Glossary
of Terms
A
Abstract
(Of Title)
A summary of the public records relating
to the title to a particular piece of land.
An attorney or title insurance company reviews
an abstract of title to determine whether
there are any title defects, which must
be cleared before a buyer can purchase clear,
marketable, and insurable title.
Acceleration
Clause
Allows a lender to declare the entire outstanding
balance of a loan immediately due and payable
should a borrower violate specific loan
provisions or default on the loan.
Accrued
Interest
Interest earned but not yet paid.
Adjustable
Rate Mortgage (ARM)
A variable or flexible rate mortgage with
an interest rate that adjusts periodically
according to the financial index it is based
upon plus a margin. As a result, the interest
rate on your loan and the monthly payment
will rise and fall with increases and decreases
in overall interest rates. To limit
the borrower's risk, the ARM may have a
payment or rate cap.
Adjustment
Date
The date on which the interest rate changes
for an adjustable rate mortgage (ARM).
Adjustment
Period
The period that elapses between the adjustment
dates for an adjustable rate mortgage (ARM).
Agreement
of Sale
Contract signed by buyer and seller stating
the terms and conditions under which a property
will be sold.
Alternative
Documentation
A method of documenting a loan file that
relies on information the borrower is likely
to be able to provide instead of waiting
on verification sent to third parties for
confirmation of statements made in the application.
Amortization
The reduction of a debt by regular, usually
monthly, installments of principal and interest.
An amortization schedule is a table showing
the payment and the amounts applied to interest
and principal.
Annual
Cap
See: Cap
Annual
Percentage Rate (APR)
The cost of credit expressed as a yearly
rate, taking into account interest, points,
and other finance charges. Disclosure of
the APR is required by the federal Truth-in-Lending
Act and allows borrowers to compare the
costs of different mortgage loans.
Application
An initial statement of personal and financial
information required to apply for a loan.
Application
Fee
Fee charged by a lender to cover the initial
costs of processing a loan application.
The fee may include the cost of obtaining
a property appraisal, a credit report, and
a lock- in fee or other closing costs incurred
during the loan process.
Appraisal
An estimate of a property's value as of
a given date, determined by a qualified
professional appraiser. The value may be
based on replacement cost, the sales of
comparable properties or the property's
ability to produce income.
See MortgageIT
Appraisal Policy
Appraisal
Fee
A fee charged by a licensed, certified appraiser
to render an opinion of market value as
of a specific date.
Appraiser
A person qualified by education, training,
and experience to estimate the value of
real property and personal property.
Appreciation
A property's increase in value due to inflation
or economic factors.
ARM
See Adjustable
Rate Mortgage
Assessment
Charges levied against a property for tax
purposes or to pay for municipality or association
improvements such as curbs, sewers, or ground
maintenance.
Assignment
A means of transferring ownership, rights,
or interests in property by one person,
the assignor, to another, the assignee.
See also C.E.M.
Assumable
Mortgage
A mortgage that can be taken over ("assumed")
by the buyer when a home is sold.
Assumption
An agreement between a buyer and a seller
which may require lender approval, where
the buyer takes over the payments for a
mortgage and accepts the liability. Assuming
a loan can be advantageous for a buyer because
there are no closing costs and the loan's
interest rate may be lower than current
market rates. Depending on the terms of
the mortgage or deed of trust, the lender
may raise the interest rate or require the
buyer to qualify for the mortgage.
Assumption
Clause
A provision in an assumable mortgage that
allows a buyer to assume responsibility
for the mortgage from the seller. The loan
does not need to be paid in full by the
original borrower upon sale or transfer
of the property.
Assumption
Fee
The fee paid to a lender (usually by the
purchaser of real property) resulting from
the assumption of an existing mortgage.
Aztec
See Recognition
Agreement
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Balloon
Mortgage
A mortgage that has level monthly payments
which are insufficient to amortize the loan
so that a balloon, or lump sum payment is
due at the end of the term. Frequently,
balloon mortgages contain an opportunity
to refinance when the balloon payment is
due.
