Capital Line Funding Group

Capital Line Residential Glossary of Terms

Acceleration
The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due on Sale Clause

Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically based on an index. Also called a variable rate mortgage

Adjusted Basis
The cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.

Adjustment Date
The date an interest rate changes on an adjustable rate mortgage (ARM).

Adjustment Interval
For an adjustable rate mortgage, the time between changes in the interest rate charged. The most common adjustment intervals are one, three, five or seven (7) years.

Adjustment Period
The period elapsing between adjustment dates for an Adjustable rate mortgage  (ARM).

Affordability Analysis
An analysis of a buyer’s ability to afford the purchase of a home. Reviews income, liabilities, available funds, and considerer the type of mortgage you plan to obtain, the area  in which you wish to purchase a home, and the closing costs that are likely.

Amortization
Literally to “kill off”(from the root word: mort) the outstanding balance
of a loan by making equal payments on a regular schedule (usually monthly). The Payments are structured so that the borrower pays both interest and principal with each equal payment.

Amortization Term
The length of time required to amortize the mortgage loan expressed as a number of months. For example, 360 months is the amortization term for a 30-year fixed rate mortgage.

Annual Percentage Rate (APR)
The interest rate which reflects the cost of a mortgage as a yearly rate. This rate is usually higher that the stated loan rate for the mortgage, because it in takes into account points and closing costs.

Application Fee
The fee charged by the lender to the borrower for applying for a loan. Payment of this fee does not guarantee that a loan will be approved. Some lenders may apply the cost of the application fee to certain closing costs.

Appraisal
The Determination of property value based on recent sales information of similar properties.

Appraisal Value
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property.

Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.

Assumable Loan
These loans may be passed on from a seller of home to the buyer. The buyer “assumes the responsibility of the outstanding loan balance and payments.

Assumption
An assumable mortgage can be transferred from the seller to the new buyer.
Generally requires a credit review of the new borrower and lenders may charge a fee for the assumption. If a mortgage contains a due on sale clause, it may not be assumed by a new buyer.

Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.

Balloon Mortgage
Behaves like a fixed-rate mortgage for a set number of years (usually five or seven) and then must be paid off in full in a single “balloon” payment. Balloon loans are popular with those expecting to sell or refinance his  property within a definite  period of time.

Balloon Payment
The final lump sum paid at the maturity date of a balloon mortgage.

Biweekly Payment Mortgage
A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one half of the monthly payment required if the loan were a standard 30-year fixed rate mortgage. The result for the borrower is a substantial savings in interest.

Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.

Borrower
(Mortgagor) One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

Bridge Loan
A second trust that is collateralized by the borrower’s present home allowing the proceeds to be used to close on a new house before the present home is sold. Also know as a “swing loan”.

Broker
An individual, in the business of assisting in arranging funding or  negotiating contracts for a client but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.


Buy Down
When the lender and/or the home builder subsidized the mortgage by lowering the interest rated during the first few days of the loan. While the payments are initially low, payments will increase when the subsidy expires.

Caps  (Interest)
Consumer safeguards limiting the amount of change to the interest rate for an adjustable rate mortgage.

Caps (Payment)
Consumer safeguards limiting the amount of change to the monthly payments for an adjustable rate mortgage.

Cash Flow
The amount of cash derived over a certain period of time from an income producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.)

Certificate of Eligibility
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business and mobile homes. Certificates of eligibility may be obtained by sending Form DADA (Separation Paper) to the local VA office with VA Form 1880 (Request for Certificate of Eligibility).

Certificate of Reasonable Value (CRV)
An appraisal issued by the Veterans Administration showing the property’s
current market value.

Certificate of Veteran Status
The document given to veterans or reservists who have served  90 days of continuous active duty (including training time). It may be obtained by sending DD 214 to the local VA office with Form 26-8261a (Request for certificate of Veteran Status). This document enables veterans to obtain lower down payments on certain FH/A insured loans.

Change Frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable rate mortgage (ARM).

Closing
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands, also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee,
title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount.

Closing Costs
Expenses which are over and above the price of the property that are incurred by the buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs will vary according to the area country where is property is sold and the lender used.

COFI
An adjustable-rate mortgage with a rate that adjust based on a cost-of-funds index, often the 11th District Cost of Funds.

California Loan
California is home to residential loans up to $0 million +.

Construction Loan
A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he or she progresses

Consumer Reporting Agency (or Bureau)
An organization that handles the preparation of reports used by lenders to determine a potential borrowers credit  history. The agency gets data for these reports from a credit repository and other sources.

