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632 W. Montrose Street, Clermont, FL
 
(across from city hall, next to library)

 

 

Basic Mortgage Terms

You'll hear and see these words in nearly every discussion about home loans.

amortization
Repayment of your loan amount through regular payments of both principal and interest, calculated to pay off the loan after a fixed period of time.

 

annual percentage rate (APR)
Charges imposed on the borrower to obtain a mortgage, expressed on an annualized basis as an interest rate. It includes the interest rate, loan fees and points.

 

appraisal
The act of preparing a report by a qualified appraiser setting forth an opinion or estimate of the value of a piece of real state.

 

appreciation
An increase in property value caused by economic factors.

 

assessed value
The value placed on property for the purpose of taxation.

 
bridge loan
Borrowing against the equity in one's present home to enable the purchase of another home before the existing home sells.
 
buy-down
A cash payment to a lender to reduce the interest rate a borrower must pay.
 
closing
The occasion where a sale is finalized; the buyer signs the mortgage and the note and closing costs are paid; the seller warrants the title and transfers ownership of the property in consideration for the funds provided by the borrower and the borrower's mortgage company.
 
closing costs
EMoney paid by the borrower to effect the closing of a mortgage loan. This normally includes an origination fee, title insurance, survey, attorney's fees and pre-paid items.
 
closing statement
A financial disclosure accounting for all funds received and expected at settlement.
 
commitment
A written promise to make or insure a loan for a specified amount and on specified terms.
 
conventional mortgage
A private mortgage loan neither government insured nor government guaranteed.
 
cosigner
Person who agrees to make loan payments, if you cannot fulfill your financial commitment.
 
credit report
A report of an individual's credit history prepared by a credit bureau and used by the lender in determining loan applicant's credit worthiness.
 
deed
A written document which transfers ownership of land from one party to another.
 
discount point
One percent of the face amount of the loan. Discount points are a one-time charge assessed at closing by the lender to increase the yield to a competitive level.
 
down payment
Cash paid by the home buyer towards the partial payment of a home's sales price.
 
encroachment
Any physical intrusion upon the property of another. It is usually revealed by a survey.
 
equity
The difference between a property's fair market value and the current indebtedness.
 
equity line of credit
A revolving line of credit against the equity in one's home.
 
escrow impounds
Funds held by the lender or servicer of a mortgage loan for the payment of hazard insurance, taxes, homeowner's dues or private mortgage insurance when they come due. These funds are collected at closing and monthly with the regular mortgage payment.
 
Fannie Mae
Federal National Mortgage Association. A government-sponsored private corporation that buys home loans from lenders and sells them to investors.
 
FHA
Federal Housing Administration. An agency within the Department of Housing and Urban Development that provides mortgage insurance for home loans and sets standards for construction and underwriting.
 
hazard insurance
A contract whereby an insurer, for a premium, will cover a home for loss by fire or windstorm.
 
homestead tax exemption
The Florida Constitution allows a tax exemption from assessed property value. This exemption is currently $25,000.00 for all qualifying homesteads.
 
loan closing
The process of formulating, executing and delivering all documents required by a permanent investor, the disbursement of mortgage funds, and the protection of the investor's security.
 
loan to value ratio (LTV)
The relationship between the mortgage amount and the appraised value (or sales price if lower) of the security property.
 
mortgage insurance
An insurance policy to protect the lender from loss caused by a borrower's default. This insurance is not required if the down payment on a property is 20% or more of the sales price, or if the LTV in the property is 80% or lower in the case of a refinance loan.
 
negative amortization
A situation where the loan balance increases over time, rather than decreases.
 
negative amortization
Increase in the unpaid loan balance created when monthly payments do not cover both principal and interest and unpaid interest is added to the principal balance.
 
origination fee
The fee for the work involved in the evaluation, preparation, and submission of a proposed mortgage loan.
 
points
Upfront fee lenders charge to reduce an interest rate. Each point typically equals 1 percentage point of the total amount of the loan.
 
prepayment clause
The right given to a borrower to pay all or part of a debt prior to maturity without penalty.
 
prepayment penalty clause
A provision in a mortgage that requires a borrower to pay a monetary penalty if the mortgage payments are made in advance of the normal due date or the mortgage is paid in full ahead of schedule.
 
principal
The original amount of money borrowed not including interest owed.
 
quitclaim deed
A deed transferring (with no warranty) the interest or right the grantor may have at that time; a release.
 
real estate sales contract
A written agreement whereupon a seller commits to sell and a buyer commits to buy certain real estate.
 
servicing
The collection for an investor of payments, interest, principal, and trust items in accordance with terms of the note.
 
survey
The procedure used to measure and describe a specific tract of land for the purpose of determining exact boundaries and the area contained therein.
 
title
The evidence of the right to ownership of property.
 
title insurance policy
A contract by which the insurer agrees to pay the insured a specific amount for any loan loss resulting from defects in the title to real estate.
 
usury
Charging more for the use of money than allowed by law.
 
warranty deed
A deed in which the grantor warrants or guarantees title against any and all claims.
  Licensed Mortgage Brokerage Business. © 2014 Kinder Mortgage. All rights reserved. Pre-qualification is neither pre-approval nor a commitment to lend; you must submit additional information for review and approval. Approval may be subject to rate increases, satisfactory title and appraisal review, and no change in financial condition.