The adjustment interval refers to the frequency at which the interest rate of an adjustable-rate mortgage (ARM) is recalculated. It plays a crucial role in determining how often a borrower's mortgage payments may change.
A Budget Mortgage is a mortgage structure which includes monthly payments for taxes and insurance, in addition to the standard interest and principal. This type of mortgage ensures that homeowners set aside the necessary funds for property tax and insurance premiums.
Buy-Up refers to the payment of points, or a rebate, to the borrower for taking a loan with an above-market interest rate. Commonly referred to as 'negative points,' this payment helps offset fees and other settlement costs associated with the loan.
The Federal Housing Administration, or FHA, is a U.S. government agency within the Department of Housing and Urban Development that administers various loan programs, loan guarantees, and loan insurance programs designed to make homeownership more accessible.
A Graduated-Payment Mortgage (GPM) is a type of fixed-rate mortgage where the initial payment starts low and then increases at regular intervals over a set period, after which it stabilizes for the remaining loan term.
A Growing-Equity Mortgage (GEM) is a type of mortgage loan where the payment increases by a specific amount each year, with the extra payment amount applied toward reducing the principal balance, thereby shortening the loan's maturity period compared to a traditional fixed-payment mortgage.
An insured mortgage is a type of home loan that is backed by either private mortgage insurance or government mortgage insurance programs to protect lenders against borrower default.
Loan points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also referred to as 'buying down the rate.'
Loan processing encompasses the various steps taken by a lender to approve a loan, from the initial application to the closing of the loan. It involves verifying the borrower's information and fulfilling necessary requirements to ensure the legality and financial viability of the loan.
MGIC is a provider of private mortgage insurance in the United States. Private mortgage insurance (PMI) protects lenders by covering mortgage payments in the event the borrower defaults, particularly when the borrower puts down less than 20% as a down payment.
A mortgage broker acts as an intermediary between borrowers and lenders. For a fee, typically paid by the lender, a mortgage broker connects borrowers to loan products without servicing the loans themselves.
Mortgage Guaranty Insurance Corporation (MGIC) is a company that provides mortgage insurance, which protects lenders from losses when a borrower defaults on a mortgage loan. MGIC ensures that lenders can recover the money if a borrower does not fulfill their loan obligation.
A mortgage loan is a type of loan secured by real estate property that the borrower is obliged to pay back with a predetermined set of payments. It allows individuals and businesses to purchase real estate without paying the full value upfront.
A mortgagor is the owner of real estate who provides their property as security for a mortgage loan.
The payment adjustment date is the specific date on which the interest rate of an adjustable-rate mortgage (ARM) can be adjusted to reflect changes in market interest rates.
The term 'Principal' in real estate can refer to the owner or user of the property, the client of an agent or broker, or the amount of money borrowed in a mortgage, excluding interest.
Principal and Interest Payment (P&I) refers to a periodic payment, usually made monthly, that includes the interest charges for the period plus an amount applied to the amortization of the principal balance, commonly seen with amortizing loans.
A rate guarantee, also known as a locked-in interest rate, ensures that the interest rate on a mortgage loan will not change for a specified period, even if broader market interest rates fluctuate during that time.
A Renegotiated Rate Mortgage (RRM) allows borrowers to renegotiate the interest rate of their existing mortgage, often providing an opportunity to lower monthly payments and overall interest costs.
A Savings and Loan Association (S&L) or thrift is a financial institution that focuses on accepting deposits from members and providing home mortgage loans.
A Shared Appreciation Mortgage (SAM) is a type of mortgage where the lender offers a reduced interest rate in exchange for a share of any increase in the value of the property.
A teaser rate is an initial lower interest rate offered on an adjustable-rate mortgage to entice borrowers, which eventually adjusts to the fully indexed rate.
A Variable-Rate Mortgage (VRM) is a real estate loan in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The rate adjustments are based on predetermined benchmarks such as the prime rate or U.S. Treasury rates.
The Department of Veterans Affairs (VA) is a federal agency providing a wide range of services to eligible veterans, including home loans with no down payment for those meeting specific service criteria.
