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Terms A-CAcceleration ClauseIt is a provision in a mortgage that gives the lender the right to demand repayment of the entire principal balance upon the default of the borrower.Back Adjustable Rate MortgageA mortgage, which allows the lender to adjust the mortgage's interest
rate periodically on the basis of changes in a specified index. Interest
rates may move up or down, as market conditions change. The change in
interest rate will result in a change in the periodic payments due under the
mortgage. AgentA person authorized to act for and under the direction of another person
when dealing with third parties. Alternative FinancingMortgage financing, usually provided by an institutional lender, other
than a 30-year Fixed Rate Mortgage. AmortizationReducing the principle and interest on a loan with a payment plan that
allows for equal payments to be made to the creditor at consistent intervals
over the life of the loan (the amortization period). Amortization ScheduleThe time table of the payments to be made on an amortized loan showing
the following information: the date and amount of each payment, the amount
of each payment which will be applied to interest and to principal and the
balance of principal still outstanding on the loan after the payment is
made. Annual Percentage RateA rate designed to allow for the comparison of one type of loan to
another. The APR reflects the cost of your mortgage loan as a yearly rate.
It will often be higher than the interest rate designated on the note
because it includes such items as interest, mortgage insurance, and loan
origination fee (points). ApplicationA printed form used by a mortgage lender to record required information
concerning a prospective mortgage. Application FeeThe fees the lender charges the applicant. May include costs of a
property appraisal and a credit report on the applicant. AppraisalA written analysis made by a qualified person setting forth an estimation
of the value of a property, usually after an inspection of the property. The
appraisal usually determines the amount of money that a lender will loan on
that property. Assessed ValuationThe value assigned to a property by a public tax assessor for purposes of
taxation. This valuation does not necessarily correspond to the market
valuation. AssessmentThe process of placing a value on property for purposes of taxation. This
may take the form of a levy against property for a special purpose, such as
a sewer assessment where the property owner pays a share of the cost
according to the valuation of the property. AssetsAssets refer to the value of the entire property and resources of a
person or corporation. A fund's assets generally include the securities in
its portfolio plus any cash. AssumptionA mortgage obligation that can be taken over by the buyer when a home is
sold. The new owner assumes the mortgage obligations and assumes title to
the property. Assumption FeeThe fee paid to a lender (usually by the purchaser of real property)
which results from the assumption of an existing mortgage. Balloon MortgagesUsually a short-term fixed-rate loan that involves small payments for a
certain period of time with the balance due in a single, large payment at a
time specified in the contract. Balloon PaymentWhen the final installment payment on a note is greater than the
preceding installment payments that extinguishes the debt. Basis PointOne basis point equals 1/100 of 1% in interest. Basis points are used by
Lenders to measure interest rates in yield calculations. BinderA preliminary agreement, which is written in evidence of insurance
coverage for a limited time. It is usually secured by the payment of an
earnest money deposit and is replaced later with a permanent policy. Blanket MortgageA mortgage that covers two or more pieces of real estate for security on
a single loan. BorrowerA person or company (also know as Mortgagor) who receives funds in the
form of a loan in exchange for a written promise to repay principal with
interest. Bridge LoanA loan used to fill a gap in financing. It is usually a temporary
mortgage to help a borrower obtain the necessary cash funds to purchase
another home, prior to the sale of their currently owned home. BuydownThe payment of extra money on a loan now so as to provide a lower
interest rate over either a given period or over the life of the loan. Cash FlowThe amount of cash derived over a given period of time from an income
producing property, such as a rental house, after all expenses of holding
and carrying the property are paid. Theoretically, the cash flow should be
large enough to pay all property expenses including mortgages, taxes, etc. Cash OutThe refinancing of a mortgage in which the money received from the new
loan exceeds the amount due on the old loan. This refinance transaction
results in additional cash for the homeowner that can be used for any
purpose. Cash To CloseLiquid assets that are accessible to be used to pay the closing cost in a
mortgage transaction. ClosingThe culmination of a real estate transaction in which documents are
signed and recorded, funds are exchanged and the property is transferred. Closing CostsExpenses (over and above the price of the property) incurred by buyers
and sellers in connection with the closing of a mortgage loan. This usually
involves an origination fee, discount points, appraisal, credit report,
title insurance, attorney's fees, survey, and prepaid items such as taxes
and insurance escrow payments. Closing StatementA document that details an account of the funds between a buyer and
seller received and paid at the closing. Co-BorrowerAn additional individual who is both obligated on the loan and whose name
appears on all documents with equal legal obligations. CollateralAdditional security for a debt, such as the real estate pledged as
security for a mortgage. The lender has the right, if the debt is not paid,
to slll the collateral to recoup the outstanding principal and interest on
the loan. Commitment Fee (Loan)An up-front fee paid by a potential borrower to a lender for the lender's
promise to lend money at a specified rate and within a give time. CondominiumA development where individuals have title to their own dwelling units in
a multi-family structure with joint ownership of common areas of structure
and the land. Conforming LoanConventional home mortgages, first mortgages up to loan amounts mandated
by Congressional directive, which meets the qualifications for sale or
delivery to either the Federal National Mortgage Association (FNMA) or the
Federal Home Loan Mortgage Corporation (FHLMC). Construction LoanA structured, short-term loan to provide funds necessary to begin
construction on buildings or homes. ContingencyA condition that must occur before a contract is legally binding. For
example: The sale of a house is contingent upon the buyer obtaining
financing. Conventional MortgageA mortgage loan made by an institutional lender without the inclusion of
government guarantees such as VA or FHA loans. Conversation OptionThe right for the borrower for a fee to convert an Adjustable Rate
Mortgage into a Fixed Rate Mortgage within a specific time frame. Convertible ARMThe convertible ARM is a combination of both fixed-rate and adjustable
rate mortgages, allowing the best of both options in one package. Co-OpShort for Cooperative, a structure of two or more units, owned by a
corporation that gives each resident the right to occupy a specific
apartment or unit. It is a mode of land ownership where the occupiers of
individual units in a building own an interest in the Cooperative
Corporation that owns the whole property. Creative FinancingWhen institutional financing of the purchase of a property does not meet
the purchaser's need, another party may provide additional financing.
Creative financing is outside the normal practice of residential financing
because the lender does not have to follow the same stringent rules
governing the institutional lenders. Current IndexThe current value of a recognized index as calculated and published
nationally or regionally. It is used in calculating the new note at each
adjustment period as periodically, the current index changes.
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