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| # |
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11th
District Cost of Funds -
A monthly cost-of-funds index (COFI) reflecting
the weighted-average interest rate paid
by 11th Federal Home Loan Bank District
savings institutions for savings and checking
accounts. The 11th district covers Arizona,
California and Nevada. The index is published
on the last day of the month and reflects
the cost of funds for the prior month.
|
|
|
| A |
|
Acceleration
clause -
The clause in a mortgage or trust deed
that stipulates the entire debt is due
immediately if the mortgagee defaults
under the terms of the contract. |
|
Acquisition
cost -
Under an FHA loan, the purchase price
or appraised value of the property plus
the estimated closing costs. |
|
Adjustable
Rate Mortgage (ARM) -
A mortgage in which the interest rate
is adjusted periodically based on an index.
Also called a variable rate mortgage.
|
|
Adjustment_date
-
The date the interest rate changes on
an ARM (adjustable rate mortgage). |
|
Adjustment
Interval -
For an adjustable rate mortgage, the time
between changes in the interest rate charged.
The most common adjustment intervals are
one, three or five years. |
|
Adjusted
book basis -
The purchase price of a property plus
any capital improvements less accrued
depreciation, if any, to the date of the
sale. |
|
Amortization
-
Literally to "kill off" (root:
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. |
|
Annual
Percentage Rate (APR) -
A figure that states the total yearly
cost of a mortgage as expressed by the
actual rate of interest paid. The APR
includes the base interest rate, points,
and any other add-on loan fees and costs.
As a result the APR is invariably higher
for the rate of interest that the lender
quotes for the mortgage but gives a more
accurate picture of the likely cost of
the loan. Keep in mind, however, that
most mortgages are not held for their
full 15 or 30 year terms, so the effective
annual percentage rate is higher than
the quoted APR because the points and
loan fees are spread out over fewer years.
|
|
Annuity
-
A series of income payments of receipts
over a period of years. |
|
Application
-
A mortgage application requires
borrowers to submit information regarding
their income, savings, assets, debts,
and more. |
|
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. |
|
Assessment
-
Determining a property's value for the
purpose of taxation. |
|
Assumable
Loan -
These loans may be passed on from a seller
of a home to the buyer. The buyer "assumes"
all outstanding payments. |
|
Assumption
-
Buying property and assuming the responsibility
of the exiting mortgage. |
|
Appreciation
-
Increases in property value due to fluctuations
in the market, inflation, et al. |
|
Asset
-
Valuable items, encumbered or not, owned
by a person, corporation, or entity. |
|
Assumable
Mortgage -
A mortgage that provides for a buyer to
"assume" all outstanding payments
when a home is sold. The buyer usually
must meet qualification standards to assume
a loan. |
|
|
| B |
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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 their property within
a definite period of time. |
|
Balloon
Payment -
The final lump sum that is paid at the
end of the balloon mortgage. |
|
Bankruptcy
-
A tactic that individuals use to relieve
themselves of debts and/or liabilities
when they are no longer able to repay.
The most common form of individual bankruptcy
is a Chapter 7, when an individual frees
himself from most of his/her debts. Borrowers
who have undergone bankruptcy usually
cannot qualify for "A" paper
loans until after two years after declaration
and a re-establishment of credit. |
|
Best
Faith Estimate -
An estimate of the total costs for securing
a real estate loan, that is given to borrowers
prior to closing. |
|
Bill
of Sale -
A written document that transfers a title
to personal property. |
|
Biweekly
Mortgage -
Mortgage loan payments that requires a
payment twice monthly, yielding thirteen
payments per year instead of twelve. This
significantly reduces the time a principal
is paid off. |
|
Blanket
Mortgage -
A mortgage secured by the pledging of
more than one property or collateral.
|
|
Book
Value -
Acquisition costs less any accrued depreciation.
|
|
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. |
|
Bridge
Loan -
An equity loan secured to solve short-term
financing problem. |
|
Budget
Mortgage -
A mortgage that includes a portion for
taxes and insurance as well as principal
and interest. |
|
Buydown
-
Allows loans to be made at less-than-market
interest rates by paying front-end discounts.