Bank
Attorney
The party with fiduciary responsibility
to the lender to ensure the terms of the
loan are carried out. Other responsibilities
include review of Title and Lien searches,
Assignments and other documents required
to close the loan. Not all states require
a Bank Attorney. See Escrow
Agent
Bankruptcy
A proceeding in a federal court in which
a debtor (who owes more than his/her assets
or cash flow) is relieved from the payment
of debts. This can affect the borrower's
personal liability or the mortgage debt
but not the lien of a mortgage.
Basis
Points
Used to describe mortgage yield, one basis
point equals one 100th of 1% or 0.01%. A
mortgage yield increase from 9.50% to 9.75%
is an increase of 25 basis points.
Bearer
The legal owner of a piece of property.
Before-Tax
Income
Income before tax is deducted.
Beneficiary
The person designated to receive the income
from a trust, estate, or a deed of trust.
Bequest
A gift of personal property by will.
Binder
A preliminary agreement secured by the payment
of an earnest money deposit under which
a buyer offers to purchase real estate.
Biweekly
Mortgage
A loan requiring payments of principal and
interest at two-week intervals. Each biweekly
payment is half the amount of a monthly
payment. The borrower makes the equivalent
of 13 monthly payments each year. As a result,
this type of loan amortizes much faster
than monthly payment loans.
Blanket
Mortgage
A mortgage that covers more than one parcel
of real estate.
Bona
Fide
In good faith.
Bond
An interest-bearing certificate of debt
with a maturity date. An obligation of a
government or business corporation. A real
estate bond is a written obligation usually
secured by a mortgage or a deed of trust.
Borrower
(Mortgagor)
An individual who applies for and receives
funds in the form of a loan and is obligated
to repay the loan in full under the terms
of the loan.
Breach
A violation of any legal obligation.
Bridge
Loan
A loan, usually a second mortgage, that
is collateralized by the borrower's present
home (that is usually for sale).
Broker
An individual who brings buyers and sellers
together and assists in negotiating contracts
for a client.
Building
Line or Setback
Distances from the ends and/or sides of
the lot beyond which construction may not
extend. The building line may be established
by a filed plat of subdivision, by restrictive
covenants in deeds or leases, by building
codes, or by zoning ordinances.
Buy-Down
Where the buyer pays additional discount
points in return for a below market interest
rate; or the buyer or seller deposits sufficient
funds with the lender to reduce the rate
during the first one to three years of the
loan; or pays closing costs such as the
origination fee. During times of high interest
rates, buy-downs may induce buyers to purchase
property they may not otherwise have purchased.
Buyer's
Market
Market conditions that favor buyers. With
more sellers than buyers in the market,
sellers may be forced to make substantial
price concessions.
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Call
Option
A provision of a note which allows the lender
to require repayment of the loan in full
before the end of the loan term. The option
may be exercised due to breach of the terms
of the loan or at the discretion of the
lender.
Cap
A limit on how much an adjustable rate mortgage's
monthly payment or annual interest rate
can increase. A cap is meant to protect
the borrower from large increases and may
be a payment cap, an interest cap, a life-of-loan
cap or a periodic cap. A payment cap is
a limit on the monthly payment. An interest
cap is a limit on the amount of the interest
rate. A life-of-loan cap restricts the amount
the interest rate can increase over the
entire term of the loan. A periodic cap
limits the amount the interest rate can
change each interest rate adjustment date.
For example, if your per-period cap is 1%
and your current rate is 7%, then your newly
adjusted rate must fall between 6% and 8%
regardless of actual changes in the index.
Cash
Out
Any cash received when you get a new loan
that is larger than the remaining balance
of your current mortgage, based upon the
equity you have already built up in the
house. The cash out amount is calculated
by subtracting the sum of the old loan and
fees from the new mortgage loan. For example,
if your existing loan is $100,000, you might
refinance it with a loan of $120,000. After
you pay off your current loan ($100,000)
and any loan-origination costs for the new
loan (for example $2,000 in points), you
would be left with $18,000 cash out. Cash-out
loans may not be available for all types
of property.
