| Term |
Definition |
| 1 year adjustable (ARM)
|
A loan with a fixed rate
for the first 1 year that has a rate that changes once each year for
the remaining life of the loan. Because the interest rate can change
after the first 1 year, the monthly payment may also change. |
| 10 year adjustable
(ARM) |
A loan with a fixed rate
for the first 10 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 10 years, the monthly payment may also
change. |
| 2 year adjustable (ARM)
|
A loan with a fixed rate
for the first 2 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 2 years, the monthly payment may also change.
|
| 3 year adjustable (ARM)
|
A loan with a fixed rate
for the first 3 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 3 years, the monthly payment may also change.
|
| 5 year adjustable (ARM)
|
A loan with a fixed rate
for the first 5 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 5 years, the monthly payment may also change.
|
| 7 year adjustable (ARM)
|
A loan with a fixed rate
for the first 7 years that has a rate that changes once each year
for the remaining life of the loan. Because the interest rate can
change after the first 7 years, the monthly payment may also change.
|
| Abstract (of Title) |
A summary of the public
records relating to the title to a particular piece of land. If
there are any title defects they must be cleared before a buyer can
purchase clear, marketable, and insurable title. |
| Acceleration Clause |
Allows the lender to speed
up the rate at which your loan comes due or even to demand immediate
payment of the entire balance of the loan should you default on you
loan. |
| Adjustable Rate
Mortgage (ARM) |
A mortgage in which the
interest rate is adjusted periodically based on an index. Also known
as the renegotiable rate mortgage, the variable rate mortgage or the
Canadian rollover mortgage. |
| Adjustment Interval |
On an adjustable rate
mortgage, the time between changes in the interest rate and/or
monthly payment, usually one, three or five years. |
| Affiliate |
An entity related to a
Seller that is subject to common operating control and that is
operated as part of the same system or enterprise. The Seller
typically owns less than a majority of the voting stock or the
Seller and the entity are subsidiaries of a third party. |
| Affordable Gold 5 |
Mortgage with less than or
equal to 95 percent LTV, when at least 5 percent of the downpayment
comes from the borrower's personal cash. |
| Affordable Gold 97 |
Mortgage with greater than
95 percent loan-to-value (LTV) ratio but less than or equal to 97
percent LTV, when at least 3 percent of the downpayment comes from
the borrower's personal cash. |
| Affordable Product Type
|
Choice of loan determined
under the Affordable Gold program. Indicates whether to submit the
loan under the Affordable Gold program and, if so, which type of
program. |
| Affordable Seconds |
Subsidized secondary
financing or other financial assistance provided under an
established, documented secondary financing or financial assistance
program that has formal procedures in place to provide applicant
qualification, loan processing, and loan program administration on
an ongoing basis. |
| Agreement of Sale |
Known by various names,
such as contract of purchase, purchase agreement, or sales agreement
according to location or jurisdiction. A contract in which a seller
agrees to sell and a buyer agrees to buy, under specific terms
spelled out in writing and signed by both parties. |
| Amortization |
The gradual reduction of a
debt by periodic payments of interest and principal that are large
enough to pay off a loan at maturity. The loan is repaid through
regular, monthly payments of principal and interest paid for a
predetermined amount of time. |
| Annual Percentage Rate
(APR) |
The annual cost of a loan
to a borrower. Like an interest rate, the APR is expressed as a
percentage of the loan amount. Unlike an interest rate, however, it
includes other charges or fees to reflect the total cost of the
loan. The Federal Truth in Lending Act requires that every consumer
loan agreement disclose the APR in large, bold print. Since all
lenders must follow the same rules to ensure the accuracy of the
APR, borrowers can use the APR as a good basis for comparing the
cost of loans. |
| Appraisal |
A written analysis of the
estimated value of a property, as prepared by a qualified appraiser.
A fee is typically charged for a real estate appraisal because a
home appraisal is time-consuming. An appraisal of an auto is usually
not necessary because auto dealers, sellers and buyers all have
quick access to the market value of autos. |
| Appraisal Fee |
The charge for estimating
the value of property. |
| Appraiser network |
Group of licensed/certified
individuals or entities contracted to perform property value
assessments. |
| Assessment Report |
Report that appraisers use
to record property values, marketability analyses and any pertinent
comments regarding the subject property. Assessment reports are
classified as appraisal reports or inspection reports. |
| Assessment Upgrade |
Approved recommendation
from an appraiser that you must use a more comprehensive type of
assessment. An example of an upgrade recommendation includes any
adverse/atypical findings or other atypical property or neighborhood
condition observed by the appraiser. You must also upgrade an
assessment when its value does not support the loan transaction; the
appraiser is unable to view the subject property from the public
street; the assessment is "subject to" completion; or repair or
property rights are leasehold. |
| Asset |
Anything that has monetary
or exchange value that is owned by an individual, business or
institution. Assets include real estate property, personal property,
vehicles and enforceable claims against others (including bank
accounts, stocks, mutual funds, and so on). A lender is very
interested in the amount and value of any assets you may have
because assets can be used as collateral against a loan. Along with
other factors such a a borrower's credit rating, assets are also
used to help determine the amount of the loan. |
| Assumable Mortgage |
An assumable mortgage is a
mortgage that allows you to take over a mortgage on a home you are
buying or allows a buyer to take over your mortgage if you are
selling your house. The advantage of this is that you assume a
mortgage that has a lower interest rate than current rates, and you
avoid high closing costs. |
| Assumption |
The agreement between buyer
and seller where the buyer takes over the payments on an existing
mortgage from the seller. Assuming a loan can usually save the buyer
money since this is an existing mortgage debt. |
| Automated Underwriting
|
Automated underwriting is
used to offer instant decisioning regarding your loan request.
Automated underwriting is similar to instant offer service. You are
usually required to provide additional information to the lender to
close your loan.
|