The interest rate is brought down for
a temporary period, usually from one to
three years. In oder to acquire this discount,
a lump sum is paid and held in an account
used to supplement the borrower's monthly
payment. After the discount period, the
payment is calculated as the note rate.
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| C |
|
Callable
Debt -
A debt security in where the issuer has
the right to redeem the security at a
specified price on or after a specified
date, but prior to its stated final maturity
date. |
|
Caps
-
A set percentage amount by which an adjustable
rate mortgage may adjust each adjustment
period. For adjustable loans, caps are
usually quoted as two numbers as in 2/6.
The first number indicates how much a
loan may adjust at each adjustment period
while the second number indicates how
much a loan may adjust over its lifetime.
Loans like the 3/1 and 5/1 adjustable
which have an initial fixed period are
quoted with 3 numbers as in 3/2/6 which
would mean that the first adjustment
may be as much as 3%, subsequent adjustments
are capped at 2% each, and the lifetime
cap is 6%.
Two-Step loans are quoted with a single
cap, which is the amount by which the
loan may adjust at its single
adjustment date. |
|
Carryback
Loan -
A loan in which a seller agrees to finance
a buyer in order to complete a property
sale. |
|
Certificate
of Eligibility -
A veteran's evidence of entitlement for
a VA-guaranteed loan. |
|
Certificate
of Reasonable Value (CRV) -
An appraisal that has been performed on
a property that is being paid for a VA
loan. After the property has been appraised,
the Veterans Administration issues a CRV.
|
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Clear
Title -
A title that is free of liens or any legal
question as to the ownership of the property.
|
|
Closing
-
Final arrangements to transfer title of
property as well as allocate charges and
credits. |
|
Closing
Costs -
Closing costs are fees paid by the borrower
when a property is purchased or refinanced.
Costs incurred include a loan origination
fee, discount points, appraisal fee, title
search, title insurance, survey, taxes,
deed recording fee, and credit report
charges. All closing costs are separated
into "non-recurring," and "pre-paid."
Non-recurring charges are any items that
are paid only once because a loan was
obtained or a property bought, such as
a loan origination fee. Pre-paid charges
are those that recur over time, like insurance
and property taxes. These are summarized
in the Good Faith Estimate. |
|
Cloud
-
An outstanding claim or encumbrance, that,
if valid, would affect or impair the owner's
property title. |
|
Collateral
-
Property, real or personal, pledged as
a security to back up a promise. In a
home loan, the property is considered
collateral that can be revoked if loan
is not repaid according to the terms of
the mortgage or deed of trust. |
|
Commitment
-
A written letter of agreement detailing
the terms and conditions by which the
lender will lend and the borrower will
borrow funds to finance a home. |
|
Conforming
Loan -
A loan for up to and including $359,650
in the continental United States (Alaska
and Hawaii limits are higher). |
|
Construction
Loan -
A short term loan for funding the cost
of construction. The lender advances funds
to the builder as the work progresses.
|
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Conversion
-
The right of a borrower to convert an
adjustable or balloon loan into a fixed
loan. The Conversion Option
column on kw.monstermoving.com balloon
tables indicates the right of a borrower
to convert this balloon loan. The possible
options are as follows... |
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|
| Option |
Description |
|
| Not
Available |
Borrower
May Not Convert This Loan. |
|
| Must
Requalify |
Borrower
May Convert But Must Requalify.
Conversion Fee Applies |
|
| Auto-Qualify |
Borrower
May Convert And Is Automatically
Qualified.
Conversion Fee Applies |
|
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Conventional
Mortgage -
A mortgage loan that is obtained without
any additional guarantees for repayment,
such as FHA insurance, VA guarantees,
or private insurance. This is usually
given at an 80% loan-to-value ratio. |
|
Credit
Loan -
A credit loan is a mortgage that is issued
on only the financial strength of a borrower,
without great regard for collateral. |
|
Credit-Loss
Ratio -
The ratio of credit-related losses to
the dollar amount of MBS outstanding and
total mortgages owned by the corporation.
|
|
Credit
Rating -
Borrowers are rated by lenders according
to the borrower's credit-worthiness or
risk profile. Credit ratings are expressed
as letter grades such as A-, B, or C+.
