble that occurs periodically in local or global markets. It is characterised a rapid increases in valuation of real property until they reach unsustainable levels and then sharply decline.

Housing Expense

The sum of monthly payments, hazard insurance premiums, property taxes and home owner’s association fees plus monthly debt service. It is used in the calculation of back-end ratio, which is used to qualify a borrower for a loan.

Housing Expense Ratio

It is the ratio of housing expense to borrower’s income. It is used to qualify borrowers for a home loan.

Housing Investment

It is the amount which actually is invested in a house. It can be calculated as the sale price less the loan amount.

HUD-1 Form

A standard form used to itemise services and fees charged to a borrower by the lender when applying for a loan. This form gives a picture of the closing transaction and provides each party with a complete list of incoming and outgoing funds.

Hybrid ARM

An adjustable rate mortgage that lines the characteristics of a fixed rate mortgage with an adjustable rate mortgage. This usually has an initial fixed interest rate period followed by an adjustable rate period. The date on which the mortgage changes from the fixed rate to the adjustable rate is referred to as the reset date.

Impound Account

An account of the list by the issuing bank or lender to collect monthly and automatically pay a borrower’s property taxes and insurance costs when payments are due.

Indexed ARM

An adjustable rate mortgage in which the interest rate adjusts periodically according to an underlying benchmark index plus a margin.

Initial Interest Rate

The interest rate debt remains constant for some unspecified period usually at the beginning of the life of an ARM. Sometimes, when it is below the fully indexed interest rate, it is referred to as a teaser rate.

Initial Rate Period

The period for which the initial rate holds. See initial interest rate.

Interest Accrual Period

The period over which the interest due to the lender is calculated.

Interest Cost

Total interest incurred over the entire term of a loan or credit facility. It is calculated in the same way as the APR and That the APR is yours that the loan runs to term and is always measured before taxes.

Interest Due

The interest amount calculated by multiplying the loan balance at the hand of the preceding period with the annual rate divided by the interest accrual period.

Interest Only

Paying just the interest portion of the mortgage payment each month.

Interest Payment

The amount of interest paid each month. It is the same as interest due so long as the scheduled mortgage payment is equal to or greater than the interest due.

Interest Rate

It is the rate charged on the borrower each period against the loan. It, mostly, is quoted on an annual basis.

Interest Rate Adjustment Period

The frequency of rate adjustments in an ARM after the initial rate period is over. For example, a 5 / 1 ARM means you have an initial rate period of five years with a fixed rate and then after five years your rate can change every year.

Interest Rate Ceiling

The maximum interest rate that can be charged on an ARM. It is expressed as an absolute percentage.

Interest Rate Decrease Cap

The maximum allowable decrease in your interest rate in an ARM each time your rate is adjusted. It is usually one or two percentage points.

Interest Rate Floor

It is the lowest interest rate possible under an ARM. Floors are not as common as the ceilings.

Interest Rate Increase Cap

The maximum allowable increase in the interest rate on an ARM each time the rate is adjusted. It is usually one or two percentage points.

Interest Rate Index

The interest rate index is how lenders determine the interest rate on ARM. Usually the interest rates on your mortgage is tied to a specific index rate like Treasury Constant Maturities or Cost of Funds indices.

Interest Rate Risk Premium

The premium attached to do the interest rate that is about the rate on the loan that poses the smallest risk.

Interim Refinance

An ill advised scheme to avoid a prepayment penalty by refinancing twice that of once.

Internet Mortgages

These are the mortgages which are delivered using Internet as the main media for communication between the two parties.

Investor

A generic term, which means a borrower in real estate terminology, who owns or purchases of property as an investment rather than for his own use.

Islamic Mortgage

A mortgage that avoids the payment receipt of interest, which is prohibited under Islamic law.

Jumbo Loan

A loan amount above the conforming loan limits, which is that each year by regulatory bodies. These loans typically carry higher interest rates than conforming loans because they cannot be sold to Fannie or Freddie.

