Additional principal occurs when the monthly payments cover only part of the interest then due. The interest cost that is not covered is added to the unpaid principal balance. This additional amount is additional principal. It may also be called “negative amortization.”

A mortgage that permits the lender to adjust its rate periodically in relation to an index. Payments may increase or decrease accordingly.

The legal contract between buyer and seller of a property including the sale price, settlement date, and all conditions and terms of the sale.

A timetable for payment of a mortgage showing the amount of each payment applied to interest and principal and the balance remaining. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.

The total yearly cost of a mortgage stated as a percentage of the loan amount; includes such items as the base interest rate, primary mortgage insurance, and loan origination fee (“points”).

A fee charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a loan.

An increase in the value of a property 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 by the buyer when a home is sold.

A type of mortgage loan in which a lump sum payment for the unpaid balance of the loan.

A preliminary agreement, secured by the payment of earnest money, under which a buyer offers to purchase real estate.

A procedure in which the seller or builder of a property permanently or temporarily reduces the amount of interest the buyer will have to pay by paying points to the mortgage lender at closing.

A provision of an ARM limiting how much the interest rate or mortgage payments may increase or decrease.

Receiving money back when refinancing your present mortgage.

The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage

A certificate issued by a local building department to a builder or renovator, stating that the building is in proper condition to be occupied and the legally permissible use.

The meeting during which the title to property actually changes hands, documents are executed and the sale of the property and/or the loan is completed. It is usually attended by the buyer, the seller, a bank representative, each party’s attorney and the title company representative.

Costs associated with securing a mortgage and the sale and purchase of property. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.

Written agreement detailing the terms and conditions by which the bank will lend and the borrower will borrow funds to finance a home.

A structure of two or more units, the interior space of which are individually owned.

The amount of a Fannie Mae (FNMA)-established maximum loan amount based on the property’s legal number of units (1 family, 2 family, etc.). Generally, a mortgage loan under $203,150. Qualifying ratios and underwriting methods are standardized to a large degree.

Written contract signed by both parties in which the seller agrees to sell and the buyer agrees to buy under certain specific terms and conditions.

An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.

A structure of two or more units in which the right to occupy a unit is obtained by the purchase of stock in the corporation which owns the building.

An offer to extend credit on different terms than the applicant originally requested.

Generally, almost any promise set forth in a written agreement. Most commonly, assurances set forth in a deed by the grantor or implied by law.

A legal document conveying title (ownership) to real property from one individual to another.

The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000)

A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.

The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.

The right to enter or use a portion of the land of another for a specific purpose.

Construction, such as a wall, fence, building, etc. on the property of another.

The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.

Funds held by the lender, set aside for payment of taxes and possible property and mortgage insurance and other recurring charges against real property. (Monthly mortgage payments usually included principal, interest and escrow amounts.)

A federal agency purchasing first mortgages, both conventional and federally insured, from members of the Federal Reserve System and the Federal Loan Bank System.

A part of the U.S. Dept. of Housing and Urban Development which offers mortgage loan insurance programs to buyers of qualifying properties.

A mortgage that is insured by the Federal Housing Administration.

A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.

Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance. Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance. Models can be developed from different sources of data. Credit-bureau models are developed from information in consumer credit-bureau reports.

Credit scores analyze a borrower's credit history considering numerous factors such as:

A mortgage that has first claim in the event of default.

A quasi-government agency, now publicly owned, which purchases mortgages from the original mortgage lenders.

The total dollar amount your loan will cost you. It includes all interest payments during the term of the loan, any interim interest paid at closing, your origination fee and any other charges paid to the lender or to a third party or an incident or a condition of the extension of credit. Certain charges like the appraisal, credit report and the title search charges are not included in the finance charge calculation.

An interest rate which is fixed for the term of the loan. Payments as well are fixed at one amount.

Insurance indemnifying against loss by flood damage, required by lenders in areas designated (federally) as potential flood areas.

The legal remedy used by a mortgage lender to assume ownership of a property when the required loan payments are not made.

A written estimate of closing costs which a lender must provide you within three days of submitting an application.

Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc. It’s dependent upon the terms of the policy.

A loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Simple interest (interest-only payments on the outstanding balance) is usually tax-deductible. Often used for home improvements, major purchases or expenses, and debt consolidation.

A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.

The ratio of the monthly housing payment (PITI) to total gross monthly income. Also called Payment-to-Income Ratio or Front-End-Ratio.

The U.S. Department of Housing and Urban Development.

A published interest rate not controlled by the lender to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. The index and the interest rate linked to it may increase or decrease.

A share or right in some property. Also, money charged for the use of money (principal).

The periodic charge, expressed as a percentage, for use of credit.

Mortgage loans over $203,150. Terms and underwriting requirements may vary from conforming loans.

An encumbrance against property for money due, either voluntary or involuntary.

The maximum interest rate that can be charged during the life of the loan. Also called Life Cap of Life Rate.

A provision of an ARM that limits the highest rate that can occur over the life of the loan.

The ratio of the amount of your loan to the value of the home.