Contract Sale or Deed
A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional Loan
A mortgage not insured by FHA or guaranteed by VA.

Conversion Clause
A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.

Credit Report
A report documenting the credit history and current status of a borrower’s
Credit standing.

Credit Risk Score
A credit risk score is a statistical summary of the information contained in a consumer’s credit report. The most well know type of credit risk score is the Fair Isaac or FICO score. This form of credit scoring is a mathematical summary calculation that assigns numerical values to various pieces of information in the credit report. The overall credit risk score is highly relative in the credit underwriting process for a mortgage loan.

Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.

Deed of Trust
A legal document which affects the transfer of ownership of real estate from the seller to the buyer. In many states, this document is used in place of a mortgage to secure the payment of a note.

Default
Failure to meet the legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deferred Interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See Negative Amortization.

Department of Veterans Affairs  (VA)
An independent agency of the federal government which guarantees long term, low-or-no-down payment mortgages to eligible veterans.

Discount Point (Point)
Prepaid interest assessed at closing by the lender.  Each point is equal to 1 percent of the loan amount (e.g., 1 point on a $100,000 mortgage would cost $1,000)

Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount.

Due-on-Sale Clause
A provision in a mortgage or deed of trust which allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

Earnest Money
Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Entitlement
The VA home loan benefit is called an entitlement (i.e. entitlement for a VA guaranteed home loan). This is also known as eligibility.

Equal Credit Opportunity Act  (ECOA)
A federal law that requires lenders and other creditors to make credit equally available without discrimination based upon race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity
The difference between the fair market value and current indebtedness, also referred to as the owner’s interest. The value an owner has in real estate over and above the obligation against the property.

Escrow
An account held by the lender into which the home buyer pays money for tax or insurance payments. Also, earnest deposits held pending loan closing.

Escrow Disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

Escrow Payment
The part of a mortgagor’s monthly payment that is held by the servicer  to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.
Fannie Mae
Federal National Mortgage Association

Farmers home Administration   (FmHA)
Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

Federal Home Loan Bank Board (FHLBB)
The former name for the regulatory and supervisory agency for federally chartered savings institutions. The agency is now called the office of Thrift Supervision.

Federal Home Loan Mortgage Corporation   (FHLMC)
Also known as Freddie Mac.  A government sponsored entity that purchases conventional mortgages from insured depository institutions
And HUD -approved mortgage bankers.

Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.

Federal National Mortgage Association   (FNMA)
A government sponsored entity that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA.

FHA Loan
A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans, these loans are generous enough to handle moderately priced homes almost anywhere in the country.

FHA Mortgage Insurance
Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.

FHLMC
The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also know as “Freddie Mac”.

Finance Charge
The total dollar amount your loan will cost you. It includes all interest payment for the life of the loan, any interest paid at closing, your origination fee and any other charges paid to the lender and/or broker. Appraisal, credit report and title search fees are not included in the finance charge calculation.

Firm Commitment
A promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan.

First Mortgage
The Primary Lien against a property.

Fixed Installment
The monthly payment due on a mortgage loan including payment of
both principal and interest.

Fixed Rate Mortgage
The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

Fixed Term Arms. Initial Fixed Interest rate and payment rate for 3, 5 ,7,or 10 years with Fully Amortized or Interest Only payments.

Florida Million Mortgage Loan
$3.0MM to $45 Million Mortgage loan programs have been very popular with luxury home owners in Florida.
Float
Between the time of application and closing, a borrower may choose to bet on interest rates decreasing by electing to float. Floating is essentially choosing not to lock the interest rate. Since it is the borrowers responsibility to lock his or her rate before (or at) closing, choosing to float is consider risky and may result in a higher interest rate. Request information from your lender regarding lock procedures.

Foreclosure
A legal procedure in which real estate is sold by the lender to pay a defaulting borrower’s debt.

Fully Amortized ARM

FNMA
The Federal National Mortgage Association is a secondary mortgage institution. FNMA buys VA, FHA and conventional mortgages from primary lenders. Known as “Fannie Mae”.

Foreclosure
A legal process in which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. May also be known as repossession of property.

