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Mortgage Glossary

The Mortgage Glossary Index: A-B C D-E F-I J-M N-P Q-S T-Z

Abstract Of Title

A public record showing a condensed title history of the property.
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Acceleration Clause

A provision which requires that the remaining balance due be paid if the borrower defaults on the loan or transfers title to another party.
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Adjustable Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically, according to an "index", such as Treasury Bills. Monthly payments can go up or down when the interest rate is adjusted.
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Adjustment Date

The date that an ARMs interest rate is changed.
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Amortization

The process of paying off the debt or mortgage, usually by equal monthly payments. Monthly payments are mostly interest at first (because the debt is higher) and almost entirely principal in later years, when the loan balance is small.
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Amortization Schedule

A table which shows the distribution of monthly payments - how much will be applied toward principal and how much toward interest over the life of the loan.
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Annual Percentage Rate (APR)

A figure which attempts to reflect the total cost of a loan, expressed as a yearly rate. Because the APR takes the total cost of credit into account, it can never be lower, and is almost higher than the stated note rate or advertised rate. Within reason, the APR allows you to compare different types of mortgages based on the total cost.
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Application Form (1003)

The standard form used to apply for a mortgage. The form used to includes regarding income, savings, assets, debts, and more.
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Appraisal

A written justification of value of a property, usually based on an analysis of the price paid for similar properties in the area.
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Appraised Value

An opinion of the fair value of a property, generally by a qualified and/or licensed professional an appraise.
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Appreciation

The increase in the value of a property over time, usually due to changes in market conditions, inflation, or improvements.
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APR

See Annual Percentage Rate (APR)
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ARM

See Adjustable Rate Mortgage (ARM)
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Assessed Value

The valuation placed on property for the purpose fixing the amount property taxes.
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Assessment

The process of setting the value of a property for tax purposes.
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Asset

Personal and Real property: items of value which can be quickly converted into cash. Bank accounts, stocks, bonds, mutual funds, real estate, personal property, etc.
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Assignment

Transfer of ownership from one individual or company to another. Lenders often assign mortgages which they make to Fannie Mae or other entity which specializes in buying mortgages.
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Assumable Mortgage

A mortgage which can be assumed by the buyer when a home is sold. Not commonly available in recent years.
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Assumption

The process of assuming a mortgage.
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Balloon Mortgage

A fixed rate mortgage with monthly payments which are not large enough to pay off the loan during the term. Balloons end after a specific time, usually one to five years, after which the entire remaining balance must be paid in a lump sum.
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Balloon Payment

The final lump sum payment due at the end of a balloon mortgage.
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Balloon Reset Mortgage

Two Step Mortgage (Balloon Reset)
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Basis Point

1/100th of a point.
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Bill Of Sale

A written document which transfers titles to personal property, such as an automobile or other valuable property.
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Biweekly Mortgage

A mortgage with payments made every two weeks instead of monthly. Since a bi-weekly has 26 payments per year -- the equivalent of 13 monthly payments -- the loan is paid off much sooner typically in 18 - 20 years as opposed to monthly payments for 30 years. The early payoff saves substantial amounts of interest.
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Bridge Loan

A loan used (usually) to finance the down payment on a new home before the previous property is sold. Previously commonly available, bridge loans are hard to find and are expensive.
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Broker

A person or company that, for a specified fee, provides a service. Real estate brokers bring together buyers and sellers and then facilitate the transaction. Note: most real estate brokers represent the seller, NOT the buyer. Mortgage brokers are individuals or companies which arrange financing but do not lend money directly.
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Buydown

A provision where someone, usually the builder or seller, subsides the mortgage, either by paying extra points or by setting up an escrow account with funds to subsidize the loan during the first few years. The effect is to lower the interest rate for some period of time, which in turn allows the borrower to qualify. The reduced monthly payments increase when the subsidy expires.
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Caps

Caps are limits on the amount that the interest rate on an Adjustable Rate Mortgage can change at any one adjustment and (usually) over the life of the loan. They protect the borrower from huge increases in the monthly payment in a rising interest rate environment. Rarely, a cap may apply to the payment amount rather than to the rate. Under certain conditions, payment caps can cause the loan balance to increase rather than decrease.
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Cash Out Refinance

The process of refinancing for an amount higher than the balance due, assuming the property has a sufficiently high value.
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Certificate of Eligibility