A written agreement guaranteeing the home buyer 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 number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period.

A legal document that pledges a property to the lender as security for payment of a debt.

A disability insurance policy that will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.

Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.

A term life insurance policy that covers the declining balance of a loan secured by a mortgage, and is payable upon death of a covered borrower.

The lender in a mortgage loan transaction.

The borrower in a mortgage loan transaction.

Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because of various reasons, including loan amount, loan characteristics or underwriting guidelines. Non-conforming loans usually incur a rate and origination fee premium.

A written agreement containing a promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand.

A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan. Usually a percentage of the amount loaned, such as one percent.

A property purchase transaction in which the property seller provides all or part of the financing.

A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.

Principal, interest, taxes and insurance-the components of a monthly mortgage payment.

Charges levied by the mortgage lender and usually payable at closing. One point represents 1% of the face value of the mortgage loan.

Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.

Amount of debt, not including interest. The face value of a note or mortgage.

Insurance provided by non-government insures that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%

The ratio of your fixed monthly expenses to your gross monthly income, used to determine how much you can afford to borrow.

A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

The process of paying off one loan with the proceeds from a new loan using the same property as security.

A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.

An agreement in which the owner of a property provides financing, often in combination with an assumed mortgage.

A print showing the measurements of the boundaries of a parcel of land, together with the location of all improvements on the land and sometimes its area and topography.

A form of ownership in which husband and wife are co-owners with rights of survivorship.

An undivided interest in property taken by two or more persons. The interest need not be equal. Upon death of one or more persons, there is no right of survivorship.

The evidence one has of right to possession of land.

Insurance against loss resulting from defects of title to a specifically described parcel of real property.

An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.

A federal law requiring a disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms of different financial institutions.

The process of verifying data and approving a loan.

An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.

A government agency guaranteeing mortgage loans with no down payment to qualified veterans.

Additional principal occurs when the monthly payments cover only part of the interest then due. The interest cost that is not covered is added to the unpaid principal balance. This additional amount is additional principal. It may also be called “negative amortization.”

A mortgage that permits the lender to adjust its rate periodically in relation to an index. Payments may increase or decrease accordingly.

The legal contract between buyer and seller of a property including the sale price, settlement date, and all conditions and terms of the sale.

The total yearly cost of a mortgage stated as a percentage of the loan amount; includes such items as the base interest rate, primary mortgage insurance, and loan origination fee (“points”).

A fee charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a loan.

An increase in the value of a property 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 by the buyer when a home is sold.

A type of mortgage loan in which a lump sum payment for the unpaid balance of the loan.

A preliminary agreement, secured by the payment of earnest money, under which a buyer offers to purchase real estate.

A procedure in which the seller or builder of a property permanently or temporarily reduces the amount of interest the buyer will have to pay by paying points to the mortgage lender at closing.

A provision of an ARM limiting how much the interest rate or mortgage payments may increase or decrease.

Receiving money back when refinancing your present mortgage.

The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage

A certificate issued by a local building department to a builder or renovator, stating that the building is in proper condition to be occupied and the legally permissible use.

The meeting during which the title to property actually changes hands, documents are executed and the sale of the property and/or the loan is completed. It is usually attended by the buyer, the seller, a bank representative, each party’s attorney and the title company representative.

Costs associated with securing a mortgage and the sale and purchase of property. This normally includes an origination fee, discount points, attorney's fees, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.

Written agreement detailing the terms and conditions by which the bank will lend and the borrower will borrow funds to finance a home.

A structure of two or more units, the interior space of which are individually owned.

The amount of a Fannie Mae (FNMA)-established maximum loan amount based on the property’s legal number of units (1 family, 2 family, etc.). Generally, a mortgage loan under $203,150. Qualifying ratios and underwriting methods are standardized to a large degree.

Written contract signed by both parties in which the seller agrees to sell and the buyer agrees to buy under certain specific terms and conditions.

An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.

A structure of two or more units in which the right to occupy a unit is obtained by the purchase of stock in the corporation which owns the building.

An offer to extend credit on different terms than the applicant originally requested.

Generally, almost any promise set forth in a written agreement. Most commonly, assurances set forth in a deed by the grantor or implied by law.

A legal document conveying title (ownership) to real property from one individual to another.

The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000)

A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.

The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.

The right to enter or use a portion of the land of another for a specific purpose.

Construction, such as a wall, fence, building, etc. on the property of another.

The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance.

Funds held by the lender, set aside for payment of taxes and possible property and mortgage insurance and other recurring charges against real property. (Monthly mortgage payments usually included principal, interest and escrow amounts.)

A federal agency purchasing first mortgages, both conventional and federally insured, from members of the Federal Reserve System and the Federal Loan Bank System.

A part of the U.S. Dept. of Housing and Urban Development which offers mortgage loan insurance programs to buyers of qualifying properties.

A mortgage that is insured by the Federal Housing Administration.

A mortgage that has first claim in the event of default.

A quasi-government agency, now publicly owned, which purchases mortgages from the original mortgage lenders.