Acceleration
Clause
Allows the lender to speed up the rate at which your loan comes due or even to
demand immediate payment of the entire outstanding balance of the loan should
you default on your loan or violate the Due on Sale Clause.
Adjustable
Rate Mortgage (ARM)
A
mortgage in which the interest rate is adjusted periodically according to the
movement in a pre-selected index. Technically, ARM’s do not include mortgages
where the payments change for other reasons, such as buydowns, although the term
is often used in this broader sense. Adjustable rate mortgages are also
sometimes known as the renegotiable rate mortgage, the variable rate mortgage,
or the Canadian rollover mortgage.
Amortization
The
repayment of a mortgage loan over a fixed period of time by installments of
regular payments to cover the principal and interest.
Annual
Percentage Rate (APR)
A
figure which reflects the cost of a mortgage as a yearly rate. This rate is
likely to be higher than the interest rate stated on the note or the advertised
rate on the mortgage, because it takes into account other costs (such as
borrower paid origination fees, mortgage insurance, interim interest and other
credit costs.) The APR is intended to help homebuyers compare different types of
mortgages based on the annual cost for each loan.
Appraisal
an
estimate of the value of property, made by a qualified professional appraiser.
The appraisal is an important factor in determining the interest rate, and
whether Mortgage Insurance will be required on the loan.
Appreciation
An
increase in the value of a house due to changes in the market conditions or
other causes.
Assessment
A
local tax levied against a property for a specific purpose, such as a sewer or a
street light.
Assessed
Value
the
valuation placed upon a property by a public tax assessor for the purpose of
taxation.
Assumption
The
agreement between buyer and seller where the buyer takes over the payments on an
existing mortgage from the seller. Assuming the loan can usually save the buyer
money since this is an existing mortgage debt, unlike a new mortgage where
closing costs and a new, possibly higher, market rate interest charge will
apply.
Balloon
Loan
A
type of mortgage loan that is like a traditional fixed rate mortgage, except
that it becomes 100% due after a specified amount of time has elapsed. When the
loan matures, you must pay off the loan in cash (Balloon Payment) or through a
refinance. The advantage of this type of loan is that the initial rate is
usually lower than a normal fixed rate loan. The disadvantage of this type of
loan is that you may have to refinance or pay off the loan if you do not sell
the home by the time the loan matures.
Bi-Weekly
Mortgage
A
mortgage payment plan, which allows the borrower to make ½ the monthly payment
every two weeks, effectively reducing the total interest, paid over the term of
the loan.
There's
nothing to lose-you can return to monthly payments anytime, without penalty.
If you try the Bi-Weekly Mortgage Plan and decide it's not for you, no problem.
Just notify us, and we'll cancel your enrollment with no penalties. (Please
allow 30 days for automatic payments to be discontinued.)
Blanket
Mortgage
A
mortgage covering at least two pieces of real estate as security for the same
mortgage.
Borrower
(Mortgagor)
A
person who applies for and receives a loan in the form of a mortgage with the
intention of repaying the loan in full.
Bridge
Loan
A
form of second mortgage that is collateralized by a borrower’s present home
(which is usually for sale) in a manner that allows the proceeds to be used for
closing on a new house before the present home is sold.
Broker
A
licensed individual in the business of assisting in the arrangement of 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.
Buydown
(Temporary Buydown)
A
payment to the lender from the seller, buyer, or a third party, causing the
lender to reduce the interest rate during the initial one, two, or three years
of the loan.
Caps
(Interest)
Consumer
safeguards which limit the amount the interest rate may change per year and/or
during the life of the loan on an adjustable rate mortgage.
Caps
(Payment)
Consumer
safeguards, which limit the amount monthly payments, may change on an adjustable
rate mortgage.
Cash
Flow
The
amount of cash derived over a certain period of time from an income-producing
property. The cash flow should be large enough to pay the expenses of the income
producing property (mortgage payment, maintenance, utilities, etc.).
Cash
Out
A
refinance transaction in which the amount of money received from the new loan
exceeds the total of the money needed to repay the existing first mortgage,
closing costs, points, and the amount required to satisfy any outstanding
subordinate mortgage liens. In other words, a refinance transaction in which the
borrower receives additional cash that can be used for any purpose.
Certificate
of Eligibility (DD Form 214)
A
document issued by the federal government certifying a veteran’s eligibility
for a Veterans Administration (VA) mortgage guarantee.