Freddie Mac
Federal Home Loan Mortgage Corporation

Ginnie Mae
Government National Mortgage Association (GNMA)

Good Faith Estimate
An estimate of charges which a borrower is likely to incur in connection with a loan closing.
Government National Mortgage Association  (GNMA)
Also known as “Ginnie Mae”. Provides sources of funds for residential mortgages, insured or guaranteed by FHA or VA

Graduated payment Mortgage  (GPM)
A type of flexible payment mortgage where the payments increased for a specified period of time and then level off. This type of mortgage has negative amortization built into it.

Gross Monthly Income
The total amount the borrower earns per month, not counting taxes
or expenses. The Gross Monthly is often used in calculations.
 
Growing Equity Mortgage   (GEM)
A fixed rate mortgage that provides scheduled payment increases  over an established period of timed. The increased amount of the monthly payment is applied directly toward reducing the remaining balance of the mortgage.

Guaranty
A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

Guarantee Mortgage
A mortgage that is guaranteed by a third  party.

Hazard Insurance
A form of insurance in which the insurance company protects the insured from specified losses, such as ire, windstorm and the like.

Hawaii Million Mortgage Loan
Hawaii is a very popular investment destination for borrowers who are seeking $$MM to $50 Million Mortgage Loan Programs

Housing Expenses-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower’s housing expenses are divided by his/her gross monthly income

HUD-I Statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the3 bottom of the HUD-I statement define the sellers’s net proceeds and the buyer’s net payment at closing.

Idaho Million Dollar Mortgage

Impound

Index
A published interest rate controlled by the lender to which the interst rate on an adjustable Rate Mortgage (ARM) is used. The index and the interest rate linked to it may increase or decrease. The typical index values available are as follows:
      1YTB      One Year Treasury Bill Yield
      3YTB      Three Year Treasury Note Yield
      5YTB      Five Year Treasury Note Yield
    10YTB      Ten year Treasure Bond Yield
    30YTB      Thirty Year Treasury Bond Yield
     6mTB       Six month Treasury Bill Yield
     6mCD       Six Month CD Rate
     6mLIB      Six  Month Libor
1 LIB       One Year Libor
11 Di       11th District Cost of Funds Rate
   Prime          Prime Interest Rate

Indexed Rate
The sum of the published index plus the margin. For example,
If the index is 4% and the margin is 2.75%, the indexed rate would be 6.75%. Often, lenders charge less than the indexed rate the first year of an adjustable rate mortgage.

Initial Interest Rate
This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable rate mortgage (ARM). It’s also known as “start rate” or “teaser”.

Installment
The regular periodic payment that a borrower agrees to make to a lender.

Insured Mortgage
A mortgage that is protected by the Federal Housing Administration
(FHA) or by private mortgage insurance (PMI)

Interest
The fee charged for borrowing money

Interest Accrual Rate
The percentage rate at which interest accrues on the mortgage. In
most cases, it is also the rate used to calculate the monthly payments.

Interest Only Mortgages Programs are available from 1 month Adjustables to 7/1 Adjustables to 30 year fixed rate mortgages with initial interest only payments. It is most important to craft the program to the needs of the client.

Interest Rate Buy Down  Plan
An arrangement that allows the property seller to deposit money to an
account. That money is then released each month to reduce the mortgagor’s monthly payments during the early years of a mortgage.

Interest Rate Ceiling
For an adjustable rate mortgage (ARM), the maximum interest rate as specified in the mortgage note.


Interest Rate Floor
For an adjustable rate mortgage (ARM), the maximum interest rate as specified in the mortgage note.

Interim Financing
A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion.

Investor
A money source for a lender.

Jumbo Loans  A loan above $417,000 on a single family residence, for most of the country. These limits are set by the Federal Home Loan Mortgage Corporation , and the Federal National Mortgage Association.. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

Late Charge
The penalty a borrower must pay when a payment is made a stated number of days after the due date.

Lease-Purchase Mortgage Loan
An alternative financing option that allows low and moderate income home buyers to lease a home with an option to buy. Each month’s rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that accumulates in a savings account for a down payment.

Life of Loan Cap
The maximum interest rate that can be charged during the life of the loan. Also called Life Time Cap. This value is often expressed as an increment above the initial loan rate.

Liabilities
A person’s financial obligations. Liabilities include long term and short term debt.

Lien
A claim upon a piece of property for the payment or satisfaction of a debt or obligation.

Lifetime Payment Cap
For an adjustable rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life to the loan.

Lifetime Rate Cap
For an adjustable rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan.