Cashier's
Check (or Bank Check)
A check whose payment is guaranteed because
it was paid for in advance and is drawn
on the bank's account instead of the customer's.
Ceiling
The maximum allowable interest rate of an
adjustable rate mortgage.
C.E.M.
Or Consolidation, Extension, and Modification
of existing note(s) into one document: the
CEM Agreement. In New York refinanced and
purchase money mortgages are often documented
in this manner to reduce the recording tax.
Allowed only on properties located in New
York State. (See Assignment)
Certificate
of Eligibility
Document issued by the Veterans Administration
to qualified veterans which verifies a veteran's
eligibility for a VA guaranteed loan. Obtainable
through local VA office by submitting form
DD-214 (Separation Paper) and VA form 1880
(request for Certificate of Eligibility).
Certificate
of Occupancy (CO)
Written authorization given by a local municipality
that allows a newly completed or substantially
completed structure to be inhabited; not
to be confused with "Notice of Completion."
Certificate
of Reasonable Value (CRV)
A Veteran's Administration appraisal that
establishes the maximum VA mortgage loan
amount for a specified property.
Certificate
of Title
Written opinion of the status of title to
a property, given by an attorney or title
company. This certificate does not offer
the protection given by title insurance.
Certificate
of Veteran Status
FHA form filled out by the VA to establish
a borrower's eligibility for a FHA Vet loan.
Obtainable through local VA office by submitting
form DD 214 (Separation Paper) with form
26-8261a (request for certificate of veteran
status).
Chain
of Title
The chronological order of conveyance of
a property from the original owner to the
present owner.
Closed-end
Mortgage
A mortgage principal amount that is fixed
and cannot be increased during the life
of the loan.
Closing
(or Settlement)
The settlement or closing is the conclusion
of your real estate transaction. It includes
the delivery of your security instrument,
signing of your legal documents and the
disbursement of the funds necessary to the
sale of your home or loan transaction (refinance).
Closing
Costs
Costs payable by either seller or buyer
at the time of settlement when the purchase
of a property is finalized or by borrower
when a loan is refinanced. They include
expenses such as points, taxes, title insurance,
mortgage insurance and attorneys' fees.
You will receive more specific information
about types and amounts of closing costs
applicable to your transaction and the state
where your property is located when you
apply for a loan.
Closing
Statement
Also referred to as the HUD1. The final
statement of costs incurred to close on
a loan or to purchase a home.
Cloud
A claim to the title of a property that,
if valid, would prevent a purchaser from
obtaining a clear title.
Co-borrower
One who is individually and jointly obligated
to repay a mortgage loan and may or may
not share ownership of the property with
one or more borrowers. See also: Co-signer
Collateral
An asset (such as a car or a home) that
guarantees the repayment of a loan. The
borrower risks losing the asset if the loan
is not repaid according to the terms of
the loan contract.
Collection
The efforts used to bring a delinquent mortgage
current and to file the necessary notices
to proceed with foreclosure when necessary.
Co-maker
A person who signs a promissory note along
with the borrower. A co-maker's signature
guarantees that the loan will be repaid,
because the borrower and the co-maker are
equally responsible for the repayment. See
endorser.
Commission
The fee charged by a broker or agent for
negotiating a real estate or loan transaction.
A commission is generally a percentage of
the price of the property or loan.
Commitment
Fee
A fee charged when an agreement is reached
between a lender and a borrower for a loan
on specific terms and conditions. Rate and
points may be locked-in or may be "floating".
Commitment
Letter
A formal offer by a lender stating the terms
under which it agrees to lend money to a
homebuyer. Also known as a "loan commitment."
Common
Elements/Areas
Those portions of a building, land, and
amenities of a PUD, condo or co-op that
are used by all unit owners, who share in
the common expenses of their operation and
maintenance. Common areas usually include
swimming pools, tennis courts, or other
recreational facilities, as well as common
corridors of buildings, parking lots, etc.
