MORTGAGE GLOSSARY
agreement to accept a certain interest rate, regardless of whether the interest rate changes from that date forward. It normally covers the amount of points that you agree to pay for that interest rate. Although it is often times a verbal agreement, it should be in writing for your protection.
MORTGAGE This word has two different meanings.
The legal document that is recorded in the public records of the county where the home is located, that pledges the property to the lender as collateral for a loan. (aka - Deed of Trust)
It is another word for loan.
MORTGAGEE This is the lender in a mortgage transaction.
MORTGAGE INSURANCE This is insurance for the lender on a mortgage loan. It insures the lender a portion of the loan funds should the borrower default on the mortgage. Some mortgage insurance companies are private companies. Other mortgage insurance is issued from government entities such as Federal Housing Administration or Veterans Administration. (aka - FHA, VA, PMI or MI)
MORTGAGOR This is the borrower in a mortgage transaction.
NEGATIVE AMORTIZATION This is when your monthly mortgage payment is not enough to cover all of the interest portion of the payment. This surplus of interest is added to the unpaid portion of the loan, which makes the loan balance higher than the original loan amount.
NO CASH-OUT REFINANCE This is a mortgage transaction where an existing mortgage is paid off by a new mortgage. The new mortgage may cover the costs of the loan but the borrower does not use any existing equity in the home for any other purpose at that time. (aka - Refinance, Refi, Limited Refinance)
PREPAYMENT PENALTY This is a fee that is charged by a lender if the mortgage is paid prior to an agreed upon date. This penalty fee is disclosed and agreed to prior to loan closing and is included in the legal documents of the mortgage.
ORIGINATION FEE This is a closing cost. It is the fee paid to the lender for their services. (aka - origination point)
POINT This is a closing cost. There are two different types of points. See Discount Point and Origination Fee. A point is one percent of the loan amount. One point on a $100,000 mortgage is $1000.
PRE-QUALIFICATION The process of calculating what loan amount the borrower will qualify for using standard lending guidelines. The calculation is normally based on income, monthly debts and down payment.
PRINCIPAL, INTEREST, TAXES AND INSURANCE This is a complete monthly mortgage payment. (aka - PITI, Mortgage payment)
REAL ESTATE SETTLEMENT
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