Certificate
of Reasonable Value (CRV)
an
Appraisal issued by the Veterans Administration showing the property’s current
market value.
Certificate
of Veteran Status
the
document given to veterans or reservists who have served 90 days of continuous
active duty (including training time). It may be obtained by sending DD214 to
the local VA office with form 26-8261a (request for certificate of veteran
status). This document enables veterans to obtain lower down payments on certain
FHA insured loans.
Clear
Title
A
title that is free of liens or legal questions as to the ownership of the
property.
Closing
the
conclusion of the loan transaction, which includes delivery of a deed, financial
adjustments, the signing of the notes and the disbursement of funds necessary to
finalize the sale or loan transaction.
Closing
Agent (Escrow/Title Company)
An
impartial third party who oversees the closing of the loan transaction.
Closing
Costs
Money
paid by the borrower or the seller for various services provided with the
closing of a mortgage loan. This generally involves an origination fee, discount
points, appraisal, credit report, title insurance, settlement agent fee and
recording costs. Closing costs will vary according to the loan type.
Closing
Documents
the
documents that are signed at closing. These include the Deed of Trust or
Mortgage, with attachments, Promissory Note, Truth-In-Lending Disclosure, and
other documents related to the transaction as required by the lender.
Closing
Statement
The
final statement of closing costs incurred to close on a loan or to purchase a
home. This is also referred to as the HUD1.
COFI
An
adjustable rate mortgage that adjusts based on a cost of funds index, often the
11th District Cost of Funds.
Community
Property
A
form of ownership under which property acquired during a marriage is presumed to
be owned jointly, unless acquired as separate property of either spouse.
Comparables
(Comps)
An
abbreviation for comparable properties used for comparative purposes in the
appraisal process; properties of reasonably the same size and location with
similar amenities; properties which have been recently sold, which have
characteristics similar to the property under consideration, thereby indicating
the approximate fair market value of the subject property.
Conforming
Loan Limit
The
maximum loan size on which a FNMA or FHLMC loan will be granted. The current
single family home loan maximum within the contiguous 48 states is $322,700.
Construction
Loan
A
short term interim loan for financing the cost of construction. The lender
advances funds to the builder at periodic intervals as the work progresses.
Conventional
Mortgage
A
mortgage loan not insured or guaranteed by a federally insured program (such as
FHA, VA or Farmers Home Administration).
Contingency
A
condition that must be met before a contract is legally binding. For example,
home purchasers often include a contingency that specifies that the contract is
not binding until the purchaser obtains a satisfactory home inspection report
from a qualified home inspector.
Convertible
ARM
A
type of adjustable rate mortgage that allows the borrower to change from an ARM
to a fixed rate loan. The conversion feature usually involves paying a one-time
fee and may be limited to a certain time frame.
Cosigner
Someone
who is willing to sign a mortgage loan obligation with you in case you default
on your monthly payments. Normally, the cosigner is required to go through the
same application and approval process as the original signer of the loan.
Credit
Report
A
report of an individual’s credit history as it appears in the credit bureaus,
used by a lender in determining a loan applicant’s creditworthiness. Check
your credit score
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Debt
Ratio
One
of several financial calculations performed by your lender to determine if you
can afford a particular monthly payment. The debt ratio is the sum of all your
monthly debt payments including your total monthly mortgage payment divided by
your total monthly income. Typically acceptable debt ratios for Conventional
Loans are 36-38%. FHA Loans are 41-43%, and VA loans are 41%.
Deed
of Trust
In
many states, this document is used in place of a mortgage to secure the payment
of a note.
Default
Failure
to make mortgage payments on a timely basis or to comply with other conditions
of a mortgage.
Deferred
Interest
Occurs
when your monthly payments are not large enough to pay all the interest due on
the loan. This unpaid interest is added to the unpaid balance of the loan. The
danger of a loan with the ability to incur deferred interest is that the
homebuyer may end up owing more than the original amount of the loan.
Deficiency
Judgment
A
court order to pay the balance owed on a loan if the proceeds from the sale of
the security are insufficient to pay off the loan. Deficiency judgments are not
allowed in all states.
Delinquency
Failure
to make payments on time. This can lead to foreclosure.
Department
of Veterans Affairs (VA)
An
independent agency of the federal government which guarantees long-term low or
no down payment mortgages to eligible veterans.
Depreciation
A
decline in the value of property. The opposite of "appreciation".