Junk Fees

A term used for lender fees that are expressed in dollars rather than as a percent of the loan amount. Sample junk fees are loan processing, document handling, fundamental and, review appraisals, underwriting reviews and many other such items.

Late Fees

The fees to be paid by the borrower when they don’t pay within the grace period.

Late Payment

A payment which is received after the grace period mentioned in the contract is over.

Lead Generation Site

Same as auction site.

Lease-To-Own Purchase

The Lees combined with an option to purchase the property within a specified period of say three years or less at an agreed upon price. Such arrangements have increased in the recent past.

Lender

Any institution or individual money to a borrower. They can be a number of types of lending organisations, including educational lenders, commercial lenders, hard money lenders, lenders of last resort or mutual organisations. The most traditional type of lender is a commercial lender.

Lender

Same as mortgage lender

Lender Credit

A credit paid by the lender to the borrower for taking an above market interest rate.

Lien

A claim against a property by the issuing bank or lender to secure repayment of a debt. It usually is in the form of a mortgage.

Loan Amount

The amount which the borrower promises to repay. It may sometimes differ from the actual amount disbursed by the lender due to the amount of points and other upfront costs.

Loan Churning

The process of raising cash periodically through successive cash out refinancing. It is a scam initiated by mortgage brokers that victimizes wholesale lenders with the connivance of borrowers.

Loan Discount Fee

It is a term which is used to describe points on the good faith estimate.

Loan Level Price Adjustments

LLPAs are essentially charges for certain risk factors such as low-grade discourse, high loan to value ratio, investment property etc, that are charged as a percentage of the loan amount.

Loan Modification

A process we are the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and the borrower. It is usually done in response to a borrower’s long-term inability to repay the loan. They typically involve a reduction in the interest rate, extension of the length of the term, a different type of loan or any combination of the three.

Loan Officer

A representative of a bank or broker who originates mortgages on their behalf.

Loan Origination

The initiation of the home loan process whereby a borrower submits their information to a bank or lender in order to obtain mortgage finance.

Loan Processor

The individual who handles all the paperwork associated with closing your loan.

Loan Provider

An individual or an institution or even a mortgage broker who facilitates your mortgage.

Loan-To-Value

The percentage of the appraised property value that is borrowed from a bank or lender for instance a down payment of 20% would create a loan to Value of 80%.

Lock Commitment Letter

A formal letter from the lender verifying that the prices and other terms conditions of a loan have been locked.

Lock Failure

The refusal by a lender to honour a mortgage price that was guaranteed as per the borrower.

Lock In

Sometimes the borrower is given an option to lock in the rates and points prevailing in the market at that time. They remain applicable for the entire loan term irrespective of the changes that may occur in the market conditions.

Lock Jumper

A borrower who lets a lock in and out when interest rates and lower down to is to log in again at even lower rates. These borrowers are typically refinancing a home, rather than buying one.

Lock Period

The period of lock in during which the interest rate promised on offending mortgage loan cannot be changed. Generally, longer the period, higher the price to the borrower.

Mandatory Disclosure

A compile nation of laws and regulations mandate rate to be disclosed to the borrowers. This also includes the method and timing of the disclosure.

Manufactured Housing

A tide of prefabricated housing, that is largely assembled in factories and then transported to sites for use. They are often called as mobile homes in the United States.

Margin

A given amount specified by the bank or lender, which when added to the accompanying mortgage index, sets the interest rate for an adjustable rate mortgage.

Market Niche

The special combination of loan, borrower and property characteristics that lenders use in setting prices and underwriting requirements. These characteristics are believed to affect the default risk or cost of the loan.

Maturity

The period of loan term.

Maximum Loan Amount

The largest amount available to the borrower under a particular loan program.

Maximum Loan To Value Ratio

The maximum allowable loan to value ratio. It can vary from one loan program to the another one. See loan to value.

Maximum Lock

The maximum period for which a lender will allow a borrower to lock the rates and points. Its most common value is 60 days, at some lenders allow a maximum of 90 days also.

