The SoundBiteBlog Dictionary
1. A.R.M.
Adjustable Rate Mortgage. This type of mortgage is at the mercy of the market and the interest rate will change as the market changes.
2. adjustable rate
An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly. This type of loan is commonly called an ARM.
3. amortization
A repayment method in which the amount you borrow is repaid gradually though regular monthly payments of principal and interest. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.
4. application
An initial statement of personal and financial information which is required to approve your loan.
5. appraisal
An appraiser's professional opinion of market value as of a specific date. Required by most lenders to obtain a loan.
6. APR
Annual Percentage Rate. The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report.
7. assumption of mortgage
The agreement of a purchaser to become primarily liable for the payments on a mortgage loan. Unless otherwise specified by the lender, the seller may remain secondarily liable for payments.
8. balloon payment
A lump sum payment for the unpaid balance of the loan.
9. Buckwheat
AKA Mark - Arguably the hardest working Loan Officer in Washington.
10. cap
The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.
11. capital gains exclusion
When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes. There were significant changes to the tax code under the Taxpayer Relief Act of 1997. Check with a tax professional for accurate information.
12. cash out
Receiving money back when refinancing your present mortgage.
13. ceiling
The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.
14. closing costs
Any fees paid by the borrowers or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.
15. CLTV
Cumulative Loan to Value. A ratio determined by dividing the sales price or appraised value into the combined loan amounts, expressed as a percentage. For example, with a sales price of $100,000 and a first mortgage loan of $80,000 with a second mortgage loan of $20,000, your LTV(loan to value) ratio would be 80% and your CLTV would be 100%.(See also LTV)
16. conforming loan
Generally, a mortgage loan under $417,000. Qualifying ratios and underwriting methods are standardized to a large degree.
17. contingent offer
An offer that makes the contract dependent upon the occurrence of some act.
18. contract of sale
The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer. Also known as a Purchase and Sale Agreement.
19. credit limit
The maximum amount that you can borrow under a home equity line of credit.
20. debt service
The total amount of credit card, auto, mortgage or other debt upon which you must pay.
21. deed of trust
Used in many western states, the agreement used to pledge your home or other real estate as security for a loan.
22. default
The term used for the situation that occurs when a homeowner stops paying the mortgage and the lender must foreclose.
23. discount points
The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).
24. down payment
The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.
25. due on sale
A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.
26. effective interest rate
The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points. More often called Annual Percentage Rate (APR).
27. encumbrance
A claim against a property by another party which usually affects the ability to transfer ownership of the property.
28. energy tax credit
In October 2005, The Energy Policy act HR 6 was passed and signed into law and it entitles all eligible homeowners to tax credits for energy saving home improvements. During 2006, individuals can make energy-conscious purchases that will provide tax benefits for making your principal residence, which must be in the United States, more energy efficient and for buying certain energy efficient items.
29. energy tax credits
In October 2005, The Energy Policy act HR 6 was passed and signed into law and it entitles all eligible homeowners to tax credits for energy saving home improvements. During 2006, individuals can make energy-conscious purchases that will provide tax benefits for making your principal residence, which must be in the United States, more energy efficient and for buying certain energy efficient items.
30. equity
The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.
31. fha loan
More appropriately termed "FHA Insured Loan." A loan for which the Federal Housing Administration insures the lender against losses the lender may incur due to a default.
32. first mortgage
A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances).
33. fixed rate
An interest rate which is fixed for the term of the loan. Payments as well are fixed at one amount.
34. good faith estimate
A written estimate of closing costs which a lender must provide you within three days of submitting an application.
35. grace period
A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.
36. gross income
For qualifying purposes, the income of the borrower before taxes or expenses are deducted.
37. hazard insurance
A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium.
38. home equity line of credit
A loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Often used for home improvements, major purchases or expenses, and debt consolidation. Home Equity Loan A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.