Discount
Points
A
charge calculated as a percentage of the loan, to compensate the lender for the
difference between the interest rate of the loan and the current market interest
rate.
Discount
Rate
Many
lenders may offer a lower "teaser" rate on an adjustable rate mortgage
for the first adjustment period. After this period is over, the lender will
adjust the loan to the normal lender’s margin rate.
Down
Payment
The part of the purchase price of a property that the buyer pays in cash and
does not finance with a mortgage.
Due
on Sale Clause
A
provision in a mortgage or deed of trust that allows the lender to demand
immediate payment of the balance of the mortgage if the mortgage holder sells
the home.
Earnest
Money
A
deposit made by the potential homebuyer to show that he or she is serious about
buying the house.
Encumbrance
anything
that affects or limits the fee simple title to a property, such as mortgages,
leases, easements, or restrictions.
Entitlement
the
VA guaranteed home loan benefit is called entitlement. This is also known as
eligibility.
Equal
Credit Opportunity Act (ECOA)
A
federal law that requires lenders and other creditors to make credit available
without discrimination based on race, color, religion, national origin, age,
sex, marital status, or receipt of income from public assistance programs.
Equity
the difference between the fair market value of a property and the current
indebtedness on the property also referred to as owner’s interest.
Escrow
Refers
to a neutral third party that carries out the instructions of both the buyer and
seller to handle all the paperwork of settlement or "closing".
Escrow
Account
an
account held by the lender into which the homebuyer pays money on a monthly
basis for tax or insurance payments, rather than paying them in lump sums
themselves. The term "escrow account" is also used in referring to the
account, in which the buyer’s earnest money deposit is held pending loan
closing.
Fannie
Mae (FNMA) (Federal National Mortgage Association)
A
congressionally chartered shareholder-owned company that is the nation’s
largest supplier of home mortgage funds. It was created to provide support to
the secondary market for conventional, FHA and VA loans.
Farmers
Home Administration (FmHA)
Provides
financing to farmers and other qualified borrowers who are unable to obtain
loans elsewhere.
Federal
Housing Administration (FHA)
An
agency of the U.S. Department of Housing and Urban Development (HUD). Its main
activity is the insuring of residential mortgage loans made by private lenders.
The FHA sets standards for construction and underwriting, but does not lend
money or plan or construct housing.
FHA
Mortgage Insurance
A
required fee (up to 2.25% of the loan amount) paid at closing to insure a FHA
loan. FHA mortgage insurance also requires an annual fee of up to .5% of the
current loan amount, paid in monthly installments.
FICO
- Fair Isaac Credit Reporting
A credit score based on payment history, amount of outstanding debt, length
of credit history from the 3 credit bureaus Experian, Trans Union, and Equifax .
First
Mortgage
A
mortgage that is the primary lien against a property.
Fixed
Rate Mortgage
A
type of mortgage loan, usually with a 30 or 15-year loan term, where the
interest rate remains constant throughout the life of the loan. The advantage of
a fixed rate loan is the security for the borrower that the rate will not
increase. The disadvantage of a fixed rate loan occurs when interest rates
substantially decline below the interest rate of the loan.
Foreclosure
A
legal procedure in which property securing debt is sold by the lender to pay a
defaulting borrower’s debt.
Freddie
Mac (FHLMC) (Federal Home Loan Mortgage Corporation)
A
private corporation authorized by Congress, which became an independent,
stockholder-owned government corporation with the passage of FIRREA. Freddie Mac
promotes the flow of funds into housing markets by purchasing conventional
mortgages in the secondary market and selling securities backed by those
mortgages in the capital market.
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Gift
Letter
A
written explanation signed by an individual giving a gift, stating that the gift
is a bona fide gift and there is no obligation expressed or implied to repay the
sum at any time.
Ginnie
Mae (GNMA) (Government National Mortgage Association)
A source of funds for residential mortgages insured or guaranteed by FHA or VA.
Good
Faith Estimate
an
estimate of the charges which a borrower is likely to incur in connection with
the settlement of a mortgage loan.
Government
Loans
a
FHA or VA loan. These loans are partially backed by the government and can help
veterans and low to moderate-income families afford homes. These loans are often
easier to qualify for, have lower down-payment requirements than most
conventional loans, and can be assumed by someone else if the home is sold.