Comparable
An abbreviation for "comparable properties";
used for comparative purposes in the appraisal
process. Comparables are properties like
the property under consideration; they have
reasonably the same size, location, and
amenities and have recently been sold. Comparables
help the appraiser determine the approximate
fair market value of the subject property.
Condominium
A form of ownership where the dwelling units
are individually owned and homeowners share
ownership of common areas such as the grounds,
the parking facilities and the tennis courts.
Condominium
Conversion
Changing the ownership of an existing building
(usually a rental project) to the condominium
form of ownership.
Conforming
Loan
A loan that conforms to Federal National
Mortgage Association (FNMA) or Federal Home
Loan Mortgage Corporation (FHLMC) guidelines.
The maximum conforming loan amount is $275,000
for a one-unit property.
Construction
Loan
A short-term, interim loan for financing
the cost of construction. The lender makes
payments to the builder at periodic intervals
as the work progresses. Upon completion
of the construction, some lenders will convert
the loan to permanent financing while other
lenders will require the borrower to pay
the construction loan in full. In
this instance the borrower usually can refinance
the property.
Consumer
Handbook on Adjustable Rate Mortgages
A disclosure required by the federal government
to be given to any borrower applying for
an adjustable rate mortgage (ARM).
Consumer
Reporting Agency (or Bureau)
An organization that prepares reports that
are used by lenders to determine a potential
borrower's credit history. The agency obtains
data for these reports from a credit repository
as well as from other sources.
Contingency
A condition which must be satisfied before
a contract is legally binding.
Contract
of Sale
The agreement between the buyer and seller
on the purchase price, terms, and conditions
of a sale.
Conventional
Loan
A mortgage loan that is not insured, guaranteed
or funded by the Veterans Administration
(VA), the Federal Housing Administration
(FHA) or Rural Economic Community Development
(RECD) (formerly Farmers Home Administration).
Conversion
Clause
A provision in some ARMs that allows you
to change an ARM to a fixed-rate loan, usually
after the first adjustment period.
Conveyance
The document used to effect a transfer,
such as a deed, or mortgage.
Co-operative
A co-op is a form of ownership in which
a corporation or business entity holds title
to a property and grants the occupancy rights
to particular apartments or units to shareholders
by leases or similar arrangements. A loan
granted for a co-op is collateralized by
an assignment of the proprietary lease and
a pledge of the shares of stock allocated
to the unit.
Corporate
Relocation
Arrangements under which an employer moves
an employee to another area as part of the
employer's normal course of business or
under which it transfers a substantial part
or all of its operations and employees to
another area because it is relocating its
headquarters or expanding its office capacity.
Co-signer
A person who agrees to assume a debt obligation
if the principal borrower defaults on the
payments. A co-signer is not on the security
instrument and is only responsible for the
debt. See also: Co-borrower
Cost
of Funds Index (COFI)
An index of the weighted-average interest
rate paid by savings institutions for sources
of funds, usually by members of the 11th
Federal Home Loan Bank District.
Covenant
A clause in a mortgage that obligates or
restricts the borrower and that, if violated,
can result in foreclosure.
Covenants
Rules and restrictions governing the use
of property.
Credit
Bureau Company
A company that is engaged in the preparation
of reports that are used by credit grantors
to determine the credit and public records
history of an individual. The agency obtains
data for these reports from national repositories
and other sources (e.g., TRW, TransUnion,
Equifax, and public record data).
Credit
Bureau Repository
An organization that compiles credit history
data directly from lenders and creditors
to build in-file credit reports for individuals;
the main repositories are TRW, TransUnion,
& Equifax.
Credit
Report
A report detailing the credit history of
a prospective borrower that's used to help
determine borrower credit worthiness.
CRV
See: Certificate
of Reasonable Value
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Debt-to-Income
Ratio (D/I)
The ratio of the borrower's total monthly
obligations, including housing expenses
and recurring debts, to monthly income.
It is used to determine the borrower's capacity
to repay the mortgage and all other debts.