39. home improvement loan
The definition of home-improvement loan will differ depending on whether or not the loan is secured by a dwelling. In general the definition is: A loan for the purpose, in whole or in part, of repairing, rehabilitating, remodeling or improving a dwelling or the real property on which it is located; and is classified by the financial institution as a home-improvement loan.
40. HUD 1 Settlement Statement
A form utilized at loan closing to itemize the costs associated with purchasing the home. Used universally by mandate of HUD, the Department of Housing and Urban Development.
41. index
A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Common indexes include the Cost of Funds for the Eleventh Federal District of banks or the average rate of a one year Government Treasury Security. Lines of credit frequently use Prime Rate as an index.
42. interest charge
The periodic charge, expressed as a dollar amount, for the use of credit.
43. interest rate
The periodic charge, expressed as a percentage, for the use of credit.
44. jumbo loan
Mortgage loans above conforming loan limits (currently over $417,000). Terms and underwriting requirements may vary from conforming loans.
45. lock in
Also called a 'lock'. A commitment you obtain from a lender assuring you a particular interest rate or feature for a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.
46. LTV (Loan to Value)
A ratio determined by dividing the sales price or appraised value into the loan amount, expressed as a percentage. For example, with a sales price of $100,000 and a mortgage loan of $80,000, your loan to value ratio would be 80%. Loans with an LTV over 80% may require Private Mortgage Insurance, defined below.
47. manufactured home
Also known as mobile homes. These are dwellings that have been built in a factory and then moved to a piece of land.
48. margin
An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.
49. minimum payment
The minimum amount that you must pay, usually monthly, on a home equity loan, line of credit or Option ARM. In some plans, the minimum payment may be "interest only". In other plans, the minimum payment may include principal and interest (amortized). And with Option ARMs the minimum payment may actually be too low to cover the current month's interest charges.
50. mortgage insurance
Often called PMI (private mortgage insurance) or MIP (mortgage insurance premium) Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.
The SoundBiteBlog Dictionary
1. A.R.M.
Adjustable Rate Mortgage. This type of mortgage is at the mercy of the market and the interest rate will change as the market changes.
2. adjustable rate
An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly. This type of loan is commonly called an ARM.
3. amortization
A repayment method in which the amount you borrow is repaid gradually though regular monthly payments of principal and interest. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.
4. application
An initial statement of personal and financial information which is required to approve your loan.
5. appraisal
An appraiser's professional opinion of market value as of a specific date. Required by most lenders to obtain a loan.
6. APR
Annual Percentage Rate. The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report.
7. assumption of mortgage
The agreement of a purchaser to become primarily liable for the payments on a mortgage loan. Unless otherwise specified by the lender, the seller may remain secondarily liable for payments.
8. balloon payment
A lump sum payment for the unpaid balance of the loan.
9. Buckwheat
AKA Mark - Arguably the hardest working Loan Officer in Washington.
10. cap
The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.
11. capital gains exclusion
When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes. There were significant changes to the tax code under the Taxpayer Relief Act of 1997. Check with a tax professional for accurate information.
12. cash out
Receiving money back when refinancing your present mortgage.
13. ceiling
The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.
14. closing costs
Any fees paid by the borrowers or sellers during the closing of the mortgage loan. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.
15. CLTV
Cumulative Loan to Value. A ratio determined by dividing the sales price or appraised value into the combined loan amounts, expressed as a percentage. For example, with a sales price of $100,000 and a first mortgage loan of $80,000 with a second mortgage loan of $20,000, your LTV(loan to value) ratio would be 80% and your CLTV would be 100%.(See also LTV)
16. conforming loan
Generally, a mortgage loan under $417,000. Qualifying ratios and underwriting methods are standardized to a large degree.
17. contingent offer
An offer that makes the contract dependent upon the occurrence of some act.
18. contract of sale
The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer. Also known as a Purchase and Sale Agreement.
