A provision in a mortgage that gives the lender the right to demand payment of the entire outstanding balance if a monthly payment is missed.
Adjustable rate mortgage (ARM).
A mortgage whose interest rate changes over time based on an index.
The gradual repayment of a mortgage by installments.
A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the remaining balance.
Annual percentage rate (APR).
The total yearly cost of a mortgage stated as a percentage of the loan amount; includes the base interest rate, primary mortgage insurance, and loan origination fee (points).
A professional opinion of the market value of a property.
An increase in the value of a house due to changes in market conditions or other causes.
The valuation placed upon property by a public tax assessor for purposes of taxation.
A mortgage that can be taken over (assumed) by the buyer when a home is sold.
The transfer of the seller's existing mortgage to the buyer.
A preliminary agreement, secured by the payment of earnest money, under which a buyer offers to purchase real estate.
A provision of an ARM limiting how much the interest rate or mortgage payments may increase.
A requirement of some lenders that buyers have cash remaining after closing. Traditionally lenders have required borrowers to have reserves equal to two mortgage payments.
A title that is free of liens and legal questions as to ownership of the property.
The occasion where a sale is finalized; the buyer signs the mortgage, and closing costs are paid. Also called settlement.
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called settlement costs.
A formal offer by a lender stating the terms under which it agrees to lend money to a homebuyer.
Property acquired by husband and wife during a marriage when not acquired as separate property by either spouse. Each spouse has equal rights, including the rights of survivorship.
A form of property ownership in which the homeowner holds title to an individual dwelling unit plus an interest in common areas of a multi-unit project.
A condition that must be met before a contract is legally binding.
Any mortgage that is not insured or guaranteed by the federal government.
An adjustable rate mortgage that can be converted to a fixed rate mortgage under specified conditions.
A form of common property ownership in which the residents of an apartment building do not own their own units, but rather own shares in the corporation that owns the property.
A clause in a mortgage that obligates or restricts the borrower and which, if violated, can result in foreclosure.
A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
The legal document conveying title to a property.
Deed of trust.
The document used in some states instead of a mortgage; title is conveyed to a trustee rather than to the borrower.
Failure to make mortgage payments on a timely basis or to comply with other conditions of a mortgage.
A loan in which a payment is overdue.
Cash paid to the seller when a formal sales contract is signed.
A decline in the value of property; the opposite of appreciation.
The part of the purchase price which the buyer pays and does not finance with a mortgage.
A provision in a mortgage allowing the lender to demand repayment in full if the borrower sells the property securing the mortgage.
A deposit given to the seller to show that a prospective buyer is serious about buying the house.
A right of way giving persons other than the owner access to or over a property.
Equal Credit Opportunity Act (ECOA).
A federal law that prohibits lenders from denying mortgages on the basis of the borrower's race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity. The difference between the market value of a property and the homeowner's outstanding mortgage balance.
A loan based on the borrower's equity in his or her home.
The holding of documents and money by a neutral third party prior to closing; also, an account held by the lender into which a homeowner pays money for taxes and insurance.
Fair Credit Reporting Act.
A consumer protection law that sets up a procedure for correcting mistakes on one's credit record.
A mortgage that is insured by the Federal Housing Administration.
The mortgage that has first claim in the event of default.
Fixed rate mortgage.
A mortgage in which the interest rate does not change during the entire term of the loan.
Insurance required for properties in federally designated flood areas.
The lender's postponement of foreclosure to give the borrower time to catch up on overdue payments.
The process by which a mortgaged property may be sold when a mortgage is in default.
Graduated payment mortgage.
A mortgage that starts with low monthly payments that increase at a predetermined rate.
Insurance to protect the homeowner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards.
An insurance policy that combines liability coverage and hazard insurance.
A type of insurance that covers repairs to specified parts of a house for a specific period of time.
Also called Tax and Insurance Reserve (TIR). Accounts required if lender will pay the property taxes, mortgage insurance, and hazard insurance.
The fee charged for borrowing money.
Interest rate cap.
A provision of an ARM limiting how much interest rates may increase per adjustment period. See also Lifetime cap.