These ratings are based on various factors
such as a borrower's payment history,
foreclosures, bankruptcies and charge-offs.
There is no exact science to rating a
borrower's credit, and different lenders
may assign different grades to the same
borrower. |
|
Credit-Related
Expenses -
The sum of foreclosed property expenses
plus the provision for losses. |
|
Credit-Related
Losses -
The sum of foreclosed property expenses
plus charge-offs. |
|
Credit
Report -
A report to a prospective lender on the
credit standing of a prospective borrower.
Used to help determine creditworthiness.
Information regarding late payments, defaults,
or bankruptcies will appear here. |
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| D |
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Debt-to-Income
Ratio (DTI) -
The ratio of aggregate monthly debt to
aggregate monthly income. |
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Deed
-
A legal document which affects the transfer
of ownership of real estate from the seller
to the buyer. |
|
Deed
of Trust -
Synonymous to a mortgage. A deed of trust
or mortgage is obtained, depending on
the state in which the borrower will reside.
|
|
Default
-
The failure to make payments on a loan.
|
|
Delinquency
-
Late- or non-payments of principal, interest,
taxes, or insurance. |
|
Deposit
-
A lump sum given in advance as security.
A deposit is always paid of a larger amount
to be paid in the future. In mortgage
and real estate terms, this is called
the "earnest money deposit."
|
|
Depreciation
-
In real estate and mortgage terms, the
decline in the property value. |
|
Discount
-
Difference between the face amount of
a note or mortgage and the price at which
the instrument is sold in the secondary
market. |
|
Discount
Points -
A term used in government subsidized loans,
such as FHA and VA loans. Refers to any
"points" (one percent of the
loan amount) paid in addition to the one
percent loan origination fee. |
|
Down
Payment -
Money paid by a buyer from his own funds,
as opposed to that portion of the purchase
price which is financed. |
|
|
| E |
|
Earnest
Money Deposit -
A deposit made by a potential home buyer
to show that they are serious about purchasing
the property. |
|
Esement
-
Giving other persons, other than the owner,
access to a property. |
|
Eminent
Domain -
The government right to take private property
for public use depended on the payment
of its fair market value. |
|
Encumbrance
-
Any lien against a property or any restriction
it its use, such as an easement; a right
or interest in a property held by one
who is not the legal owner. |
|
Equal
Credit Opportunity Act (ECOA) -
The act declaring the elimination of discrimination
on the basis of age, sex, and race in
finance. |
|
Equity
-
The difference between the current market
value of a property and the principal
balance of all outstanding loans. |
|
Escalator
Clause -
A clause in a loan providing for increases
in payments or interest based on pre-determined
schedules or on a specific economic index,
such as the consumer price index. |
|
Escrow
-
A third party agent that receives, holds,
and/or disburses certain funds or documents
upon the performance of certain conditions.
For example, an earnest money deposit
is put into escrow until the transaction
is closed. Only then can the seller receive
the deposit. |
|
Escrow
Account (impound account) -
An account that a borrower can hold with
a lender once a purchase transaction is
closed. This requires borrowers to pay
more than the principal and interest each
month. The overage is put into escrow,
which the lender uses to pay items like
property taxes and homeowner's insurance
when they are due. This eliminates the
actual number of payments that a homeowner
has to worry about, but not the amount
that has to actually be paid. |
|
Escrow
Analysis -
An analysis performed by a lender each
year to escrow accountholders to ensure
that the correct amount of money is being
collected to cover anticipated payments.
|
|
Escrow
Fee -
These costs cover the preparation and
transmission of all home purchased-related
documents and funds. Escrow fees range
from several hundred to over a thousand
dollars, based on the purchase price of
your home. Not all states require funds
to be put into escrow accounts for closing.