Graduated
Payment Mortgage (GPM)
A
mortgage where the monthly payments start low but increase by a fixed amount
each year for the first five years. The payment shortfall is added to the
principal balance due on the loan. The advantage of this type of loan is a lower
monthly payment at the beginning of the loan term. The disadvantages are
typically a slightly higher rate than traditional fixed rate mortgage loans and
usually a larger required down payment. In addition, the deferred interest
increases the balance due on the total loan, which can be a problem if the value
of the home declines. GPM’s can be used with either a fixed or adjustable
rate, and usually have a 30 year term.
Gross
Monthly Income
The
total amount the borrower earns per month, before any expenses are deducted.
Growing
Equity Mortgage
A
mortgage where the monthly payments start low but increase by a fixed amount
each year for the entire life of the loan, as compared to five years with a
Graduated Payment Mortgage. The advantage of this type of loan is that the loan
can usually be paid off in a shorter duration than a traditional fixed rate
loan. The disadvantage of this loan is that the payment continues to go up,
regardless of the income of the borrower.
Guarantee
A
promise by one party to pay a debt or perform an obligation contracted by
another if the original party fails to pay or perform according to a contract.
Hazard
Insurance
Insurance to protect the homeowner and the lender against physical damage to a
property from fire, wind, vandalism, or other hazards.
Home
Equity Line
A
line of credit, which is secured by a residential property. The borrower has
access to the line of credit for a determined number of years. The loan is
similar to a second mortgage, except the borrower has access to the funds of the
line over and over again as needed for the duration of the loan.
Housing
Ratio
one
of several financial calculations performed by a lender when you apply for a
conventional loan, to determine if you can afford a particular monthly payment.
The housing ratio is the total monthly payment, including taxes and insurance,
divided by your total monthly income. Typically acceptable housing ratios for
conventional loans are 28-33%, and for FHA loans are 29-31%.
HUD
(Housing and Urban Development)
A
Cabinet department responsible for the implementation and administration of
government housing and urban development programs. The broad range of programs
includes community planning and development, low-rent public housing, mortgage
insurance for residential mortgages (FHA), equal opportunity in housing, and
research and technology.
Impound
The
portion of a borrower’s monthly payments held by the lender or servicer to pay
for taxes, hazard insurance, mortgage insurance, lease payments, and other items
as they become due. Also known as reserves.
Index
A
nationally published interest rate against which lenders measure the difference
between the current rate on an adjustable rate mortgage and that earned by other
investments (such as one, three and five year US Treasury security yields, the
monthly average interest rate on loans closed by savings and loan institutions,
and the monthly average cost of funds incurred by savings and loans), which is
then used to adjust the interest rate on an adjustable rate mortgage – up or
down.
Indexed
Rate
The
sum of the published index plus the margin. For example, if the index were 5%
and the margin 2.75%, the indexed rate would be 7.75%. Often lenders charge less
than the indexed rate for the initial period of an adjustable rate mortgage.
Initial
Borrower Interest Rate
The
rate on which the borrower’s first payment is calculated. If the loan is
discounted or bought down, it may be lower than the Fully Indexed Rate.
Investor
A
money source for a lender.
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Jumbo
Loan
A
loan, which is larger than the limits set by FNMA and FHLMC for conforming
loans. As of 12/15/2002, this would include any loan in excess of $322,700 for a
single family home in the 48 contiguous states. Because jumbo loans cannot be
funded by these two agencies, they usually carry a higher interest rate.
Lien
A
claim upon a piece of property for the payment or satisfaction of a debt or
obligation.
Lifetime
Cap
A
provision of an ARM that limits the total increase in interest rates over the
life of the loan.
Liquid
Assets
An asset such as cash, CD, Savings /Money Market accts, CD, brokerage acct,
stocks or bonds. Also any asset easily transferable to cash within hours. Real
Estate is considered a hard asset, not liquid.
Loan
to Value Ratio (LTV)
The
ratio of the amount of your loan to the appraised value of the home. The LTV
will affect programs available to the borrower. Generally, the lower the LTV,
the more favorable the terms of the programs offered by lenders
Lock
A
lender’s guarantee that the mortgage rate quoted will be good for a specific
number of days from the day a loan is locked. A locked loan will not be impacted
by future of impending economic changes to interest rates.
Margin
The
amount a lender adds to the index on an adjustable rate mortgage to establish
the adjusted interest rate
Market
Value
The
highest price that a buyer would pay and the lowest price a seller would accept
on a property. Market value may be different from the price a property could
actually be sold for at a given time.