Minimum Down Payment

See down payment. It is the minimum value of the ratio of the down payment to sale price on a given loan program.

Monthly Debt Service

Monthly payments required on credit cards, instalment loans, home a cutie loans and other debts at not including payment on the loan applied for.

Monthly Housing Expense

See housing expenses.

Mortgage

A formal agreement confirming the Lien on a property taken by a lender as security for the repayment of a loan.

Mortgage Auction Site

Same as auction site.

Mortgage Bank

An organisation who sells all loans in the secondary market. They are different from portfolio lenders who retained loans in their portfolio.

Mortgage Broker

An independent loan originators who works on behalf of consumers to obtain mortgage financing. Brokers doesn’t represent a single bank but rather work with several lenders.

Mortgage Company

Same as mortgage bank.

Mortgage Formulas

The mathematical formulas used to calculate different terms like monthly payment, balance and APR.

Mortgage Frauds

Same as Mortgage Scam

Mortgage Insurance

Also known as mortgage guarantee. It is an insurance policy which come by and say lenders or investors for the losses you to the default of a mortgage loan. In the UK it is also known as a mortgage indemnity guarantee.

Mortgage Insurance Cancellation

Cancellation of a mortgage insurance policy.

Mortgage Insurance Premium

The periodic charges paid by the borrower against the mortgage insurance. This might include the upfront charges also.

Mortgage Lead

The information about the potential borrower giving to a lender, who may try him to convert into a borrower.

Mortgage Lender

An individual or an institution who disburses money to the borrower after signing of the loan agreement.

Mortgage Modification

Same as loan modification.

Mortgage Payment

The monthly payments made by a borrower which includes the principal repayment and the interest component.

Mortgage Price

The cost of your loan including interest rates, points and fees paid to the lender.

Mortgage Program

The complete set of mortgage conditions which can be identified as a distinct mortgage instrument.

Mortgage Rate

The interest rate associated and applicable on your mortgage.

Mortgage Referrals

The recommendation or advice to the borrower on where he should go for buying a mortgage.

Mortgage Scams

A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan then would have been obtained had the lender borrower is known the truth.

Mortgage Shopping

Searching the market to get the best deal on a mortgage.

Mortgage Spam

The usual spam, often in the form of unsolicited e-mails, touting the offers for a great mortgage deal which you simply cannot ignore.

Mortgage Suitability

A standard to which a mortgage lender can adhere when directing consumers to a mortgage loan. Under such a standard, mortgage lenders would be held liable for steering consumers towards an unsustainable mortgage.

Mortgagee

The lender who provides the money to the borrower in a mortgage.

Mortgagor

The borrower who takes money from the lender.

Negative Equity

Negative equity occurs when the value of an asset used to secure a loan is less than the outstanding balance on the loan. In the United States, assets with negative equity are often referred to as being underwater and loans and borrowers with negative equity are said to be upside down.

Negative Amortization

A deferred interest graduated payment mortgage, which occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases. In other words each time you make a payment, you owe the lender still more.

Negative Amortization Cap

It is the maximum amount of negative amortization. It is usually expressed as a percentage of original loan amount. As you reach this limit, it usually triggers an automatic increase in the payment.

Negative Homeowners Equity

Same as negative equity.

Negative Points

See points. Negative points refer to the points paid by a lender for a loan with a rate above the rate on a zero point loan.

Net Branch

An arrangement in which an existing mortgage company gives a franchise to another company in order to carry out its business in land area to stop the company that gives the franchise is called the mortgage originator, while the company that takes the franchise is called the mortgage that branch.

Net Jumping

The typical characteristics of the borrowers to use a broker’s time and expertise to become informed and then hopping on Internet to get the best deal on the loan.

Ninja Loan

No income, no job, no asset loan. It is an industry slang for a no documentation loan, which doesn’t require income, asset or job verification.

No Asset Loan

The documentation requirement when the loan applicant chooses not to disclose his assets.

No Change Scenario

An assumption, that the value of index to which the ARM loan is tied up, does not change from the beginning.