Loan
A sum of borrowed money (principal) that is generally repaid with interest
Loan -To-Value Ratio
The relationship between the amount of the mortgage loan and the appraised value of the property as-a-percentage,

Lock
The act of committing to a mortgage rate. This action, taken by a borrower some time between the application and the closing dates, is sometimes accompanied by a payment by the borrower to the lender. Opposite of float.

Jumbo Loans  A loan above $417,000 on a single family residence, for most of the country. These limits are set by the Federal Home Loan Mortgage Corporation , and the Federal National Mortgage Association.. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

Margin
The amount a lender adds to the quoted index rate for an adjustable rate loan to determine the new interest rate.

Market Value
The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be t=different from the price a property cold actually be sold for a given time.

Mega Super Jumbo Loans
These are loans of $3 Million to $40 - $50 Million. Equity , Collateral, one’s
Ability to repay the mortgage as well as one’s credit history are important.

Million Dollar Mortgage
$1 Million Mortgage Loan to $40 million dollar loans programs are referred to in the lending industry by the terms Super Jumbo Mortgage  or even “Mega Jumbo Loan.

MIP (Mortgage Insurance Premium)
Insurance from FHA to the lender against incurring a loss on account of the borrower’s default.

Monthly Housing Expense
Total principal, interest, taxes and insurance paid by the borrower on a monthly basis. Used with gross income to determine affordability.

Monthly Fixed Installment
The portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction and doesn’t cover all of the interest. The loan balance therefore increases instead of decreasing.

Mortgage
A legal document that pledges a property to the lender as security for paying of a debt.

Mortgage Banker
A company that originates mortgages for resale in the secondary mortgage market.

Mortgage Broker
An individual or company that charges a service fee to bring borrowers and lenders together for the purpose of loan origination.

Mortgagee
The Lender

Mortgage Insurance
Money paid to insure the mortgage when the down payment is less than 20 percent.

Mortgage Life Insurance
A type of term life insurance . In the event that the borrower dies while the policy is in force, the mortgage debt is automatically paid by insurance proceeds.

Mortgagor
The Borrower or homeowner.

Negative Amortization
When one’s monthly payment are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The home buyer ends up owing more than the original amount of the loan.

Net Effective Income
The borrower gross income minus federal income tax.

New Mexico Million Dollar Mortgage
Loans of $1 million+ are currently available.

No Income No Asset Program (NINA)  These loans have No Verification of Income, or Assets and are available on 6 mo. adjustable,  on  2,. 3., 5  & 7 years fixed ARM’s. To qualify one need spotless credit.

No Income, No Asset, No Employment (No Doc)
These loans have No Verification of Employment Income or Assets.
Loan instruments can be ARM’s or Fixed Rate. No-Doc Loans have been popular for self-employed borrowers. Today most no-doc programs stipulate
one must be a wage-earner to qualify

Non Assumption Clause
A settlement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.

Note
A legal document that obligates a borrower to repay  mortgage loan at
a stated interest rate during a specified period of time.

Office of Thrift Supervision   (OTS)
The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board.

One Year Adjustable Rate Mortgage
Mortgage where the annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender.

Option Arms  Allows one to choose the payment that one wishes to make each month, from a minimum amount to a fully amortized payment.

Origination Fee
The  fee imposed by a lender to cover certain processing expenses in connection with making a loan. Usually a percentage of the amount loaned. All origination fees are reflected as Points.

Owner Financing
A property purchase transaction in which the party selling property provides all or part of the financing.

Payment Change Date
The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM0 or a graduated payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the adjustment date.

Periodic Rate Cap
A limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.

Permanent Loan
A long term mortgage, usually ten years or more. Also called an “end loan”.

Principal, Interest, Taxes and Insurance   (PITI)
Principal, interest, taxes and insurance. Also called monthly housing expense. The four components of a monthly mortgage payment.

Pledged Asset Mortgage-Borrow 100% of the purchase price or of one’s home value without mortgage insurance up to $10 million, may be higher
on case by case basis.

Points
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount.

Power of Attorney
A legal document authorizing one person to act on the behalf of another.


Pre Approval
The process of determining how much money you will be eligible to borrow
Before you apply for a loan.


Prepaid Expenses
Necessary to create an escrow account or to adjust the seller’s existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.

Prepayment
A privilege in a mortgage permitting the borrower to make payments in advance of their due date.

Prepayment Penalty
Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states.

Primary Mortgage Market
Lenders, such as savings and loan associations, commercial banks and mortgage companies, who make mortgage loans directly to borrowers. These lenders sometimes sell their mortgages to the secondary mortgage markets as FNMA or GNMA.