|
|
Estate
-
The ownership interest an individual holds
in real property. This is also the sum
total of all the real property and personal
property owned by an individual at time
of death. |
|
Eviction
-
The legal removal of real property occupants
for unlawful actions carried out by those
occupants. |
|
|
| F |
|
Fair
Credit Reporting Act -
A law that protects consumer that regulates
the reporting of consumer credit by agencies
and establishes procedures for correcting
errors on an individual record. |
|
Fannie
Mae (FNMA) -
The Federal National Mortgage Association
is a congressionally chartered, shareholder-owned
company. This organization is the nation's
largest supplier of home mortgage funds.
|
|
Fannie
Mae's Community Home Buyer's Program -
A program that offers flexible underwriting
guidelines to subsidize a low- to moderate-income
family's purchase of a home. The program
usually decreases the total amount of
cash needed to purchase a home. |
|
Federal
Housing Administration (FHA) -
An agency under the U.S. Department of
Housing and Urban Development (HUD), it
insures loans made by approved lenders
to qualified borrowers, in accordance
with its regulations. |
|
Fees
-
Up-front costs associated with a loan.
Clicking on the word VIEW shown under
the "Fees Detail" column on
the quotes results page will display detailed
information about the financial institution's
fees and requirements pertaining to that
rate. |
|
Fee
Simple -
The best title that one can obtain; unqualified
and conveys the highest bundle of rights.
|
|
FHA
Loan -
A government-backed mortgage loan supported
by the US FHA and the Department of Housing
and Urban Development (HUD). |
|
Finance
Charge -
The total dollar amount your loan will
cost you. It includes all interest payments
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 lender's agreement to provide a loan
to a specific borrower on a specific property.
|
|
First
Mortgage -
A mortgage that has priority over other
mortgages. |
|
Fixed-Rate
Mortgage -
A mortgage where the interest rate does
not change for the life of the loan. |
|
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 borrower's responsibility
to lock his or her rate before (or at)
closing, choosing to float is considered
risky and may result in a higher interest
rate. Request information from your lender
regarding lock procedures. |
|
Forbearance
-
The postponement for a limited time of
a portion or all the payments on a loan
when a borrower is delinquent. |
|
Foreclosure
-
A legal procedure in which real estate
is sold by the lender to pay a defaulting
borrower's debt . |
|
401(k)/403(b)
-
An investment plan sponsored by employers
that allows individuals to set aside tax-deferred
income for retirement or emergency purposes.
A 401(k) applies to private corporations,
while a 403(b) applies to non-profit organizations.
|
|
401(k)/403(b)
loan -
A loan that can be taken against the amount
accumulated in the 401(k)/403(b) plans,
if so allowed by the plan administrator.
Loans against these plans are an acceptable
source of down payment for most types
of other loans. |
|
|
| G |
|
Good
Faith Estimate -
An estimate of charges which a borrower
is likely to incur in connection with
a loan closing. |
|
Government
Loan -
A type of mortgage insured by the FHA
(Federal Housing Authority), VA (Veteran's
Administration), or RHS (Rural Housing
Authority). |
|
Government
National Mortgage Association (Ginny Mae)
-
Provides funds for government loans and
takes over special assistance and liquidation
functions of Fannie Mae. |
|
Grace
Period -
A time allowed, usually 15 days, for making
late payments without a penalty. |
|
grantee
-
The person to whom an interest in real
property is conveyed. |
|
grantor
-
The person conveying an interest in real
property. |
|
Gross
Monthly Income -
The total amount the borrower earns per
month, not counting any taxes or expenses.
Often used in calculations to determine
whether a borrower qualifies for a particular
loan. |
|
|
| H |
|
Hard-Money
Mortgage -
Cash loan to a borrower. |
|
Hazard
Insurance -
A form of insurance in which the insurance
company protects the insured from certain
losses, such as fire, vandalism, storms
and certain other natural causes. |
|
Home
Equity Conversion Mortgage (HECM) -
Also known as the reverse annuity mortgage.