No Closing Cost Refinance

A refinance transaction in which the lender or broker pays all the settlement costs.

No Fee Mortgage Plus

A loan program for homebuyers through Bank of America that removes all lender fees except points as well as the removes all third-party fees.

No Income Loan

See no asset loan

No Ratio Loan

slightly different from no income loan in that the applicant’s income and assets are disclosed as well as verified but they are not used in qualifying the borrower.

No-Cost Mortgage

A mortgage in which the lender pays the borrower’s settlement costs, including the mortgage broker’s fees except some charges like per diem interest, and escrows for taxes and insurance, home owners insurance, owners title insurance and transfers taxes charged by governmental entities.

Noho

A person who may not be a home owner just because he lives hand to mouth.

Nominal Interest Rate

It usually refers to two distinct things: the rate of interest before adjustment for inflation; or the rate of interest without adjustment for the full effect of compounding.

Non Conforming Mortgage

A non-citizen without a green card who is employed in the US. It is distinct from a permanent resident alien, who has a green card and is treated similar to a US citizen.

Non-Permanent Resident Alien

A mortgage that is not fulfilling the terms and conditions as stipulated by the guidelines of the two federal agencies, Freddie and Fannie. The reason may often be like it is too large or poor credit or inadequate documentation.

Non-Warrantable Condo

A non-warrantable condo is not eligible to be sold to Fannie Mae or Freddie Mac.

No-Surprise Adjustable Rate Mortgage

An ARM with a payment that is both predetermined and graduated, as well as in conjunction with variable term.

Note

A written promise to repay the mortgage plus interests, which includes the name of the borrower, issuing land and end the terms and provisions of the contract.

Notice Of Default

A notification given to a borrower stating that he or she has not made the payments by their predetermined deadline, or is otherwise in default on the mortgage contract. It dictates that if the money owed is not aid any given time, the lender may choose to foreclose the borrower’s property.

Option ARM

A special adjustable rate mortgage loan program with a flexibility of allowing one of several possible payments on your mortgage every month. This allows you to better manage your monthly cash flow.

Option Fee

The money paid by a buyer to a seller for the option to terminate a real estate contract. Sometimes the upfront fees paid by the buyer under a lease to own purchase, which is credited to the purchase price when the option is exercised.

Origination Fee

A percentage of the loan amount which is charged to the either bank or broker for completing the loan process.

Overage

Sometimes the price posted by a lender to its officers and the price charged to the borrower are different. Overage is the difference between the two.

Par Rate

The interest rate borrower will qualify for a resume in that there is no rate manipulation. In the secondary market it is the security rate that trades at a price of 100.

Partial Claims

The US Department of Housing and Urban Development offers homeowners with FHA loans financial assistance to help a past due mortgage payments through what is called a partial claim. HUD does not automatically grant partial claims and applicant must meet certain requirements to obtain a partial claim payment.

Partial Prepayment

Paying larger than what is required as monthly payment. This may often be done with the intention to pay off the loan earlier.

Paydown Magic

Believing that there is an extraordinary a unique way to weekly pay down a home mortgage balance if the secret is known.

Payment Adjustment Interval

The period between payment changes on an ARM, which may or may not be the same as the interest rate adjustment period. Loans on which the payment adjusts less frequently than the rate may generate negative amortization.

Payment Decrease Cap

The maximum decrease in payment on an ARM expressed in percentage, which may be done on the payment adjustment date.

Payment Increase Cap

The maximum decrease in payment on an ARM expressed in percentage, which may be done on the payment adjustment date.

Payment Period

The entire period of loan term. It is the period over which the borrower if required to make the payments. Often monthly.

Payment Power

A spatial mortgage payment plan providing flexibility to the borrowers by Fannie Mae. It allows the borrower to skip up to 2 mortgage payment in any 12 month period and up to 10 over the life of a loan.

Payment Rate

It is the interest rate which is used to calculate the mortgage payment. It may sometimes not be equal to the interest rate.

Payment Shock

A sudden, large increase in the monthly mortgage payment as a result of an adjustable rate mortgage or through a refinance with new financing terms.