MIP
(Mortgage Insurance Premium)
The
fee paid to FHA for mortgage insurance on an FHA loan.
Mortgage
A
legal instrument that pledges a property to the lender as security for payment
of a debt.
Mortgage
Banker
A
company that originates, funds, and services mortgages exclusively for resale in
the secondary market.
Mortgage
Broker
A
company or person that matches borrowers with wholesale funding sources of loans.
A mortgage broker is advantageous over banks because they offer a much wider
variety of loan programs.
Mortgage
Insurance
Insurance
which protects the lender against loss which could result from mortgage default.
Mortgage Insurance is generally required when the down payment on a property is
less than 20% of the value of the home. It is also called PMI.
Mortgagee
The
lender.
Mortgagor
The
borrower or homeowner.
Mortgage
Reduction Programs
A
type of accelerated payment program whereby payments are made more frequently,
usually bi-weekly or weekly, rather than the traditional monthly payment. The
more frequent payments reduce the principal more quickly and are an effective
tool for saving on the total interest paid on the loan.
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Negative
Amortization
See
deferred interest.
Net
Effective Income
the
borrower’s gross income minus federal income taxes.
Non
Assumption Clause
A
statement in a mortgage contract forbidding the assumption of the mortgage
without the prior approval of the lender.
Non
Recourse Loan
A Loan which is not personally guaranteed by borrower but rather by the
property's operating income. It is advantageous for investors because it is not
treated as a liability on personal financial statements. The lending guidelines
are conservative as long as the operating income and expenses are in order.
Note
A
written agreement containing a promise of the signer to pay to a named person,
or order, or bearer, a definite sum of money at a specified date or on demand.
Origination
Fee
The
amount charged for services performed by the company (lender) handling the
initial application and processing of the loan. This fee is usually computed as
a percentage of the loan amount.
Owner
Occupied
An
owner occupied property is the owner’s primary residence.
Permanent
Loan
A
long-term mortgage, usually ten years or more. Also called an "end
loan".
PITI
Principal,
Interest, taxes and insurance – the components of a monthly mortgage payment.
Pledged
Asset Mortgage (PAM)
A
mortgage that allows the funds, which would normally be used as all or part of a
down payment to be placed in a pledged savings account. This fund plus its
earned interest can then be used to gradually reduce mortgage payments.
PMI
(Private Mortgage Insurance)
In
the event a borrower does not have a 20% down payment, lenders will allow a
smaller down payment (as little as zero in some cases). With a smaller down
payment, borrowers are usually required to carry private mortgage insurance or
use PMI alternatives. The
premium is graduated, with a higher premium being charged for the lowest down
payments. PMI protects lenders against loss if a borrower defaults on a loan. Calculate
PMI.
Points
Charges
levied by the mortgage lender and usually payable at closing. One point
represents 1% of the mortgage loan amount.
Power
of Attorney
A
legal document authorizing one person to act on behalf of another.
Pre-paids
Those
funds necessary to create an escrow (impound) account or which will be prorated
upon sale. Pre-paids can include taxes, insurance, private mortgage insurance,
special assessments, rent, and interim interest.
Prepayment
A
privilege in a mortgage permitting the borrower to make payments in advance of
their due date.
Prepayment
Penalty
A
fee charged by a lender for paying off a mortgage early.
Pre-Qualification
the
process of determining how much money a prospective homebuyer will be eligible
to borrow before formal application for a loan.
Principal
The
amount remaining unpaid on a loan. It is also the part of the monthly payment
that reduces the outstanding balance of a mortgage.
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Qualifying
Ratios
Guidelines
applied by lenders to determine how large a loan to grant a homebuyer.
Realtor
A
real estate broker or an associate holding active membership in a local real
estate board affiliated with the National Association of Realtors.
Real
Estate Owned (REO)
A
term frequently used by lending institutions as applied to ownership of real
property acquired for investment or as a result of a foreclosure.
Recission
The
cancellation of a contract. With respect to mortgage refinancing, the law that
gives the homeowner three days to cancel a contract, in some cases, once it is
signed, if the transaction uses equity in the home as security.
Reconveyance
of Deed of Trust
The
process by which the Trustee for a Deed of Trust releases the lenders interest
in the property secured upon the payment in full of the Note.
Recourse
Loan
A loan which is personally guaranteed by the borrower's financial
qualifications such as income & debts and treated as a liability.