A document required for a VA guaranteed loan. It is obtained through any local VA office on presentation of a DD-214 Separation Paper.
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Certificate of Reasonable Value (CRV)

Used for VA loans only, a certificate issued by the Veterans Administration verifying the appraisal.
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Closing

A meeting between the buyer, seller, and lender where the property and funds legally change hands. Called a Settlement in some states.
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Closing Costs

The total costs and fees associated with closing. Includes one-time non-recurring fees and charges for inspections and other services, and (usually) initial escrows for recurring costs such as property taxes and insurance.
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Closing Statement

Settlement Statement
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CODI (Cost of Savings Index)

An index used on some Adjustable Rate Mortgages (ARMs). See this page for more information.
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Collateral

An asset used to secure a loan. It can be seized by a lender if the borrower defaults.
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Collection

The semi-formal process used by lenders in contacting borrowers in an effort to bring a loan current. In the case of a mortgage, the mailing and formal recording of certain documents which may be required to foreclose on a property.
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Commission

The fee paid to brokers, attorneys, and others for their services.
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Commitment

A promise by a lender to make a loan within a specified time period, subject to compliance with stated conditions. The lender's obligation expires if the borrower does not close the loan prior to the expiration date of the commitment.
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Common Area

Those portions of a building, land, and amenities in condominium and cooperative projects which are used the apartment owners. The hallways, parking areas, and other amenities.
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Common Area Assessments

Fees paid (usually) to an Owners Association Fees by the owners of the individual units in a condominium or cooperative which are used to maintain the property and common areas.
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Community Home Buyers Programs

A series of low-income loan programs offered under Fannie Mae and Freddie Mac auspices. These generally require only 3 - 5% down but do require PMI (Private Mortgage Insurance).
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Comparables

Recent sales of similar properties in the area. Used as a measure local market value to help set the current value of a property.
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Condominium

A form of ownership in real property where the owners have title to only of an apartment or townhouse. The common areas and the building exteriors are owned jointly. All owners have generally rights to all common areas.
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Conversion

Usually refers to the process of converting a property from rental to either a condominium or cooperative property. Tenants generally have a first right of purchase for the unit they occupy.
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Construction Loan

A loan used to finance construction of a new home and, sometimes, the land for a home. Depending on local custom, a construction loan may a permanent mortgage with funds disbursed as construction proceeds, or may be a short-term loan that must be repaid on completion.
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Contingency

A condition which must be met before a contract is binding. For example, a requirement that an existing lien on the property must be cleared by a certain date.
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Conventional Mortgage

A loose term which generally refers to a fixed-rate conforming loan other than an FHA or VA loan.
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Convertible ARM

An Adjustable-Rate mortgage with a borrower's option to convert to a fixed-rate mortgage under specified conditions.
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Cooperative (co-op)

A form of ownership in which the residents own shares in a corporation which owns the entire property. Shareholders are entitled to occupy a specific apartment and to have use of the common areas.
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COFI (Cost of Funds Index)

An index produced by the 11th District Federal Home Loan Bank. One of several indexes used to set interest rate changes for certain Adjustable-Rate Mortgages.
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COSI (Cost of Savings Index)

An index used on Adjustable Rate Mortgages (ARMs) originated by World Savings, which was taken over by Wachovia Savings, which is slated to merge into Wells Fargo Bank.
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Credit Report

A report of an individual's credit history used by lenders to determine credit risk. A record of an individual's repayment of debt.
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CRV

See Certificate of Reasonable Value (CRV)
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Debt

An obligation, Specifically, the amount owed.
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Debt To Income Ratio (DTI)

Total outstanding debt as a portion of total income. Used by lenders as a measure of credit worthiness.
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Deed

The legal document which certifies title to a property.
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Deed-In-Lieu

A means of avoiding foreclosure by conveying title to the lender. The lender has the option of whether to accept a deed-in-lieu, to proceed with the foreclosure, or both.
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Deed Of Trust

Used in place of a mortgage in some states. The deed to a property is held by a trustee (title company or other third party) with the condition that it will be conveyed to the borrower when the mortgage is paid off.
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Default

Failure to make payments within a specified period of time. A finding made by a lender prior to beginning foreclosure proceedings.
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Delinquency

Failure to make mortgage payments when they are due. Policies vary from lender to lender but a borrower is generally reported delinquent if a payment is more than 30 days late.
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Depreciation