Payoff Month

The particular month in which the loan balance the particular month in which the outstanding loan balance becomes zero. It may sometimes differ from the term.

Per Diem Interest

The interest charged on a loan for one or more days. This does not necessarily mean that the interest on the loan compounds daily, but simply refers to the amount of interest that is due for one day that the loan is outstanding.

Periodic Refinance

An ill advised effort involving occasional refinances to borrow equity for use as cash advances.

Permanent Buydown

Paying points as a way to reduce the interest rate.

Pick A Payment Arm

A popular adjustable rate mortgage which offers the flexibility of four different mortgage payments on each statement. Same as flexible payment ARM or option ARM.

Piggyback Mortgage

A second mortgage that closes simultaneously with the first mortgage to reduce the total necessary down payment.

Pipeline Risk

The risk associated with taking applications from prospective mortgage borrowers who may opt to decline to accept a quoted mortgage rate within a certain grace period.

PITI

The monthly housing expense, expressed as principal, interest, taxes and insurance.

Points

Front cash payment demanded by the lender as part of the charge for the loan. It is usually expressed as a percentage of the loan amount.

Portable Mortgage

A mortgage that permits the borrower to transfer the mortgage balance to a new property and with the same lender without penalties, giving them the reassurance of keeping their current interest rate terms and others in terms.

Portfolio Lender

A lender that holds the loans it originates in its portfolio rather than selling them, as against a temporary lender.

Posted Prices

The price told by the lender to its loan officers and brokers, which may often be different to the final prices paid by the borrower.

Pre-Approval

A commitment by a lender that he will extend the mortgage loan to a particular borrower, even before he has identified the specific property to be purchased. Its purpose is to make it easier for the borrower to shop for a house.

Predatory Lending

Unfair, deceptive or fraudulent practices of some lenders during the loan origination process.

Pre-Foreclusure Sale

A program which allows the borrower in default to sell his home and use the net sale proceeds to satisfy the mortgage debt is even though these proceeds are less than the amount owed.

Prepayment

The payments made by the borrower over and above what he is required to pay as mortgage payment. If this pays off the loan completely then it is termed as the payment in full otherwise partial prepayment.

Prepayment Penalty

The fees charged by the lender if a loan is refinanced or repaid prior to a certain date as agreed upon in the loan document.

Pre-Qualification

The initial evaluation of the creditworthiness of a potential borrower based on the examination of the income and expenses and arriving at an estimated borrowing range applicable for the prospective borrower.

Price-Gouging

A pejorative term referring to a situation in which the lender charges and interest much higher than that considered and reasonable charges and interest available in the market.

Pricing Notch Point (PNP)

Any growth added to the loan amount will cause the interest rate, mortgage insurance premium or points to also increase.

Primary Residence

The house, where the borrower is expected to leave most of the time, as distinct from a second home or an invested property that is most likely to be rented out.

Prime Rate

The interest rate offered by commercial banks to their best corporate consumers.

Principal

The component of the monthly payment that is used for the repayment of the outstanding loan balance.

Principal Limit

The maximum lifetime amount and elderly borrower can take out on a reverse mortgage. Calculation of the principal limit is a formula that uses the age of the youngest borrower, the maximum claim amount and the expected average mortgage interest rate.

Private Mortgage Insurance

A policy provided by private mortgage insurers to protect lenders against loss if a borrower defaults. It is different from the insurance provided by the government under FHA or VA.

Processing

The process of compiling and maintenance of the file containing the information about mortgage transaction. This file is expected to be handed over to underwriter.

Property Flipping

The process of buying a house or property with the intention to sell it for a profit.

Purchase Money Mortgage

A mortgage offered by a house by a house buyer as partial payment for the house.

Qualification

See prequalification

Rate Lock

A mortgage rate lock with the option to reduce the locked interest rate if the prevalent market rates fall during this period.

Reset Date

The date on which a hybrid ARM mortgage changes from the fixed rate to the adjustable rate.