A form of co-ownership giving each tenant equal interest and equal rights in the property, including the right of survivorship.
The penalty a borrower must pay when a payment is made after the due date.
Lease-purchase mortgage loan.
An alternative financing option that allows low- and moderate-income homebuyers to lease a home from a nonprofit organization with an option to buy, and with each month's rent payments consisting of PITI payments on the first mortgage, plus an extra amount that is earmarked for a savings account in which money for a downpayment accumulates.
A legal claim against a property that must be paid when the property is sold.
A provision of an ARM that limits the total increase in interest rates over the life of the loan.
See Commitment letter.
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
Loan-to-value ratio (LTV).
The relationship between the amount of a mortgage and the total value of the property.
A written agreement guaranteeing the homebuyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.
The set percentage the lender adds to the index rate to determine the interest rate of an ARM.
A legal document that pledges a property to the lender as security for payment of a debt.
A company that originates mortgages exclusively for resale in the secondary market.
A company that for a fee matches borrowers with lenders.
See Private mortgage insurance.
Mortgage insurance premium (MIP).
The fee paid by a borrower to the FHA or a private insurer for mortgage insurance.
A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time; the agreement is secured by a mortgage.
The lender in a mortgage agreement.
The borrower in a mortgage agreement.
Payment terms under which the borrower's monthly payments do not cover the interest due; as a result, the loan balance increases.
Notice of default.
A formal written notice to a borrower that a default has occurred and that legal action may be taken.
A fee paid to a lender for processing a loan application; it is stated as a percentage of the mortgage amount, or points.
A purchase in which the seller provides all or part of the financing.
A provision of some ARMs limiting how much a borrower's payments may increase regardless of how much the interest rate increases; may result in negative amortization.
Stands for principal, interest, taxes, and insurance -- the components of a monthly mortgage payment.
A one-time charge by the lender to increase the yield of the loan; a point is one percent of the amount of the mortgage.
A fee charged to a borrower who pays off a loan before it is due.
The process of determining how much money a prospective homebuyer will be eligible to borrow before a loan is applied for.
The amount borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
Private mortgage insurance (PMI).
insurance provided by nongovernment insurers that protects lenders against loss if a borrower defaults.
Purchase and sale agreement.
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Guidelines applied by lenders to determine how large a loan to grant a homebuyer.
A radioactive gas found in some homes that in sufficient concentrations can cause health problems.
Real estate agent.
A person licensed to negotiate and transact the sale of real estate on behalf of the owner.
Real Estate Settlement Procedures Act.
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
The process of paying off one loan with the proceeds from a new loan secured by the same property.
Rent with option to buy.
See Lease-purchase mortgage loan.
A mortgage that has rights that are subordinate to the rights of the first mortgage holder.
Secondary mortgage market.
The buying and selling of existing mortgages.
An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.
The computation of costs payable at closing which determines the seller's net proceeds and the buyer's net payment.
Subsidized second mortgage.
An alternative financing option for low- and moderate-income households that also includes a downpayment and a first mortgage, with funds for the second mortgage provided by city, county, or state housing agencies, foundations, or nonprofit corporations. Payment on the second mortgage is often deferred, carries no or low interest rates, and part of the debt may be forgiven for each year the family remains in the home.
A drawing showing the legal boundaries of a property.
Tax and Insurance Reserve (TIR).
See Impound account.
Tenancy by entirety.
A type of joint ownership of property available only to a husband and wife.
Tenancy in common.
A type of joint ownership in a property without right of survivorship.
Three/two (3/2) option.
An alternative financing plan that enables households whose earnings are no more than 100 percent of the median income in their regional area to make a 3 percent downpayment with their own funds, coupled with a 2 percent gift from a relative or a 2 percent grant or unsecured loan from a nonprofit or state or local government program.
A legal document establishing the right of ownership.
A company that specialized in insuring title to property.
Insurance to protect the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
State or local tax payable when title passes from one owner to another.
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.
The process of evaluating a loan application to determine the risk involved for the lender.
A loan that is guaranteed by the Veterans Administration.