Deed
Legal document by which title to real property
is transferred from one owner to another.
The deed contains a description of the property,
and is signed, witnessed, and delivered
to the buyer at closing.
Deed-in-lieu
A deed given by a mortgagor to the mortgagee
to satisfy a debt and avoid foreclosure.
Deed
of Trust
A document, used in many states in place
of a mortgage, whereby a trustee pending
repayment of the loan holds title to the
property.
Default
Failure to meet legal obligations in a contract,
including failure to make payments on a
loan.
Delinquency
Failure to make payments as agreed in the
loan agreement.
Department
of Housing and Urban Development (HUD)
The U.S. government agency that administers
FHA, GNMA and other housing programs.
Deposit
A sum of money given to bind the sale of
real estate, or a sum of money given to
ensure payment or an advance of funds in
the processing of a loan.
Depreciation
A decline in the value of property; the
opposite of appreciation.
Discount
The amount by which the sales price of a
note (or financial instrument) is below
or less than its face value. The purpose
of a discount is to adjust the yield upward
either in lieu of interest or in addition
to interest. Discount points are payable
to the lender by the borrower or seller
to increase the lender's effective yield.
One point is equal to 1% of the loan.
Discount
Points (or Points)
Points are an up-front fee paid to the lender
at the time that you get your loan. Each
point equals one percent of your total loan
amount. Points and interest rates are inherently
connected: in general, the more points you
pay, the lower the interest rate you get.
Documentary
Stamps
A State tax, in the forms of stamps, required
on deeds and mortgages when real estate
title passes from one owner to another.
The amount of stamps required varies with
each State.
Down
Payment
The amount of your home's purchase price
you need to supply up front in cash to get
your loan. For conventional loans, you should
strive for a down payment that's at least
20% of your home's value, since lenders
generally do not require private mortgage
insurance with a down payment of at least
20% of your home's purchase price. (Note,
however, that FHA and VA loans have different
policies regarding insurance.)
Due-on-Sale
Clause
Provision in a mortgage or deed of trust
allowing the lender to demand immediate
payment of the loan balance upon sale of
the property.
Duplex
Dwelling divided into two units.
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Earnest
Money
Deposit made by a buyer towards the down
payment in evidence of good faith when the
purchase agreement is signed.
Easement
A right of way giving persons other than
the owner access to or over a property.
Economic
Obsolescence
The loss of value due to changes outside
the particular property affected (e.g.,
high power lines, busy streets, proximity
to an airport or any other structure perceived
to be less than desirable); also called
economic depreciation.
Effective
Age
An appraiser's estimate of the physical
condition of a building. The actual age
of a building may be shorter or longer than
its effective age.
Effective
Rate
The effective rate is a consumer-oriented
rate that takes into account the projected
amount of time you tell us you will actually
have the loan, as well as the specific costs,
fees, and potential rate changes associated
with it. The fees and costs are distributed
over the time you plan to be in the house,
allowing you to do an apples-to-apples comparison
of a variety of loan types. The effective
rate is not the APR. It is similar in that
it factors in interest, mortgage insurance,
and other fees (including points); however,
the APR assumes that you keep your loan
for the entire term, while the effective
rate takes into account how long you tell
us you plan to be in your house.
Encroachment
An obstruction, building, or part of a building
that intrudes beyond a legal boundary onto
neighboring private or public land, or a
building extending beyond the building line.
Encumbrance
Anything that affects or limits the fee
simple title to a property, such as mortgages,
leases, easements, or restrictions.
Environmental
Hazard
Natural or man-made forces that may be hazardous
to the health or safety of the homeowner.
Examples include hazardous wastes, toxic
substances, radon gas and materials containing
asbestos. These types of hazards can adversely
affect the value and marketability of the
property.
Equal
Credit Opportunity Act (ECOA)
Federal law requiring creditors to make
credit equally 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 current market
value of a property and the total debt obligations
against the property. On a new mortgage
loan, the down payment represents the equity
in the property.