This mortgage provides that instead of
making payments to a lender, the lender
makes payments to the individual. Older
homeowners are able to convert home equity
into cash this way, in the form of monthly
payments. Borrowers don't qualify on the
basis of income, but on the value of his
or her home. Such a loan does not have
to be repaid until the borrower no longer
occupies the property. |
|
home
equity line of credit -
A mortgage loan in second position that
allows a borrower to obtain cash drawn
against home equity, up to a certain amount.
|
|
Home
Inspection -
A thorough assessment by a professional
regarding the structural and mechanical
condition of a property. |
|
homeowner's
insurance -
An insurance policy that combines personal
liability insurance and hazard insurance
for a home and its contents. |
|
homeowner's
warranty -
An insurance policy that is purchased
by a buyer that covers certain repairs,
should they be necessary over a certain
period. |
|
Housing
Ratio -
The ratio of the monthly housing payment
to total gross monthly income. Also called
Payment-to-Income Ratio or Front-End Ratio.
|
|
HUD
-
Department of Housing and Urban Development;
regulates Fannie Mae and Ginny Mae. |
|
Hybrid
Financing -
The joining together of two forms of finance,
such as combining a convertible loan with
a participation loan, under which the
lender has the right at loan maturity
to convert the debt to a 50 percent ownership
in the property. |
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Index
-
A published interest rate against which
lenders measure the difference between
the current interest rate on an adjustable
rate mortgage and that earned by other
investments (such as one- three-, and
five-year U.S. Treasury Security yields,
the monthly average interest rate on loans
closed by savings and loan institutions,
and the monthly average Costs-of-Funds
incurred by savings and loans), which
is then used to adjust the interest rate
on an adjustable mortgage up or down.
|
|
Interest
-
Consideration in the form of money paid
for the use of money, usually expressed
as an annual percentage. Also, a right,
share, or title in property. |
|
Interest
Only -
A term loan arrangement calling for
payments of interest only, not to include
any amount for principal. |
|
Interest
Rate -
The percentage of an amount of money that's
paid for its use over a specified time
period. |
|
Interest
Rate Swap -
A transaction between two parties, in
which each agrees to exchange payments
tied to different interest rates or indices
for a specified period of time. |
|
Intermediate-Term
Mortgage -
A mortgage loan with a stated maturity
at the time of purchase that it is equal
to or less than 20 years. |
|
|
| J |
|
Judicial
Foreclosure -
A court procedure used by lenders to secure
clear title to a property under a defaulted
real estate loan. |
|
Jumbo
Loan -
A loan for $359,651 or more in the continental
United States (Alaska and Hawaii limits
are higher). These limits are set by the
Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation.
Because jumbo loans cannot be funded by
these two agencies, they usually carry
a higher interest rate. |
|
|
| L |
|
Last
Updated -
The Last Update column on a quotes results
table tells you when the information was
last provided by the lender to our site.
We always place new listings at the top
of each table so that you, the borrower,
may have immediate access to the most
timely information. Times provided are
all Eastern Standard Time. |
|
lease
-
A written agreement between a property
owner and a tenant that stipulates the
payment and conditions under which the
tenant may possess the real estate for
a specified period of time. |
|
Leasehold
Estate -
An estate for a fixed length of time,
established when a landlord gives up possession
of real estate to a tenant, giving the
tenant an equitable interest in the property,
as defined by lease terms. |
|
Lease
Option -
A rental agreement indicating a tenant's
option to purchase a property. Monthly
payments consists not only of rent, but
an overage that can be applied towards
a down payment on an already established
amount. |
|
Lender
-
The bank, mortgage company, or mortgage
broker offering the loan. Many institutions
only "originate" loans and then
resell the obligation to third parties.
|
|
Leverage
-
Using someone else's money for the purchase
of property. |
|
Liability
Insurance -
Insurance that protects property owners
against claims that alleges negligence
or inappropriate action that resulted
in bodily injury or property damage to
another party. |
|
LIBOR
-
The London Interbank Offered Rate Index
(LIBOR) is an average of the interest
rates that major international banks charge
each other to borrow U.S. dollars in the
London money market. Like the U.S. treasury
the CD indexes, LIBOR tends to move and
adjust quite rapidly to changes in interest
rates. |
|
Lien
-
A legal claim by one party against the
property of another as security for a
debt. Must be paid off when property is
sold. A mortgage or a first trust deed
|
