Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that can adjust at pre-determined intervals. An ARM loan is typically fixed for the first 2, 3, 5, 7 or 10 years and can adjust annually thereafter. ARM interest rates and the degree to which they fluctuate at the end of every adjustment period, are determined by:
A timetable schedule showing the amount of each payment applied to interest and principal and the remaining balance after each payment is made.
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate; it includes such items as interest, mortgage, and loan origination fee.
A written analysis of the estimated value of a property prepared by a licensed appraiser.
Biweekly Payment Mortgage
A mortgage requiring payments every two weeks instead of the standard monthly payment. The result for the borrower is a substantial savings in interest.
Certificate of Title
A statement provided by an abstract company or attorney stating that the title to real estate is legally held by the current owner.
A meeting at which the sale of a property is finalized by the buyer signing the mortgage documents, paying closing costs, and receiving the transfer of the deed to the property.
An asset (such as a car or a home) that guarantees the repayment of a loan.
The legal document conveying title to a property.
Earnest Money Deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.
A homeowner’s financial interest in a property.
A segregated trust account in which funds are held by the lender to pay for ongoing items, like homeowners insurance, mortgage insurance and property taxes.
The person or organization having a fiduciary responsibility to both the buyer and seller (or the lender and borrower) to see that the terms of the purchase/sale (or loan) are carried out. Also called the escrow company or closing agent.
Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.
Fixed Rate Mortgage
A mortgage in which the interest rate and payments remain the same for the life of the loan.
Good Faith Estimate
A document which tells borrowers the approximate costs they will pay at or before settlement.
A thorough inspection that evaluates the structural and mechanical condition of a property.
The legal claim against a property that must be satisfied before the property may be sold.
LIBOR (London Inter-Bank Offering Rate)
The rate at which banks in the foreign market lend dollars to one another. LIBOR varies by deposit maturity. A common interest rate index that is one of the most valid barometers of the international cost of money.
A written agreement in which the lender guarantees a specified interest rate if the mortgage goes to closing within a set period of time.
A legal document that pledges a property to a specific lender as security for payment of a debt. (Also commonly known as a home loan.)
A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage.
The value of all of a person’s assets, including cash, minus all liabilities.
The interest that banks charge to their preferred customers.
The amount borrowed or remaining unpaid.
Real Estate Agent
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachment, and other physical features.
Title Insurance Policy
A required contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgagee, or otherwise.
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.
Truth in Lending
A federal law requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate and other charges.
The process of evaluating a loan application to determine the risk involved for the lender.