Escrow
A transaction in which a third party acts
as the agent for seller and buyer, or for
borrower and lender, in handling legal documents
and disbursement of funds.
Escrow
Account
An account held by the lender to which the
borrower pays monthly installments, collected
as part of the monthly mortgage payment,
for annual expenses such as taxes and insurance.
The lender disburses escrow account funds
on behalf of the borrower when they become
due. Also known as Impound Account.
Escrow
Agent
A person with fiduciary responsibility to
the buyer and seller, or the borrower and
lender, to ensure that the terms of the
purchase/sale or loan are carried out. See
Bank Attorney
Escrow
Collections
Funds collected by the servicer and set-aside
in an escrow account to pay the borrower's
property taxes, mortgage insurance, and
hazard insurance.
Escrow
Disbursements
The use of escrow funds to pay real estate
taxes, hazard insurance, mortgage insurance,
and other property expenses as they become
due.
Escrow
Payment
The portion of a mortgagor's monthly payment
that is held by the servicer to pay for
taxes, hazard insurance, mortgage insurance,
lease payments, and other items as they
become due. Known as "impounds"
or "reserves" in some states.
Estate
The ownership interest of an individual
in real property. The sum total of all the
real property and personal property owned
by an individual at time of death.
Eviction
The lawful expulsion of an occupant from
real property.
Examination
of Title
The report on the title of a property from
the public records or an abstract of the
title.
Fair
Credit Reporting Act
A consumer protection law that regulates
the disclosure of consumer credit reports
by consumer/credit reporting agencies and
establishes procedures for correcting mistakes
on one's credit record.
Fair
Market Value
The price established in a free market between
a buyer and seller in an arms-length transaction
where neither one is compelled to buy or
sell. In an appraisal, this is the final
value derived after examining the Sales
Comparison, Cost, and if applicable, Income
approaches; sometimes referred to as "Market
Value."
FAIR
Plan
The Fair Access to Insurance Requirement
Plan is a program established within a state
to provide access to insurance for property
owners in areas that are generally not insurable
by most insurers; examples include specific
beach and windstorm areas.
Fannie
Mae
A common nickname for the Federal National
Mortgage Association.
Fannie
Mae's Community HomeBuyer's Program
An income-based community lending model,
under which mortgage insurers and Fannie
Mae offer flexible underwriting guidelines
to increase a low- or moderate- income family's
buying power and to decrease the total amount
of cash needed to purchase a home. Borrowers
who participate in this model are required
to attend pre-purchase homebuyer education
sessions.
Farmer's
Home Administration (FmHA)
The government agency that guarantees mortgages
secured by residential properties located
in rural areas, concentrating on borrowers
with income less than HUD's local median
income for the area in which they reside.
FmHA is now known as Rural Economic and
Community Development.
Federal
Deposit Insurance Corporation (FDIC)
Independent deposit insurance agency created
by Congress to maintain stability and public
confidence in the nation's banking system.
Federal
Home Loan Mortgage Corporation (FHLMC or
Freddie Mac)
This agency buys loans that are underwritten
to its specific guidelines. These guidelines
are an industry standard for residential
conventional lending.
Federal
Housing Administration (FHA)
An agency within the Department of Housing
and Urban Development that sets standards
for underwriting and insures residential
mortgage loans made by private lenders.
One of FHA's objectives is to ensure affordable
mortgages to those with low or moderate
income. FHA loans may be high loan-to-value,
and they are limited by loan amount. FHA
mortgage insurance requires a fee of up
to 3.8 percent of the loan amount to be
paid either at closing or added to each
monthly payment, as well as an annual fee
of 0.5 percent of the loan amount added
to each monthly payment.
Federal National Mortgage Association
(FNMA or Fannie Mae)
A congressionally chartered, shareholder-owned
company that is the nation's largest supplier
of home mortgage funds. This agency buys
loans that are underwritten to its specific
guidelines. These guidelines are an industry
standard for residential conventional lending.