A decline in the value of property; the opposite of appreciation.
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Discount Point

A prepayment of interest equal to 1% of the mortgage amount.
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Down Payment

A part of the purchase price, paid in cash, to cover the difference between the purchase price and the loan amount. Typically between 5% and 20% but can be more or less.
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Due-On-Sale

A provision which requires that the remaining balance due be paid if the borrower sells the property or transfers title to another party.
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Earnest Money

A deposit made by the potential home buyer which restrains the seller from offering the property to another party for a specified period.
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Easement

A right of way allowing access to or over a property for a specific purpose, such as for a power line, or a road for access to another property.
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Eminent Domain

The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
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Encroachment

An illegal intrusion on another property by a fence, structure, etc.
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Encumbrance

Anything that affects or limits the title to a property, such as a lien or mortgage, easement, or a lease or other restriction.
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Equity

The difference between the fair market value of a property and any lien or mortgage. The net amount the owner would realize if the property were sold.
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Escrow

Funds deposited with a third party to be delivered upon the fulfillment of a condition. A special account created to hold money for taxes and insurance, or to hold deposit money prior to closing.
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Escrow Account

An account created for a specific purpose, such as to hold money for taxes and insurance, or to hold deposit money prior to closing.
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Estate

The total of all the real property and personal property owned by an individual at time of death.
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Eviction

A legal proceeding to expel an occupant from a property.
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Examination Of Title

An abstract of report on the title of a property, taken from public records.
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Fair Market Value

The highest price for a property that a willing buyer would pay, and the lowest price a willing seller would accept.
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Fannie Mae (FNMA)

The Federal National Mortgage Association (FNMA). A government sponsored private corporation which purchase mortgages from lenders. Also see Freddie Mac (FHLMC)
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Federal Housing Administration (FHA)

A division of the Department of Housing and Urban Development. See FHA mortgage
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Fee Simple

Absolute title; the highest possible interest in a property.
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FHA mortgage

A mortgage insured by the Federal Housing Administration. Typically, FHA mortgages require somewhat lower down payments and less stringent qualification requirements. The borrower pays a relatively high mortgage insurance premium which can be paid monthly or added to the total loan amount.
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FICO

A measurement of an individual's credit score as calculated by Fair, Isaaic and Company.
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First Mortgage

A loan used to finance the purchase of a home. The primary lien against a property.
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First Trust Deed

Deed Of Trust
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Fixed Rate Mortgage

A mortgage with an interest rate that remains constant for the life of the loan. The interest rate is set when the loan is made and never changes. Also see Balloon Mortgage
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Flood Insurance

Insurance against damage from flooding. A specialized insurance which must be purchased separately.
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Foreclosure

The legal process used to regain title to a mortgaged property if the borrower defaults. Foreclosure usually involves a forced sale of the property with the proceeds being applied to the mortgage balance.
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Freddie Mac (FHLMC)

Federal Home Loan Mortgage Corporation. A government sponsored private corporation which purchase mortgages from lenders. Also see Fannie Mae (FNMA)
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FRM

See Fixed Rate Mortgage
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Ginnie Mae (GNMA)

Government National Mortgage Association. A federally owned corporation which funds FHA and VA loans. GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans.
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Good Faith Estimate

A formal estimate of the fees and charges which the borrower must pay at the closing. Lenders are required to provide a Good Faith Estimate at the time the commitment is issued.
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Grantee

The person or entity to whom an interest in real property is conveyed.
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Grantor

The person or entity conveying an interest in real property.
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Hazard Insurance

Insurance to protect the homeowner AND the lender against physical damage to a property from fire, windstorm, vandalism, and other specified hazards. Also see Flood Insurance, Homeowner's Policy
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Home Equity Conversion Mortgage

Literally, a Reverse Mortgage, which allows (usually) elderly homeowners who have a substantial equity to convert the equity into cash. A lender makes regular payments to the homeowner, with a corresponding lien building against the property. The loan must be repaid at a specified time or when the borrower no longer occupies the property.
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Home Equity Line Of Credit (HELOC)

A variable rate line of credit secured by a homeowner's equity. The lender provides funds on demand, with a corresponding lien against the property. The loan must be repaid in installments after a specified draw period.
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Homeowner's Policy

A standardized form of insurance providing blanket coverage against personal liability and a wide variety of hazards. Homeowner's policies do NOT include flood insurance, and may also specify additional exemptions.
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HUD-1 Settlement Statement

