Mortgage Definitions
February 3rd, 2009 | 
Author: Adjustable Rate Mortgage (ARM) - A mortgage with an interest rate that changes over time in line with movements in the index.
Adjustment Period – This is the length of time between rate changes. For example a 6 month adjustment period means that the rate will adjust every 6 months.
Amortization - The loans repayment schedule in equal installments of principal and interest from a starting loan Dollar amount down to a 0 balance.
Balloon Payment – This is a lump sum payment due at the end of a loan term to pay off balance.
Buydown - An interest rate that is lowered by paying a fee up front.
Escrow Account - the bank collects your yearly taxes and insurance dues in easy monthly installments and pays the dues for you.
Lien - A legal hold or claim on a property as security for a debt or charges.
Loan Commitment - This is a written promise to make a loan for a specific term.
Loan to Value - The ratio between the amount of the mortgage and the appraised value of the property. Loan divided by Value = LTV%
Mortgage - The lender that holds the lien on a property as security for the repayment of the loan.
Prepayment Penalty - A penalty fee paid to a lender for paying off the loan prior to the scheduled maturity.
Private Mortgage Insurance (PMI) - Insurance paid for by the borrower to insure the lender against default in a conventional loan
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Posted in Mortgage Definitions