Fee
Simple
The maximum form of ownership, with the
right to occupy a property and sell it to
a buyer at any time. Upon the death of the
owner, the property goes to the owner's
designated heirs. Also known as fee simple
absolute.
FHA
See Federal Housing Administration.
FHA
Loans
Fixed- or adjustable-rate loans insured
by the U.S. Department of Housing and Urban
Development. FHA loans are designed to make
housing more affordable, particularly for
first-time homebuyers. FHA loans typically
permit borrowers to buy a home with a lower
down payment than conventional loans. With
FHA insurance, eligible buyers can purchase
a home with a down payment as little as
3% of the appraised value or the purchase
price, whichever is lower. FHA borrowers
typically are required to participate in
a face-to-face meeting with their lender
or a government approved mortgage counselor
prior to closing on a new mortgage loan.
The current FHA loan limit is $169,050;
however, FHA loan amount limits may vary
by county.
Fifteen-Year
Mortgage
A loan with a term of 15 years. Although
the monthly payment on a 15-year mortgage
is higher than that of a 30-year mortgage,
the amount of interest paid over the life
of the loan is substantially less.
Fidelity
Bond
An insurance bond that is obtained to protect
against financial loss from dishonest acts
of persons entrusted with authority to manage
funds.
First
Mortgage
A mortgage which is in first lien position,
taking priority over all other liens. In
the case of a foreclosure, the first mortgage
will be repaid before any other mortgages.
Fixed
Rate
An interest rate which is fixed for the
term of the loan.
Fixed
Rate Loans
Fixed rate loans have interest rates that
do not change over the life of the loan.
As a result, monthly payments for principal
and interest are also fixed for the life
of the loan. Fixed rate loans typically
have 15-year or 30-year terms. With a fixed
rate loan, you will have predictable monthly
mortgage payments for as long as you have
the loan.
Flood
Insurance
Insurance that compensates for physical
damage to a property by flood. Typically
not covered under standard hazard insurance.
FmHA
See: Farmer's
Home Administration
FNMA
See: Federal National Mortgage
Association
Forbearance
The act by the lender of refraining from
taking legal action on a mortgage loan that
is delinquent.
Foreclosure
The legal process by which a borrower in
default under a mortgage or deed of trust,
loses his/her interest in the mortgaged
property; this process usually involves
a forced sale of the property at public
auction with the proceeds of the sale being
applied to the mortgage debt.
Freddie
Mac
A common nickname for the Federal Home Loan
Mortgage Corporation.
General
Warranty Deed
A deed which conveys not only all the grantor's
interests in and title to the property to
the grantee, but also warrants that if the
title is defective or has a "cloud"
on it (such as mortgage claims, tax liens,
title claims, judgments, or mechanic's liens
against it) the grantee may hold the grantor
liable.
Gift
Funds
Funds donated to the borrower from certain
eligible sources to assist the borrower
in meeting closing costs. Generally, eligible
sources are a relative, church, municipality,
or nonprofit organization.
Ginnie
Mae
Nickname for Government National Mortgage
Association (GNMA).
Government
National Mortgage Association (GNMA or Ginnie
Mae)
A government organization that participates
in the secondary market, buying, selling
and guaranteeing FHA and VA loans.
Good
Faith Estimate
Written estimate of the settlement costs
the borrower will likely have to pay at
closing. Under the Real Estate Settlement
Procedures Act (RESPA), the lender is required
to provide this disclosure to the borrower
within three days of receiving a loan application.
Grace
Period
Period of time during which a loan payment
may be made after its due date without incurring
a late penalty. The grace period is specified
as part of the terms of the loan in the
Note.
Graduated
Payment Mortgage (GPM)
A mortgage that has initial monthly payments
set at an amount lower than that required
for full amortization of the debt. The payments
are then increased by a specified percentage
each year during the graduated payment period.
At the end of the period, payments are in
an amount that will fully amortize the mortgage.
Grantee
That party in the deed who is the buyer
or recipient.
Grantor
That party in the deed who is the seller
or giver.
Gross
Income
Total income before taxes or expenses are
deducted.
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