Securitization

A financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, securities or collateralised mortgage obligations to various investors.

Settlement Costs

Same as closing closts.

Qualification Rate

The interest rate used in calculating the initial mortgage payment in qualifying a borrower. It is not necessary that the qualifying rate is actually the rate at which make your initial payments. These are used to ensure that borrowers can handle the payments if rates go up in future.

Qualification Ratios

Are the requirements set by the lender stating what the maximum allowable housing expense to income ratio and housing expense plus other debt to income ratio can be in order to qualify for a loan. The typical values used our 28% for housing expense to income ratio and 36% for housing expense plus debt to income ratio.

Qualification Requirements

The conditions depleted by the lender for granting loans including maximum ratios of housing expense and total expense to income, maximum loan amount, maximum LTV ratio and so on.

Rate

See interest rate.

Quitclaim Deed

A document by which a person either disclaims interest in a property transfers interest to another person, typically a spouse.

Refinance

The act of replacing your existing loans with a new loan on the same property. There are two main types of refinances, rate and term refinance and cash out refinance.

Rate Caps

Limitations on the rate adjustments in an ARM. These are often expressed in a/b/c; where “a” expresses the maximum rate range at the first to rate adjustment, “b” expresses the maximum at all subsequent adjustments and “c” expresses the maximum increase over the initial rate during the life of the contract.

Rate Protection

Protection for a borrower against the danger that rates will rise between the time the borrower applies for a loan and the time the loan actually closes. It is usually extended for 90 to 120 days.

Rate Sheets

The interest rates and points arranged in a tabulated manner and distributed by the lender to the loan officers and employees.

Rate/Point Breakeven

The minimum period for which you must retain a mortgage in order for it to be profitable to the point is to reduce the rate.

Rate/Point Options

All possible points and interest rate combinations that a certain loan program offers. Interest rates and points on an ARM could refer when taking the margin and the interest rate ceiling into account.

Rebate

Seen as negative points

Recast Payment

adjusting the mortgage payment on an ARM or a variable rate mortgage to make certain that the mortgage will be paid in full by the time of its maturity.

Referral Fees

Compensation paid for referring customers by the service providers to other parties.

Referral Power

The ability of the referrer to drive a client to a specific vendor.

Referral Site

A website which drives potential borrowers to affiliated lenders. It is usually done for some sort of compensation.

Rent Premium

An increase in the rent payment on a home purchase that is lease to own. If the purchase option is put to use, then the rant premium is credited to the purchase price; however, the rent premium is forfeit if the option is left unused.

Required Cash

Total cash required by the buyer for closing the transaction. It typically includes the down payment, points and fixed charges any portion of the mortgage insurance premiums that is to be paid up front and other settlement charges like title insurance, taxes et cetera.

RESPA

Real Estate Settlement Procedures Act – an act ensure is that consumers throughout the nation are provided with more helpful information about the cost of mortgage settlement and protected from unnecessary high settlement charges caused by certain abusive practices.

Retail Lender

A lender who directly offers mortgages and loans to the public without operating through brokers and respondents.

Reverse Mortgage

A mortgage is reserved for home owners aged 62 or older, who wish to tap their home equity without paying monthly mortgage payments.

Right Of Rescission

A law allows a homeowner to the rescind the contract to refinance their primary residence within three days of signing loan documents.

Scenario Analysis

A process of analysing possible future events by considering alternate day of possible outcomes. For instance, determining how the interest rate and payment on an ARM will change in response to specified future changes in market conditions.

Scheduled Mortgage Payment

The periodic amount which the borrower is acquired to pay. It includes the interest component, the principal component and mortgage insurance as detailed in the mortgage contract.

Second Mortgage

A mortgage taken out behind a first mortgage, either concurrently or after the first.

Secondary Markets

The marketplace where securities and mortgages are bought and sold.

Secure Option Arm

A type of payment options ARM with a fixed rate period. It is similar to a payment options ARM except that it has a fixed rate period similar of fixed period or hybrid ARM.