19. credit limit
The maximum amount that you can borrow under a home equity line of credit.
20. debt service
The total amount of credit card, auto, mortgage or other debt upon which you must pay.
21. deed of trust
Used in many western states, the agreement used to pledge your home or other real estate as security for a loan.
22. default
The term used for the situation that occurs when a homeowner stops paying the mortgage and the lender must foreclose.
23. discount points
The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).
24. down payment
The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.
25. due on sale
A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.
26. effective interest rate
The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points. More often called Annual Percentage Rate (APR).
27. encumbrance
A claim against a property by another party which usually affects the ability to transfer ownership of the property.
28. energy tax credit
In October 2005, The Energy Policy act HR 6 was passed and signed into law and it entitles all eligible homeowners to tax credits for energy saving home improvements. During 2006, individuals can make energy-conscious purchases that will provide tax benefits for making your principal residence, which must be in the United States, more energy efficient and for buying certain energy efficient items.
29. energy tax credits
In October 2005, The Energy Policy act HR 6 was passed and signed into law and it entitles all eligible homeowners to tax credits for energy saving home improvements. During 2006, individuals can make energy-conscious purchases that will provide tax benefits for making your principal residence, which must be in the United States, more energy efficient and for buying certain energy efficient items.
30. equity
The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.
31. fha loan
More appropriately termed "FHA Insured Loan." A loan for which the Federal Housing Administration insures the lender against losses the lender may incur due to a default.
32. first mortgage
A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances).
33. fixed rate
An interest rate which is fixed for the term of the loan. Payments as well are fixed at one amount.
34. good faith estimate
A written estimate of closing costs which a lender must provide you within three days of submitting an application.
35. grace period
A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.
36. gross income
For qualifying purposes, the income of the borrower before taxes or expenses are deducted.
37. hazard insurance
A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium.
38. home equity line of credit
A loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Often used for home improvements, major purchases or expenses, and debt consolidation. Home Equity Loan A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.
39. home improvement loan
The definition of home-improvement loan will differ depending on whether or not the loan is secured by a dwelling. In general the definition is: A loan for the purpose, in whole or in part, of repairing, rehabilitating, remodeling or improving a dwelling or the real property on which it is located; and is classified by the financial institution as a home-improvement loan.
40. HUD 1 Settlement Statement
A form utilized at loan closing to itemize the costs associated with purchasing the home. Used universally by mandate of HUD, the Department of Housing and Urban Development.
41. index
A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Common indexes include the Cost of Funds for the Eleventh Federal District of banks or the average rate of a one year Government Treasury Security. Lines of credit frequently use Prime Rate as an index.
42. interest charge
The periodic charge, expressed as a dollar amount, for the use of credit.
43. interest rate
The periodic charge, expressed as a percentage, for the use of credit.
44. jumbo loan
Mortgage loans above conforming loan limits (currently over $417,000). Terms and underwriting requirements may vary from conforming loans.
45. lock in
Also called a 'lock'. A commitment you obtain from a lender assuring you a particular interest rate or feature for a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.
46. LTV (Loan to Value)
A ratio determined by dividing the sales price or appraised value into the loan amount, expressed as a percentage. For example, with a sales price of $100,000 and a mortgage loan of $80,000, your loan to value ratio would be 80%. Loans with an LTV over 80% may require Private Mortgage Insurance, defined below.
47. manufactured home
Also known as mobile homes. These are dwellings that have been built in a factory and then moved to a piece of land.
48. margin
An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.
49. minimum payment
The minimum amount that you must pay, usually monthly, on a home equity loan, line of credit or Option ARM. In some plans, the minimum payment may be "interest only". In other plans, the minimum payment may include principal and interest (amortized). And with Option ARMs the minimum payment may actually be too low to cover the current month's interest charges.
50. mortgage insurance
Often called PMI (private mortgage insurance) or MIP (mortgage insurance premium) Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.
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