A short-term loan which has a fixed rate, and smaller payments, for short-term period followed by one large payment for the balance of the principal. |
The legal process in which a person or firm declares the inability to pay debts. Upon a court declaration of bankruptcy, a person or firm surrenders assets to a court-appointed trustee, and is relieved from the payment of previous debts. |
An individual or company who does not fund loans himself, but facilitates the processing or approval procedures for a customer. A broker generally uses a lender to approve and close loans for customers rather than close and fund the loan himself, or itself. |
Obtaining a lower interest rate (buying down the rate) by paying additional points to the lender. The lower rate may apply to the full duration of the loan or just the first few years. A buydown may be used to qualify a borrower who would not otherwise qualify. This is because a buydown results in lower payments which are easier to qualify for. |
A limit to the rise and fall of the interest rate on an adjustable rate mortgage (ARM). A consumer safeguard. |
A limit to the amount the monthly payment can grow on an adjustable rate mortgage (ARM). A consumer safeguard. |
A document which verifies the eligibility of veterans for a VA guaranteed loan. This certificate is obtained through a local VA office. |
One-time costs that must be paid before the loan can be “closed” or funded. These costs may include such things as property taxes, insurance, broker’s fees, escrow fees, title insurance premium, deed recording fee, title transfer tax, etc. Escrow instructions will stipulate which portion of the fees are to be paid by buyer or seller. An estimate of closing costs, called a Loan Estimate, will be given to you by the lender within a few days after receiving your loan application. All or a portion of your closing costs may be financed with some loan programs. |
Cooperative Housing is an apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock. |
The property pledged to secure a loan. |
A single dwelling unit in a multi-unit structure in which each unit is individually owned. The owner holds legal title to his or her unit and owns the common areas and land jointly with other unit owners. An owner may sell, lease and encumber his unit. |
Home loans made by a lender without government backing provided, on FHA and VA loans. |
A written agreement which defines or restricts the use of a given property. This may include architectural restrictions or maintenance requirements. |
A written document recorded with the state or local government office, which conveys real property. |
Failure to legal obligations in a contract. In mortgage terms this generally means to fail to make the required monthly payments. |
A document that discloses to the customer characteristics of the mortgage. Items typically included are the terms and conditions, costs, and adjustment period. |
Fees paid to a lender to reduce the interest rate. |
Usually between 10 and 20 percent, the down payment often demonstrates the borrower’s commitment to the property and to “make good” on the mortgage. A down payment is the difference between the purchase price of real estate property and the amount that is financed by the mortgage. |
A deposit made by a buyer of real estate, towards the down payment, to evidence good faith. A buyer gives “earnest money” to the seller as part of the purchase price to secure the transaction. This money is typically held by the real estate broker or escrow company. |
In the sale of property, a neutral third party “the escrow agent” is appointed to act as custodian for documents and funds during the transfer from seller to buyer. The funds can include taxes and mortgage insurance. |
A secondary mortgage institution which holds the majority of home mortgages in the United States. FNMA buys conventional mortgages from lenders given they meet conforming guidelines. |
A loan where the rate of interest is fixed over the life of the loan. Payments on a fully amortized fixed rate loan will not change. |
A legal proceeding by which a mortgage lender may claim title to mortgaged property if the borrower fails to repay the loan. |
A private corporation chartered by Congress to make funds from the capital markets available for home financing. It does this by operating a secondary market for home loans, buying such mortgages from lenders and selling securities backed by those mortgages. |
The number of years before your loan is scheduled to be paid off. 15-year and 30-year terms are most common. |
This is the company that will research the property information with the city/state that you live to make sure title is clear. They also help with loan consummation by preparing the documents for closing, assisting with closing, and sending the documents to the appropriate parties after closing. |
A disclosure required by Federal law (The Truth in Lending Act). Discloses the terms of a mortgage, using required terminology, such as the Annual Percentage Rate (APR). |
A government agency providing guarantees, for lenders, on approved loans to qualifying veterans. |
Most loan programs require the mortgage company to verify information on loan applications such as the borrower’s employment, bank account balances, and credit references. Often, these verifications are referred to as VOE’s (verification of employment), VOD’s (verification of deposits) and VOM’s (verification of mortgage). |