Self-Employed Borrower

A borrower who is self employed. Typically he has too reliant on his income tax returns instead of the salary certificates provided by the employer. This often complicates the process somewhat.

Seller Carryback

When a seller acts as a bank or lender and carries a second mortgage on the subject property.

Seller Contribution

The contribution to the borrower’s down payment or settlement costs made by a home seller is an alternative to price reduction. It is a useful bargaining chip in slow markets and goes a long way in closing the deal with cash strapped buyers.

Seller Financing

The loan provided by the seller to the purchaser. Usually the purchaser will make some sort of down payment to the seller and then make settlement payments over a specified time period and at an agreed-upon interest rate.

Servicing

Administering loans between the time of disbursement and at times the loan is fully paid off. The process includes monthly payment collection, record maintenance, payment of taxes and insurance and pursuance of delinquent accounts.

Servicing Agent

The agency who services alone. See servicing.

Servicing Release Premium

The payment received by the lender on the sale of a closed mortgage loan to the secondary market.

Servicing Transfer

The process of replacing one servicing agent with another one.

Shared Appreciation Mortgage

A mortgage in which the lender agrees as part of the loan to extract some or all payment in the form of a share of the increase in value of the property.

Shopping Site

The website, where a prospective borrower can compare different loan offerings and shop around to choose the best one suiting his needs.

Short Sale

The sale where the proceeds from selling the property will fall short of the balance outstanding on the mortgage, but still the lender allows that. It is an alternative to foreclosure.

Short Refinance

The refinance transaction where the lender agrees to lower the rate and/or change the term despite the mortgage balance exceeding the property value.

Silent Second

A second mortgage on a home, taken to enable the borrower to buy the home evening without a sufficient down payment. They are called silent because the first lender does not know about the second mortgage and might not have approved the first mortgage, he had known about it.

Simple Interest Biweekly Mortgage

A biweekly mortgage payment plan in which the payments made by the borrower are applied immediately towards the remaining principal balance of the mortgage.

Simple Interest Mortgage

The major difference between a standard mortgage and a simple interest mortgage is that interest is calculated monthly on the first and daily on the second.

Single File Mortgage Insurance

A type of mortgage insurance in which the lander pays a premium and prices it on the interest rate.

Stated Assets

A document specification according to which a borrower’s assets are declared but the assets are not conform to buy the lander.

Stated Income

A mortgage where the lender does not verify the borrower’s income by looking at his records. Instead, borrower’s are simply asked state their income and the word is taken for granted.

Strategic Default

If the season by a borrower to stop making payments less by having the financial inability to make the payments. This often happens in cases of negative equity when the loan balance is significantly higher than the house value.

Streamline Refinance

An expedited refinance that requires limited underwriting and may even forego the need for an appraisal.

Subordinate Financing

A second mortgage on the property that is not paid off when the first market is refinanced.

Subordination Policy

The policy of the second mortgage lender to allow the refinancing of the first mortgage while leaving the second one in place.

Sub-Prime Borrower

The borrowers with poor credit can get the loan from sub-prime lenders and generally at higher rates.

Sub-Prime Lender

A lender, who specialises lending money to sub-prime borrowers usually at higher rates.

Subprime Mortgage

A home loan is reserved for those who have marginal credit or difficulty qualifying for a traditional loan.

Sub-Prime Market

A marketplace to think of sub-prime lenders, brokers, investors and bankers which allows sub-prime borrowers to get money as loans.

Swing Loan

Same as bridge loan.

Tangible Net Benefit

The net effect of refinancing from a borrower’s point of view.

Tax Service Fee

The fees charged by lenders to ensure that borrowers pay the property taxes in time. It is typically paid by the buyer at the time of house purchase to the lender, who passes it takes service agency.

Teaser Rate

The initial rate on an ARM, which is usually below the full rate and is used to lure the borrower.

Temporary Buydown

A reduction in the mortgage payment made by a homebuyer in the early years of the loan in exchange for an upfront cash deposit provided by the buyer, the seller or both. It allows borrowers with excess cash low incomes, to qualify for loans that would otherwise be out of the reach.