See Settlement Statement
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Index

An economic indicator that is used to determine changes in the interest rate of an Adjustable Rate Mortgage. U.S. Treasury bills and notes are the most common but there are others. The rate is periodically adjusted to the index value plus a margin.
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Interest

The charge paid for borrowing money.
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Interim Financing

See Construction Loan
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Investor

The actual source of money for the mortgage.
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Joint Tenancy

Joint ownership by two or more persons such as husband and wife, business partners, etc. Each person has equal rights to the property and ownership passes to the survivor in the event of death.
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Jumbo Loan

A mortgage for an amount greater than the amount eligible for purchase by Fannie Mae or Freddie Mac. See Non Conforming Loan
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Lender Buy Down

A particular form of convertible mortgage offering a discounted interest rate at the beginning of the loan that gradually increases during the first few years of the loan. It provides lower initial payments and a stable final monthly rate, but the final rate may be somewhat higher than on a standard fixed rate mortgage. See Buydown
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Liability Insurance

Insurance protection against claims alleging negligence or an action which resulted in bodily injury or property damage to another party. It is included in most homeowner's policies.
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Lien

A legal claim against a property, such as a mortgage or a workman's claim. In general, liens must be paid off prior to title transfer.
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Life 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 mortgage.
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Line Of Credit

An agreement to extend credit to a borrower under specified conditions. See Home Equity Line Of Credit (HELOC)
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Loan

A sum of borrowed money (principal) that is generally repaid with interest.
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Loan Origination Fee

See Origination Fee
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Loan Servicing

The process of collecting and managing monthly payments. Often a separate company, a loan servicer processes the payments, sends statements, manages the escrow/impound accounts and makes sure that taxes and insurance premiums made on time.
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Loan To Value (LTV) Ratio

The percentage relationship between the amount of the loan and the appraised value or sales price, whichever is lower.
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Lock In

An agreement in which the lender guarantees a specified interest rate for a certain amount of time. Extended lock in periods usually incur an additional fee.
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LTV

See Loan To Value (LTV) Ratio
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Margin

The percentage amount added to the Index value to establish the new interest rate at each adjustment. The margin remains constant over the life of the loan.
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Market Value

The highest price that a motivated buyer would pay, and the lowest price that a motivated seller would accept on a property. Market value is not necessarily the price that a property could actually be sold for at a given time.
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Maturity

The date on which the remaining balance of a loan financial instrument becomes due and payable. The date the mortgage must be paid off.
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Mechanic's Lien

A formal recorded claim against a property for work and materials for construction or repair of a property. Mechanic's liens attach to both the building(s) and land.
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Modification

A change in the terms of a mortgage without refinancing. Usually, a reduction in the interest rate or other change that is beneficial to the borrower.
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Mortgage

A formal document pledging a property as security for a loan. Not used in all states - see Deed Of Trust
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Mortgage Banker

A company or individual that originates and funds mortgages, which are then sold in the secondary market.
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Mortgage Broker

A independent company or individual that originates but does not fund mortgages. A mortgage broker arranges mortgages with a variety of institutions with which they have pre-established relationships.
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Mortgagee

The lender in a mortgage agreement.
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Mortgage Insurance (MI)

Insurance purchased by the borrower to partially protect the lender against loss if the borrower defaults. Normally required for loans with an LTV greater than 80% (20% down). FHA loans and most first buyer programs require mortgage insurance regardless of the LTV.

Insurance purchased for non-FHA loans is commonly called PMI (Private Mortgage Insurance). Some large lenders self-insure and do not require the buyer to purchase PMI, the interest, however, rate may be slightly higher.

Normally, mortgage insurance may be dropped when the LTV drops below 80%.
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Mortgage Insurance Premium (MIP)

The premium paid by a borrower either to FHA (FHA/VA loans) or to a private company for non-government insured loans.
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Mortgage Life/Disability Insurance

A form of insurance where the insurance amount decreases in lock step with the remaining loan balance. It is not usually required by lenders and is relatively expensive.
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Mortgagor

The borrower in a mortgage agreement.
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MTA

An ARM index also known as "12-MAT." See this page for more information and a history of the index.
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Negative Amortization

A condition where the loan balance goes up, rather than down, as payments are made. If a payment is not large enough to cover the interest due the difference is added to the principal. Negative amortization can occur in certain types of adjustable rate mortgages.
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No Cost Refinance

