| MORTGAGE
GLOSSARY
Abstract of Title:
A summary of the public records relating to the ownership of a particular
piece of land. It represents a short legal history of an individual
piece of property and traces the ownership of that property from
the time of the first recorded transfer to the present.
Adjustable-Rate Mortgage (ARM):
A Mortgage that allows the interest rate to be changed
periodically.
Amortization: The
gradual repayment of a mortgage by periodic installments.
Annual Percentage Rate (APR):
The total finance charge (interest, loan fees and points)
expressed as a percentage of the mortgage amount.
Appraisal: An evaluation
of a piece of property to determine its value.
Assessed Value: The valuation placed on property
by a public tax assessor as the basis for property taxes.
Assumption of Mortgage: An
agreement whereby the buyer assumes responsibility for a mortgage
owed by the seller; the seller remains liable to the lender unless
the lender agrees to release the seller from the liability.
Balloon Mortgage:
A mortgage where the amount financed is not fully amortized over
the period of the loan. When the loan becomes due a large sum, or
“balloon” payment, is required to satisfy the mortgage.
Bridge Loan: A short-term
mortgage made until a longer-term loan can be made. It is sometimes
used when a person needs money to build or purchase a home before
the present one has been sold.
Cap: The maximum amount
an interest rate or monthly payment can change – either at
adjustment time or over the life of the mortgage.
Closing: The final
Step in the sale and transfer of ownership of a property. The title
is transferred from the seller to the buyer; the buyer signs the
mortgage and pays the cost of settlement; any funds due to the seller
and purchaser are paid.
Closing Costs: Fees
and expenses, not including the price of the home, payable by the
seller and the buyer at the closing (e.g., brokerage commissions,
title insurance premiums and inspection, appraisal, recording and
attorney fees).
Commercial Bank: A
financial institution authorized to provide a variety of financial
services, including consumer and business loans (generally short-term),
checking services, credit cards and savings accounts.
Comparable: Properties
similar in size and character to the one being bought or sold.
Condominium: Ownership
of a unit only, rather than of the entire building.
Contingency: A condition
that must be satisfied before a contract is binding.
Conventional Mortgage: A fixed-rate, fixed-term
mortgage not insured by the federal government.
Deed: A legal document
conveying title to a property.
Deed (quick claim):
A deed that transfers only the titles or right to a property that
the holder of that title has at the time of the transfer. It does
not warrant or guarantee a clear title.
Department of Housing and Urban
Development (HUD): A United States government agency established
to implement certain federal housing and community development programs.
Disclosure Laws: State
and federal regulations which require sellers to disclose such conditions
as whether or not a home is located in a flood plain or whether
or not know defects exist or affect the property’s condition.
Earnest Money: A portion
of a down payment put in escrow by a potential buyer indicating
the purchaser’s intent to complete the procurement of the
property.
Equity Mortgage: A
mortgage based on the borrowers’ equity in their home, rather
than their credit worthiness.
Escrow: The placement
of money and documents with a third party for safekeeping pending
the fulfillment or performance of a specified act or condition.
Graduated-payment Mortgage:
A mortgage that starts with low monthly payments and is
increased at a predetermined rate.
Growing-equity Mortgage: A
mortgage in which the monthly payments increase by a specific amount
each year, with the “overpayment” applied to the principal.
Installment Debts:
Long-term debts that usually extend more for than one month.
Lien: A legal claim
against a property that must be paid when the property is sold.
Loan-to-value-Ratio: The
relationship between the amount of a home mortgage and the total
value of the property. Lenders may limit their maximum mortgage
to 80 to 90 percent of the value.
Lock-in-Rate: A commitment
made by lenders on a mortgage loan to “lock in” a rate
pending mortgage approval. Lock-in periods may vary between lenders.
Market Value: The
highest price a buyer will pay for a property.
Mortgage Broker: An
individual or company that obtains mortgages for others by finding
lending institutions, insurance companies or private sources to
lend funds; may also make collections and handle disbursement.
Mortgage Insurance:
A policy that provides protection for the lender in case of default
and guarantees repayment of the mortgage if the borrower becomes
disabled or dies.
Negative Amortization:
An increase in the outstanding balance of a mortgage resulting from
the failure of periodic debt service payments to cove required interest
charges on the loan.
Private Mortgage Insurance
(PMI): Insurance issued to a lender by a private company
to protect the lender against loss on a defaulted mortgage loan.
Its use is generally limited to loans with high loan-to-value ratios.
The borrower remits the premiums.
Title: A legal document
representing evidence of ownership.
Title Insurance: Protection
from lenders and homeowners against financial loss resulting from
legal defects in the title.
Title Defect: An outstanding
claim or encumbrance on a property that affects its marketability.
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Today's
conforming rate on 
15-Year
fixed mortgage:
