Mortgage Terms and Definitions

• Adjustable Rate
  Mortgage (ARM) - A mortgage with and interest rate that fluctuates
  according to the movements of a predetermined index. There are several
  types of ARM's, some change quicker than others, but all have a ceiling
  cap.
  
• APR (Annual Percentage
  Rate) - A term used in the Truth-in-Lending Act to represent the
  percentage relationship of the total finance charge to the amount of
  the loan. The APR reflects the cost of your mortgage loan as a yearly
  rate. It will be higher than the interest rate stated on the note because
  it includes, in addition to the interest rate, loan discount points,
  fees and mortgage insurance.
  
• Consolidation Mortgage
  - Available up to 85% of current appraised value of your home. Good
  credit and provable income are required on any mortgage in this category
  exceeding 70% of the current appraised value on your home.
  
• Conventional Mortgage
  - Any mortgage that is not insured or guaranteed by the federal government.
  
• Equity - A
  homeowner's financial interest in a property. Equity is the difference
  between the fair market value of a property and the amount still owed
  on the mortgage.
  
• Fixed Rate Loan
  - A mortgage in which the interest rate does not change during the entire
  term of the loan.
  
• High-Ratio Mortgage
  - Mortgage loans in excess of 80 percent of the loan amount divided
  by the lower of the sales price or appraised value.
  
• Interest Rate
  - The fee charged for borrowing money.
  
• Line of Credit
  Mortgage - A line of credit secured by a mortgage on your property.
  
• Market Rate
  - The average rate charged by lenders for conventional, fixed-rate loans.
  
• Mortgage Life Insurance
  - Standard or reducing term insurance that will payout your mortgage
  in the event of death. Available for single or joint borrowers. Super
  rates.
  
• Mortgagor -
  The borrower giving the lender a lien on property as security for the
  repayment of a loan.
  
• Mortgagee -
  The lender that holds the lien on property as security for the repayment
  of a loan.
  
• Private Mortgage
  - Insurance paid for by the borrower to insure the lender against default
  in conventional loans.
  
• Principal -
  The amount borrowed or remaining unpaid; also, that part of the monthly
  payment that reduces the outstanding balance of a mortgage.
  
• Qualifying Ratios
  - Guidelines applied by the lenders to determine how large a loan to
  grant a home buyer.
  
• Refinancing
  - The process of paying off one loan with the proceeds from a new loan
  using the same property as security.
  
• Reverse Mortgage
  - A special program for the elderly that provides income until death.
  Payment requirements are arranged through the increase in the principal
  amount of the loan.