Temporary Lender

The lender who doesn’t want holds the loans it originates. He is different from a portfolio lender who holds them for a long time.

Tenure Annuity

Accessible to borrowers under a home equity conversion mortgage, option allows them to take an established monthly amount for the entire time they live in their house.

Term

The length of time period which is used to calculate the monthly mortgage payments. It may be different from maturity.

Title Insurance

If all of indemnity insurance, which insures against financial loss from defects in title and from the invalidity or unenforceability of mortgage liens.

Total Expense Ratio

A ratio used for qualifying the borrower. It is calculated by dividing the housing expense plus current debt service payments to the borrower’s income.

Total Housing Expense

The total housing expenses when added to the monthly debt service costs. It is predominantly used to calculate the total housing expense ratio.

Total Interest Payments

The sum total of all interest payments.

Tranche Based EMI

An innovative repayment plan, which is suitable for borrowers who have sufficient funds and income levels to pay right from the beginning. Tranche based EMI option allows you to start making payments right after the disbursal of the first installment of loan amount and continue to pay till the property is ready and the regular EMI starts.

Related: Tranche EMI – Reduce Effective EMI with Tranche Based EMI Repayment Plan.

Transaction-Based Reserves

Mandatory loss reserves based on the riskiness of individual transactions.

Truth In Lending

A federal law designed to promote the inform the use of consumer credit by requiring disclosures about its terms and costs to standardised the procedures to calculate interests and other costs.

Underage

The fees collected by a loan officer from a borrower that are lower than the target is specified by the lender who employs the loan officer.

Underwriting

The process used by the large financial service providers to assess the eligibility of a customer to receive their products like insurance, mortgage or credit.

Underwriting Requirements

The requirements and conditions imposed by lenders to determine the qualification of a borrower for a loan.

Upfront Mortgage Broker

A broker who has elected to business in an up front and fully transparent manner. They disclose their fees and charges customers in advance and in writing.

Upfront Mortgage Lender

A lender who provides full information to the prospective borrowers before applying for a mortgage and guarantees them feared treatment during the process.

VA Mortgage

A mortgage loan guaranteed by the US Department of Veteran Affairs and is designed to offer long-term financing to eligible US veterans or the surviving spouses.

Underwater Mortgage

A mortgage whose balance exceeds the value of the property. Sometimes also known as upside down mortgage.

Underwriter

An individual who decides upon your mortgage application by either approving, suspending or declining it.

Waive Escrows

Permission of the lender for the borrower to pay taxes and insurance is directly.

Warehouse Lender

The financial institution who extends the line of credit to a loan originator to fund a mortgage that a borrower initially used to buy a property.

Warrantable Condos

A condominium project teachers that lenders view as protection against hazards and would threaten the value of condo units.

Wholesale Lender

The lender provides mortgages through brokers and correspondence and not deal directly with customers.

Wholesale Mortgage Prices

The rates, points, prices et cetera which are quoted by the wholesale lender to its brokers and correspondents.

Workout Assumption

The assumption of an existing mortgage by a qualified third-party borrower, from a financially distressed borrower.

Worst Case Scenario

The assumption that the worst happens for the borrower and interest rates on an ARM rise to their maximum extent permissible.

Wrap-Around Mortgage

A form of secondary financing for the purchase of property. It is a loan transaction in which the lender assumes responsibility for animals in mortgage. It is attractive to lenders because they can leverage a lower interest rate on the existing mortgage into a high read for themselves.

Yield Curve

If half showing several yields or interest rates across different contract lands. This shows the relation between the interest rates and a time to maturity.

Yield-Spread Premium

The compensation received by mortgage brokers from lenders by originating loans.

Yield-Spread Premium Abuse

The practice of mortgage brokers to earn large profits by delivering a highly rate loan without the knowledge of the borrower.

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Disclaimer

Lots of approximations and assumptions have been made while developing the calculators.

Please make your own calculations before making any financial decision.