A refinance with the fees and charges are added to the new mortgage amount instead of being paid up front.
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Non Conforming Loan

A mortgage which does not conform to credit or other standards, or to the maximum loan limits set by Fannie Mae and Freddie Mac. See Jumbo Loan
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Note

A signed, formal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time.
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Note Rate

The stated interest rate on a mortgage or other loan agreement.
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Origination

The process of making a loan; the sequence of steps needed to document borrower assets and credit, property appraisal, and so on.
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Origination Fee

A fee charged by a lender to cover certain expenses associated with the loan origination. Usually stated as a percentage of the face value of the loan (points).
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Party Wall

The wall between two adjoining properties, such as between apartments in a condominium.
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Percolation Test

A test to determine soil seepage capacity for properties where a septic tank is in use or being considered.
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Permanent Financing

A mortgage which replaces a construction loan after construction is complete.
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Periodic Cap

See Caps
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Personal Property

In most states, any property that is not real property. (Definitions vary.) See Real Property
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PITI

Principal, Interest, Taxes and Insurance. The four components that (for most homeowners) make up the monthly mortgage payment. Principal and interest are the portions of the payment assigned to repay the mortgage; the tax and insurance components are accumulated in an escrow account to make payments when they are due.
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PITI reserves

A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
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Planned Unit Development (PUD)

A type of ownership with privately owned lots and buildings, and jointly owned common areas and facilities.
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Point

A point is equal to 1 percent of the mortgage. One point on a $100,000 mortgage would be $1,000, for example. Discount points are simply interest that is paid up-front. Most lenders offer mortgages with several combinations of points and interest rates; generally, more points means a lower interest rate, less points means a higher rate.
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Pre Approval

An approval for credit issued by a lender before the borrower has selected a property. Usually issued for a stated maximum loan amount and under certain conditions and assumptions regarding interest rates and other factors.
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Prepayment

Any amount paid to reduce the principal balance of a loan before the due date. Payment in full when a property is sold. Also where additional or augmented monthly payments to reduce the loan balance prematurely.
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Prepayment Penalty

A fee that may be charged to a borrower who pays off a loan before it is due.
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Prequalification

Usually, a written opinion of the ability of a borrower to qualify for a home loan.
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Prime Rate

The rate charged by banks to their preferred customers. Often used as the index for Home Equity Credit Lines but only rarely for first mortgages.
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Principal

The amount of debt, not including interest, left on a loan; the total amount of a loan before any payments are made.
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Principal Balance

The remaining balance on a mortgage. The principal balance does not include interest or any other charges.
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Private Mortgage Insurance (PMI)

See Mortgage Insurance (MI)
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Purchase Agreement

A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
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Purchase Money Mortgage

A mortgage used for the acquisition of a property.
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PUD

See Planned Unit Development (PUD)
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Qualifying Ratios

A measure of credit worthiness. Ratios of debt to income which are used to determine whether a borrower can qualify for a mortgage. Less important than formerly, qualification ratios are being replaced by FICO scores.
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Quitclaim Deed

A deed that transfers all interest or title, if any, that a grantor may have at the time the conveyance is made. No warranty is made.
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Rate Lock

A commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time at a specific cost. Extended lock in periods usually incur an additional fee.
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Real Estate Agent

A person licensed to negotiate and transact the sale of real estate.
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Real Estate Settlement Procedures Act (RESPA)

A law and corresponding consumer protection regulations which, among other requirements, specifies that lenders must state an Annual Percentage Rate for each loan.
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Real Property

Land and all that attached with it, such as buildings, trees, minerals, easements, rights of way, all items of a permanent nature.
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Realtor

A real estate agent who is an active member of a board of realtors that is affiliated with the National Association of Realtors
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Recording

A registration of the details of a properly executed legal document, such as a deed, mortgage, satisfaction of mortgage, etc., thus making it a part of the public record.
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Refinance

The process of paying off one loan with the proceeds from a new loan using the same property as security, usually, for the purpose of obtaining a lower interest rate, converting accumulated equity into cash, or both.
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Remaining Balance

The amount of principal that has not yet been repaid. See Principal Balance
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Remaining Term

The original amortization term less the number of payments that have been applied. The number of payments yet to be made.
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Replacement Reserve

Money accumulated in an escrow account to replace common property (roofing, heating unit, etc.)in a condominium, or cooperative.
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Reverse Mortgage

