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Terminology
Here Are Some Helpful Terms Used Throughout The Real Estate,
Mortgage, and Title Processes.
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Manufactured Home |
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A factory assembled residence built in units or sections that are transported to a permanent site and erected on a foundation. |
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Margin |
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The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment. It is typically between 2.5 to 3% on a conforming loan. Sub-prime loans may have margins of 5% to 6%. |
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Marketable Title |
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A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection. |
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Maximum Cash Out |
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The maximum amount of money you are allowed to get back from your mortgage transaction based on the loan information provided and the amount of equity you have in your home. |
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Maximum Monthly Payment |
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As part of your loan approval, you are given a maximum monthly payment for which you qualify based on the information you provided. This maximum payment is inclusive of the three major components of a typical mortgage payment: loan principal and interest, taxes, and insurance. |
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Monthly Mortgage Payment |
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A monthly mortgage payment typically contains three parts called the PITI (principal & interest, taxes, and insurance). If you pay your taxes and insurance on your own, you pay only principal and interest to your lender. |
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Monthly Principal and Interest (P&I) Payment |
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Principal and interest is the dollar portion to repay the loan. All interest which occurs is calculated on the current balance owing. The principal reduces the remaining balance of a mortgage. |
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Monthly Principal and Interest (P&I) Payment |
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Principal and interest is the dollar portion to repay the loan. All interest which occurs is calculated on the current balance owing. The principal reduces the remaining balance of a mortgage. |
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Mortgage |
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A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under government-insured or loan-guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, PUD association fees, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off. |
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Mortgage (Open-End) |
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Line of Credit. A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no more than would raise the balance to the original loan figure. |
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Mortgage Banker |
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A company who is a direct lender but does not retain loans they have made. They use a line of credit to fund loans and immediately sell the mortgage, at closing or within a matter of days, to another lender at which time the borrower will receive a "Goodbye Letter" announcing who they will be sending payments to. Mortgage Bankers do not service loans. |
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Mortgage Broker |
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A person (not an employee of a lender) who brings a borrower and a lender together to obtain a federally-related mortgage loan. A mortgage broker has access to a variety of lenders and offers the most choice in loan programs. 1999 saw Mortgage Brokers with a 70% market share of all originations. |
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Mortgage Commitment |
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A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house by a certain date. |
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Mortgage Insurance Premium (MIP) |
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The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of 1/2% paid by the mortgagor on a monthly basis. |
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Mortgage Note |
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A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment. |
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Mortgage Term |
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The length of time given to repay the loan. |
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Mortgagee |
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The lender in a mortgage agreement. |
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Mortgagor |
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The borrower in a mortgage agreement.
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Multiple Listing Service (MLS) |
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A service offered to participating real estate brokers that lists available homes for sale. The listings are published and distributed among the member brokers to assist in sales efforts.
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