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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. |
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A |
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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. |
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Acquisition cost -
Under an FHA loan, the purchase price or appraised value of the
property plus the estimated closing costs. |
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Adjustable Rate Mortgage (ARM) -
A mortgage in which the interest rate is adjusted periodically
based on an index. Also called a variable rate mortgage. |
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Adjustment_date -
The date the interest rate changes on an ARM (adjustable rate
mortgage). |
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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. |
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Adjusted book basis -
The purchase price of a property plus any capital improvements
less accrued depreciation, if any, to the date of the sale. |
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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. |
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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. |
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Annuity -
A series of income payments of receipts over a period of years.
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Application -
A mortgage application requires borrowers to submit
information regarding their income, savings, assets, debts, and
more. |
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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. |
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Appraisal -
The determination of property value based on recent sales
information of similar properties. |
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Assessment -
Determining a property's value for the purpose of taxation. |
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Assumable Loan -
These loans may be passed on from a seller of a home to the
buyer. The buyer "assumes" all outstanding payments. |
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Assumption -
Buying property and assuming the responsibility of the exiting
mortgage. |
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Appreciation -
Increases in property value due to fluctuations in the market,
inflation, et al. |
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Asset -
Valuable items, encumbered or not, owned by a person,
corporation, or entity. |
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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. |
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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. |
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Balloon Payment -
The final lump sum that is paid at the end of the balloon
mortgage. |
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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. |
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Best Faith Estimate -
An estimate of the total costs for securing a real estate loan,
that is given to borrowers prior to closing. |
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Bill of Sale -
A written document that transfers a title to personal property.
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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. |
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Blanket Mortgage -
A mortgage secured by the pledging of more than one property or
collateral. |
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Book Value -
Acquisition costs less any accrued depreciation. |
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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. |
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Bridge Loan -
An equity loan secured to solve short-term financing problem.
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Budget Mortgage -
A mortgage that includes a portion for taxes and insurance as
well as principal and interest. |
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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 |
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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. |
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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.
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Carryback Loan -
A loan in which a seller agrees to finance a buyer in order to
complete a property sale. |
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Certificate of Eligibility -
A veteran's evidence of entitlement for a VA-guaranteed loan.
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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. |
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Closing -
Final arrangements to transfer title of property as well as
allocate charges and credits. |
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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.
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Cloud -
An outstanding claim or encumbrance, that, if valid, would
affect or impair the owner's property title. |
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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. |
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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. |
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Conforming Loan -
A loan for up to and including $417,000 in the continental
United States (Alaska and Hawaii limits are higher). |
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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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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. |
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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 Moving.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 |
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Not Available |
Borrower May Not Convert This Loan. |
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Must Requalify |
Borrower May Convert But Must Requalify.
Conversion Fee Applies |
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Auto-Qualify |
Borrower May Convert And Is Automatically Qualified.
Conversion Fee Applies |
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Credit Loan -
A credit loan is a mortgage that is issued on only the financial
strength of a borrower, without great regard for collateral.
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Credit-Loss Ratio -
The ratio of credit-related losses to the dollar amount of MBS
outstanding and total mortgages owned by the corporation. |
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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. |
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Credit-Related Expenses -
The sum of foreclosed property expenses plus the provision for
losses. |
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Credit-Related Losses -
The sum of foreclosed property expenses plus charge-offs. |
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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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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. |
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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. |
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Default -
The failure to make payments on a loan. |
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Delinquency -
Late- or non-payments of principal, interest, taxes, or
insurance. |
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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." |
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Depreciation -
In real estate and mortgage terms, the decline in the property
value. |
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Discount -
Difference between the face amount of a note or mortgage and the
price at which the instrument is sold in the secondary market.
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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. |
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Down Payment -
Money paid by a buyer from his own funds, as opposed to that
portion of the purchase price which is financed. |
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Earnest Money Deposit -
A deposit made by a potential home buyer to show that they are
serious about purchasing the property. |
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Esement -
Giving other persons, other than the owner, access to a
property. |
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Eminent Domain -
The government right to take private property for public use
depended on the payment of its fair market value. |
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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. |
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Equal Credit Opportunity Act (ECOA) -
The act declaring the elimination of discrimination on the basis
of age, sex, and race in finance. |
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Equity -
The difference between the current market value of a property
and the principal balance of all outstanding loans. |
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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. |
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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. |
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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.
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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. |
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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. |
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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. |
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Eviction -
The legal removal of real property occupants for unlawful
actions carried out by those occupants. |
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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. |
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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. |
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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. |
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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. |
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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.
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Fee Simple -
The best title that one can obtain; unqualified and conveys the
highest bundle of rights. |
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FHA Loan -
A government-backed mortgage loan supported by the US FHA and
the Department of Housing and Urban Development (HUD). |
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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. |
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Firm Commitment -
A lender's agreement to provide a loan to a specific borrower on
a specific property. |
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First Mortgage -
A mortgage that has priority over other mortgages. |
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Fixed-Rate Mortgage -
A mortgage where the interest rate does not change for the life
of the loan. |
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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. |
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Forbearance -
The postponement for a limited time of a portion or all the
payments on a loan when a borrower is delinquent. |
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Foreclosure -
A legal procedure in which real estate is sold by the lender to
pay a defaulting borrower's debt . |
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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. |
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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. |
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Good Faith Estimate -
An estimate of charges which a borrower is likely to incur in
connection with a loan closing. |
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Government Loan -
A type of mortgage insured by the FHA (Federal Housing
Authority), VA (Veteran's Administration), or RHS (Rural Housing
Authority). |
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Government National Mortgage Association (Ginny Mae) -
Provides funds for government loans and takes over special
assistance and liquidation functions of Fannie Mae. |
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Grace Period -
A time allowed, usually 15 days, for making late payments
without a penalty. |
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grantee -
The person to whom an interest in real property is conveyed.
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grantor -
The person conveying an interest in real property. |
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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. |
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Hard-Money Mortgage -
Cash loan to a borrower. |
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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. |
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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. |
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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.
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Home Inspection -
A thorough assessment by a professional regarding the structural
and mechanical condition of a property. |
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homeowner's insurance -
An insurance policy that combines personal liability insurance
and hazard insurance for a home and its contents. |
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homeowner's warranty -
An insurance policy that is purchased by a buyer that covers
certain repairs, should they be necessary over a certain period.
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Housing Ratio -
The ratio of the monthly housing payment to total gross monthly
income. Also called Payment-to-Income Ratio or Front-End Ratio.
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HUD -
Department of Housing and Urban Development; regulates Fannie
Mae and Ginny Mae. |
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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. |
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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. |
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Interest Only -
A term loan arrangement calling for payments of interest only,
not to include any amount for principal.
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Interest Rate -
The percentage of an amount of money that's paid for its use
over a specified time period. |
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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. |
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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. |
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Judicial Foreclosure -
A court procedure used by lenders to secure clear title to a
property under a defaulted real estate loan. |
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Jumbo Loan -
A loan for $417,001 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. |
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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. |
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separated by commas and click-on Search:
Whether you are buying or refinancing a luxury home in
Asheville, NC, applying for a
mortgage for Asheville Real Estate is a big step. And more than not, half the battle is understanding
the unique vocabulary of mortgage terms used throughout the Mortgage Industry.