Recording
Fees
Money
paid for the recording of a home sale or the recording of a mortgage or deed of
trust with the local authorities, thereby making it part of the public record.
Refinance
the
process of paying off one loan with the proceeds from a new loan, using the same
property as security.
Renegotiable
Rate Mortgage (RRM)
A
mortgage in which the interest rate is adjusted periodically. See Adjustable
Rate Mortgage.
Residual
Income
The
amount of money left over after a borrower has paid all of his/her ordinary and
necessary debts, including the mortgage. This calculation is typically used with
VA loans.
RESPA
(Real Estate Settlement Procedures Act)
A
federal law requiring lenders to provide home mortgage borrowers with
information on known or estimated settlement costs. It also establishes
guidelines for escrow balances and the disclosure of settlement costs.
Reverse
Mortgage
A
form of mortgage in which the lender makes periodic payments to the borrower
using the borrower’s equity in the home as collateral and for repayment of the
loan.
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Satisfaction
of Mortgage
The document issued by the mortgagee when the mortgage loan is paid in full.
Seasoned
Loans
Any loan more than one year old.
Unseasoned loans are any loans less than one year old. Many conforming lenders
will not allow unseasoned loans to be paid off with a refinance
Second
Mortgage
A
mortgage made subsequent to another mortgage and subordinate to the first one.
Secondary
Mortgage Market
The
place where primary mortgage lenders sell the mortgages they make to obtain more
funds to originate more new loans. It provides liquidity for the lenders.
Servicing
All
the steps and operations a lender performs to keep a loan in good standing, such
as collection of payments, payment of taxes, insurance, property inspections,
and the like.
Settlement/Settlement
Costs
See
Closing/Closing Costs
Shared
Appreciation Mortgage (SAM)
A
mortgage in which a borrower receives a below market interest rate in return for
which the lender (or another investor such as a family member or other partner)
receives a portion of the future appreciation in the value of the property. This
may also apply to a mortgage where the borrowers share the monthly principal and
interest payments with another party in exchange for part of the appreciation.
Simple
Interest
Interest
which is computed only on the principal balance.
Survey
A
measurement of land, prepared by a registered land surveyor, showing the
location of the land with reference to known points, its dimensions, and the
location and dimensions of any buildings.
Title
A document that gives evidence of an individual’s ownership of property.
Title
Insurance
an insurance policy usually issued by a title insurance company, which insures a
homebuyer against errors in the title search. The cost of the policy is usually
a function of the value of the property, and is often borne by the purchaser
and/or the seller. Policies are also purchased to protect the lender’s
interest. (more
info )
Title
Search
an
examination of the municipal records to determine the legal ownership of
property. A title company usually performs the title search.
Truth
in Lending
A
federal law requiring disclosure of the Annual Percentage Rate (APR) to home
buyers shortly after they apply for a loan. It is intended to facilitate
comparisons between the lending terms of different financial institutions. Also
known as Regulation Z.
Two
Step Mortgage
A
mortgage in which the borrower receives a below market interest rate for a
specified number of years (most often seven or ten years) and then receives a
new interest rate adjusted (within certain limits) to market conditions at that
time. The lender sometimes has the option to call the loan, due within 30 days
notice at the end of seven or ten years.
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Underwriting
the
decision whether to make a loan to a potential homebuyer based on credit,
employment, assets, and other factors and the matching of this risk to an
appropriate rate and term or loan amount.
Usury
Interest
charged in excess of the legal rate established by law.
VA
Loan
A
long term, low or no down payment loan guaranteed by the Department of Veterans
Affairs. A VA loan is restricted to individuals qualified by military service or
other entitlements.
VA
Mortgage Funding Fee
A
premium of up to 2% (depending on the size of the down payment) paid on a VA
backed loan. This fee can be either paid at closing, or financed into the loan.
Variable
Rate Mortgage
See
Adjustable Rate Mortgage.
Verification
of Deposit
A
document signed by the borrower’s financial institution verifying the status
and balance of his/her financial accounts.
Verification
of Employment
A
document signed by the borrower’s employer verifying his/her position and
salary.
Wraparound
Mortgage
A
wraparound mortgage results when an existing assumable loan is combined with a
new loan, resulting in an interest rate somewhere between the old rate and the
current market rate. The payments are made to a second lender or the previous
homeowner, who then forwards the payments to the first lender after taking the
additional amount off the top.
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