Understand your Mortgage options better through our Online Dictionary of Mortgage Industry Terms.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ACH stands for Automated Clearing House, which is an electronic network for fiscal transactions in the United States. It processes high volume of debit and credit transactions including direct deposit, vendor payments, payroll, etc.
AMORTIZE By definition, amortize means to liquidate or extinguish a debt, mortgage, or another obligation through periodic payments to the lender over a period of time.
APPRAISAL A professional estimation of the value of the personal property or real estate.
ASSETS Assets are the valuable things owned by an individual.
BALLOON MORTGAGE It is simply a mortgage loan that is repaid in low-interest payments initially but involves a single large payment at the end of the loan term.
BUYER’S AGENT A real estate agent that guides a homebuyer through the home-buying transaction or works on behalf of the home buyer.
COLLATERAL A property or house that is pledged as security for mortgage loan repayment, and is subject to be surrendered in the event of a default.
CREDIT REPORT A report or a statement that details out an individual’s credit history. Lenders use credit report to determine a borrower’s credit worthiness.
CREDIT SCORE Credit score is a numerical expression (ranging from 300-850) that represents an individual’s creditworthiness.
DEED A legal document conveying the property ownership.
DOWN PAYMENT A down payment is the cash a home buyer pays upfront to get a home loan. It ranges usually between 3% and 20%.
EQUITY It is the real property value that a homeowner would receive after selling the property and paying off the mortgage.
ESCROW It refers to the funds a mortgage lender collects and holds on behalf of a customer for paying homeowner’s insurance, real estate taxes, mortgage insurance and other regular debts against the home.
FHA Federal Housing Administration (FHA) is a United States government agency under the National Housing Act (1934) that apart from setting construction standards, insures home loans offered by both banks and private lenders.
FIRST TIME BUYER A borrower taking out a loan for the first time.
FORECLOSURE A legal process where the mortgage lender acquires the home ownership in an event the borrower or home owner defaults on home loan.
A GOVERNMENT MORTGAGE It is a loan that is insured by government agencies, for example, the U.S. Department of Veterans Affairs or the FHA.
GOOD-FAITH ESTIMATE A written and itemized list of approximate loan costs and closing fees from a lender to prospective borrower within three days of home loan application.
HAZARD INSURANCE It is an insurance coverage on a home, which covers the home value in the event of damage to the home.
HOME INSPECTION A professional examination of home as part of mortgage process to decide the property condition.
INTEREST It is the percentage charged on a loan that should be paid to the lender in addition to the principal.
INVESTMENT PROPERTY A property other than a primary residence that is bought by an investor for generating income or for availing tax benefits.
JOINT OWNERSHIP A property ownership shared equally by two people.
LIEN A claim on home for payment of a debt allowing the lender to take the property title in case a borrower fails to repay the mortgage.
LIABILITIES Financial obligations and debts.
MARKET VALUE An estimated value of the house in the current real estate market.
MI Mortgage Insurance (MI) protects lenders against damages caused in an event a borrower defaults on a mortgage.
MORTGAGE COMPANY A direct lender or a brokerage business.
NO-FEE MORTGAGE A no-cost mortgage is a sales tactic used to attract prospective buyers lacking upfront closing fees.
POINTS 1% of the total mortgage loan amount. For a loan amount of $1,000,00, one point equals $1000.
PRINCIPAL The amount borrowed to purchase house but has not yet been paid back to the lender.
REFINANCE To refinance means replacing the current loan with a new one for low rates and better terms.
REMAINING BALANCE The current balance owed by a borrower on a mortgage loan.
SALES CONTRACT A formal written real estate agreement made between a homebuyer and a seller.
SECOND MORTGAGE A home equity loan that allows a borrower to access the cash equity in his or her home.
SHORT SALE A tool for homeowners and mortgage lenders to effect a fast sale when foreclosure could be a worst-case situation.
TENANCY IN COMMON More than one person possessing the property title with ownership declared in various percentages.
TILA Truth-in-lending-act (TILA) is United States federal law aimed at promoting the informed use of consumer credit.
UNDERWRITING A process used by lending company to determine a borrower’s creditworthiness before the approval.