Principal
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

Principal Balance
The outstanding balance of principal on a mortgage not including interest or any other charges.

Principal Residential Mortgage
Mortgage of a residential property. Mortgage up to $1 million is federal and state tax deductible (or up to $100,000) for a home-equity loan)

Private Mortgage Insurance (PMI)
If one does not have a 20% down payment, lenders will allow a smaller down payment. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may not require an additional monthly fee depending on one’s loan structure.

Qualifying Ratios
Calculations used to determine if a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Rate Lock
A commitment issued by a lender to a borrower or another mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.

Realtor
A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Associate of Realtors.

Real Estate Agent
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real Estate Settlement Procedures Act  ( RESPA)
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Recission
The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.

Recording Fees
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.

Refinance
Obtaining a new mortgage loan on a property already owned often to replace existing loans on the property.

Renegotiable Rate Mortgage
A loan in which the interest rate is adjusted periodically.

Reverse  Mortgage
A financial tool designed by the Federal Government as a form of financial relief of home homeowners 62 and older. It allows seniors to stay in their home and use their home’s equity as tax-free income or to eliminate their current Mortgage payment w/out paying any additional money every month

Revolving Liability
A credit arrangement, such as a credit card,
That allows a customer to borrow against a pre-approved line of credit when purchasing  goods and services.

Satisfaction of Mortgage
The document issued by the mortgagee when the mortgage loan is paid in full. Also called a “release of mortgage”.

Second Mortgage
A mortgage made subsequent to another mortgage and subordinate to the first.

Secondary Mortgage Market
The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders

Security
The property that will be pledge as collateral for a loan.

Seller Carry Back
An agreement in which the owner of a property provides financing often in combination with an assumable mortgage.

Servicer
An organization that collects principal and interest payments from borrowers and manages borrower escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing
All the steps and operations a lender performs to keep a loan in good standing, such a as collection of payments, payment of taxes , insurance,
Property inspections and the like.

Shared Appreciation Mortgage  (SAM)
A mortgage in which a borrower receives a below market interest rate in return for which the lender (or another investor such a as a family member or partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrower shares the monthly principal and interest payment with another party in exchange for part of the appreciation.

Simple Interest
Interest which is computed only on the principal balance.

Standard payment Calculation
The method used to determine the monthly payment required to epay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.

Step Rate Mortgage
A mortgage that allows for the interest rate to increase according to a specified schedule (say five years), resulting increased payments well. At the end of the specified period, the rate and payments will remain constant for the remained of the loan.

Survey
A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any buildings.

Sweat Equity
Equity created by a purchaser performing work on a property being purchased.

Super Jumbo Mortgages The term Super Jumbo Mortgage is used to describe mortgage loans exceeding $650,000.

Third party Origination
When a lender uses another party to completely or partially  originate, process, underwrite, close, fund, or package the mortgages it plans to
Deliver to the secondary market

Texas Million Dollar Mortgage
Texas is big in almost every way, including popular loans of $2-6Million

Title
A document that gives evidence of an individuals ownership of property.

Title Insurance
A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the proep0rty, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender’s interests.

Title Search
An examination of municipal records to determine the legal ownership of property, Usually is performed by a title company.

Truth in Lending
A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.

Two Step Mortgage
A mortgage in which the borrower receives a below-market interest rate for a specified number  of years (most often sever or ten), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan due with 30 days notice at the end of the initial term

Underwriting
The decision whether to make a loan to a  potential home buyer based on credit, employment, assets and other factors and the matching of this risk to an appropriate rate and term of loan amount.

Usury
Interest charged .in excess of the legal rate established by law.

Utah Million Dollar Mortgage
Utah is becoming a very popular destination for borrowers who are seeking
$1million to $4 million dollar loans.
 
VA Loans
May be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling/windows/doors or other energy efficient improvements approved by the Lender and VA.

VA Mortgage Funding Fee
A premium of up to 1 7/8% (depending upon the size of the down payment) paid on a fixed rate loan.

Verification of Deposit    (VOD)
A document signed by the borrower’s financial institution verifying the status and balance of his/her financial accounts.

Verification of Employment   (VOE)
A document signed by the borrower’s employer verifying his/her position and salary.

Warehouse Fee
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.

Washington Million Dollar Mortgage
Luxury home owners in Washington seek loans $ One millionl

Wraparound Mortgage
Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.