See Home Equity Conversion Mortgage
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Revolving Debt

A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
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Right Of First Refusal

A provision in an agreement that requires the owner of a property to offer the first opportunity to purchase a property before it is offered for sale to others.
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Right Of Way

An easement providing access to an adjoining property. See Easement
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Rollover

In current usage, the conversion of a construction loan to the permanent financing when construction is complete.
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Satisfaction (Of A Mortgage)

An instrument provided by the lender as evidence that the loan has been paid off and the lien is satisfied. Usually, it is up to the borrower to record the document.to remove the lien from the public record.
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Second Mortgage

A mortgage with lower rights than a first mortgage on the same property. In the event of a foreclosure, the first mortgage must be satisfied before any payment can go to the second.
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Secondary Market

An infrastructure where the vast majority of mortgages are sold. Crudely, individual mortgages grouped together into large pools called Mortgage Backed Securities. Shares in MBSs are sold to investors, providing funds for more mortgages.
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Servicing, Servicer

See Loan Servicing
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Settlement Statement

A statement which shows the seller's net proceeds and the buyer's net payment at closing. A standard form itemizing all of the monies paid at closing, including real estate commissions, loan fees, points, and initial escrow amounts. See HUD-1 Settlement Statement
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Subordinate Loan

Any mortgage or lien that has a priority lower than the first mortgage.
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Survey

A drawing or map showing the boundaries of a property, easements, rights of way, encroachments, and other limits. The process of creating or verifying a survey map, usually required by a lender prior to making a loan.
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Sweat Equity

An owners labor or services in the construction or rehabilitation of a property, instead of, or in addition to, cash.
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TARP

Acronym for the Troubled Asset Relief Program, a voluntary Capital Purchase Program to encourage US financial institutions to build capital to increase the flow of financing to US businesses and consumers and to support the U.S. economy. See this Treasury announcement or this Wikipedia article for more.
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Tax Deed

A deed to a property purchased at a public sale. See also Tax Sale
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Tax Lien

A claim against a property for due and unpaid taxes.
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Tax Sale

The sale of a property, usually under a court order, to satisfy a tax lien.
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Tenancy By Entirety

In some states, a type of joint ownership of property where a husband and wife are considered as one person, essentially providing an automatic right of survivorship.
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Tenancy In Common

Joint ownership by two or more persons. Each person has equal rights to the property but without any right of survivorship. Ownership does not pass to the others in the event of death.
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Tenancy In Partnership

A form of ownership where the title is in the name of the partnership, rather than in the names of the individual partners.
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Title

Detailed documentation evidencing ownership or other right to a property. In real estate, the deed.
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Title Insurance

An insurance against a loss (up to a specified amount) resulting from any dispute over ownership or other title defect.
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Title Search

An examination of the public title records to ensure that the seller is the owner of the property and that there are no liens or other claims outstanding.
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Townhouse

A form of ownership in real property similar to a condominium or cooperative. Generally, a series of residential units which share common walls with the adjacent units, but stand on individual lots. Owners have title to the unit and lot that they occupy. The common areas and the building exteriors are owned jointly.
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Transfer Tax, Transfer Fee

Fees and taxes imposed by state and local governments when title passes from one owner to another.
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Treasury indexes

A series of indexes which are used the basis for determining interest rate changes for many Adjustable Rate Mortgages.
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Truth-In-Lending

A federal law and supporting regulations which require lenders to fully disclose, in writing, the terms and conditions of a loan, mortgage, or other credit. Lenders are required to specify the rate, term, fees, and other characteristics, including an Annual Percentage Rate (APR).
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Two Step Mortgage (Balloon Reset)

A form of Adjustable Rate Mortgage with a one-time rate adjustment at the end of either five of seven years. The rate then remains constant for the remaining term.
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Underwriting

The process of verifying the documentation and analyzing the risk associated with granting a mortgage.
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VA mortgage

A residential mortgage made to an eligible military veteran. The loan is guaranteed by the Department of Veterans Affairs to protect the lender against loss in the event of default.
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Warranty Deed

A deed in which the seller guarantees that title is free and clear of encumbrances other than any stated in it the contract or deed. See Quitclaim Deed
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Zoning

Specification, by a municipal or city authority, of areas for particular purposes; the type of use (residential, commercial, etc.) allowed for a property located within a specified area.
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