 |
 |
Terms P-ZPayment Adjustment PeriodThis is the time frame between payment adjustments made on
Adjustable Rate Mortgages and a usual time frame is one, three,
or five years. Payment CapA cap placed on the borrower's payment rather than his
interest rate. The level to which the monthly payment may rise
is limited to a certain dollar figure. A typical payment cap
used today would be 7.5% of the payment (Roughly equivalent to
one percent in interest). Payment RateThe effective rate of interest the buyer is paying at a
certain time, regardless of the overall interest rate of the
note. Permanent BuydownAn amount of money a lender is paid to permanently reduce a
borrower's interest rate and payments. Permanent LoanA long-term mortgage of ten years or more, often registered
after construction is complete. Often referred to as an "end
loan". P.I.T.I.This stands for principal, interest, taxes and insurance. It
is representative of the borrower's actual monthly
mortgage-related expenses. Most residential mortgage payments
are referred to as P.I.T.I . Pledged Account BuydownThis refers to a principle amount paid plus interest earned
on the principal to reduce a borrower's interest rate and
payment. PointsA one - time fee you pay the bank for originating a loan. A
charge equal to 1% of the loan amount which increases or
equalizes the lender's yield or rate of return. Lenders offer
various rate/point combinations. Prepayment PenaltyA penalty that a lender may impose on a borrower who pays off
a loan before it is due. Prepayment PrivilegeThe right of a borrower to pay off all or part of the
outstanding principal before the maturity date, without
incurring a penalty. PrincipalIt is the amount of the mortgage debt that is presently owed
and remains unpaid. The principal is the part of the monthly
payment that reduces the remaining balance of a mortgage. Private Mortgage InsurancePrivate mortgage insurance is to protect lenders against
foreclosure losses provides mortgage insurance. Similar to the
FHA's mortgage insurance premium, it is provided to lenders
making conventional loans with less than 20% down. It protects
lenders against foreclosure losses. ProrateThe seller and buyer allocate their proportionate share of an
obligation paid or due. For example, real property taxes, fire
insurance or condominium fees may be prorated. Quit Claim DeedA document that releases the deeding or giving up of one's
interest in a property to another party. RealtorA professional real estate broke or associate who is an
active member in a local real estate board that is affiliated
with the National Association of Realtors. Not every broker is a
Realtor. Real Estate Mortgage Investment Conduits (REMICs)Mortgage securities may be pooled to create collateral for a
more complex type of mortgage security known as a Real Estate
Mortgage Investment Conduit. They are a complex type of mortgage
securities that may be pooled to allow cash flows to be split so
that different classes of securities may be created. Real Estate ProfessionalAny real estate broker, sales person, or attorney who holds a
real estate license. RefinanceTo obtain or replace an existing mortgage with a new mortgage
loan on property already owned. New mortgage may have different
terms than the old one. Release of LiabilityA release from financial obligations from a mortgage due to
another individual becoming responsible for the obligation. Both
the VA and FHA allow releases of liability on their mortgages. Renegotiable Rate Mortgage (RRM)Similar to an Adjustable Rate Mortgage, this type of mortgage
allows the interest rates and payments to be adjusted
periodically according to an index. REO (Real Estate Owned)Defined as a term for properties taken back by lenders in
foreclosures. Residual IncomeResidual income is determined by subtracting all known
obligations from the borrower's gross monthly income to see how
much is left to support the family. This amount replaces the
Income Ratio on VA loans. RestrictionA provision in a deed which limits in some way the right to
use land or convey it's title. Examples are building setback
lines and limitations to residential uses. Reverse Annuity Mortgage (RAM)A type of mortgage where the property's equity serves as
security for periodic payments made by the lender to the
borrower. Mortgage is generally paid out upon the sale of the
property. Rollover Mortgage (ROM)A mortgage where the payments are only guaranteed for three,
four, or five years. The borrower is allowed to refinance at the
end of the term at the interest rate then applicable. Second MortgageA mortgage loan that is registered on title after a first
mortgage is already recorded. It is behind the first mortgage in
priority. In the event of default and sale of the property, the
second mortgagee will only be paid if there are funds left after
the payment of the first mortgagee. Secondary Mortgage MarketA market where the primary lenders can sell packaged home
loans to obtain more funds to make additional loans. Shared Appreciation Mortgage (SAM)It is a loan arrangement where two or more parties
participate in the purchase of real estate and share the
appreciation and tax deduction. Similar to shared equity
mortgages. Shopping CenterA group of stores catering to a trade area, which offer a
variety of goods and/or service and on-site parking. Strip CommercialIt refers to a string of stores in a commercial area with no
central leasing, management or theme. Sweat EquityWhen a purchaser contributes to the construction or
rehabilitation of a property in the form of labor or services
rather than cash. Title CompanyA corporation which is in the business of selling policies of
insurance guaranteeing the ownership, quality of title to land
and also to perform escrow functions. Title InsuranceProtection for the lender (lender's policy) against the
consequences of a pre-existing lien or the buyer (owner’s
policy) against encumbrance on a property that is discovered
after change of ownership. Veterans Administration LoansMortgage loans to veterans by banks, savings and loans, or
other lenders that are guaranteed by the Veterans'
Administration, enabling veterans to buy a residence with little
or no money down. Walk-Up ApartmentsThree to five story buildings, without an elevator. They may
be mixed single and multi-family; usually only two or three
different types of units. Warehouse/DistributionTypically warehouse and distribution facilities are often
located in the lowest-priced land in older parts of town or as
well as suburban fringes. Frequently, like light
industrial/assembly property, office use is limited to
management tasks for distribution or warehouse facility, or
about 15 percent of total space. Warehouse FeeCharged as an offset to cover a loss, many mortgage firms
borrow funds on a short-term basis in order to originate loans
that will later be sold in the secondary mortgage market. When
the rate of interest is higher on short-term loans than on long
term mortgage loans, the lender has an economic loss. Wraparound MortgageA secondary financing option in which a new larger mortgage
is created to encompass the first mortgage. This large second
mortgage is used to preserve the low interest rate on the first
mortgage for a potential buyer. YieldA profit obtained on an investment, which includes the
interest rate charged, discount points paid and any other
charges collected. |
