A balloon mortgage is a type of loan that does not fully amortize over its term, leaving a balance due at the end of the period in a balloon payment. This large, lump-sum payment can be a surprise for borrowers who are not prepared or aware of this structure.
A closed-end mortgage is a type of mortgage loan whose principal amount cannot be increased during the payout period. This contrasts with an open-end mortgage, where the loan amount can be revised or increased.
A co-borrower is an additional person who signs a mortgage loan agreement, sharing responsibility for loan repayment and contributing to the household income used to qualify for the loan.
A co-signer is a person who signs a credit application alongside another individual, agreeing to be equally responsible for the repayment of the loan. This involves providing additional assurance to the lender that the loan will be repaid.
An equitable mortgage is a legal arrangement where the property is encumbered similarly to a traditional mortgage loan but may not technically qualify as a mortgage due to a legal error or omission in documentation. Despite these errors, the courts can enforce an equitable mortgage to reflect the intentions of the parties involved.
Fannie Mae (FNMA) is a government-sponsored enterprise (GSE) that backs and increases liquidity in the United States residential mortgage market by buying and guaranteeing mortgage loans.
A Federally Related Mortgage is a mortgage loan that is governed by federal laws and regulations due to involvement by federal agencies, ensuring compliance and protection for both lenders and borrowers.
A fifteen-year mortgage is a fixed-rate, level-payment mortgage loan with a maturity of 15 years, often chosen for its interest savings and quicker equity buildup compared to longer-term loans.
A high-ratio mortgage is a loan that requires a smaller percentage of down payment, typically covering more than 80% of the property's value. Such loans often necessitate mortgage insurance to mitigate risk.
Horizontal Property Laws are state statutes that enable condominium ownership of property, adjusting traditional property laws to allow for individual ownership of units within a building while maintaining shared interest in common elements.
Initial equity refers to the amount of down payment made by a buyer when purchasing a property. Initial equity does not include appreciation, mortgage amortization, or transaction costs.
A Letter of Commitment serves as official notification to a borrower from a lender, indicating the latter's intent to grant a loan. This letter typically specifies the terms of the loan, including interest rate, loan term, and sets a date for closing.
A loan is an arrangement in which one party borrows money from another party, often through formal agreements that detail the terms of repayment.
A decision by a lender to extend credit in a specified amount, often accompanied by a loan commitment outlining the terms and conditions. Also referred to as Loan Preapproval when provided before formal loan application.
Loan Origination is the comprehensive process of creating a new loan, which spans from the initial marketing efforts to the actual closing of the loan agreement. This critical phase in lending encompasses several steps to ensure that both the borrower and lender align with the terms.
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.
Mortgagee’s Title Insurance is a policy that protects the lender from future claims to ownership of the mortgaged property. Generally, this is required by the lender as a condition of issuing a mortgage loan.
Prepaid interest refers to interest that is paid in advance of the time it is earned. It's typically associated with mortgage loans where borrowers pay interest upfront to reduce future interest payments.
Purchase capital is the total amount of money used to acquire real estate, irrespective of its source, encompassing both equity and debt components.
A type of mortgage loan commonly used in Canada, where the amortization term for principal repayment extends over a long period, but the interest rate is set for a much shorter term. The interest rate is renegotiated, or the loan 'rolls over,' at the end of this shorter term based on current market conditions.
A satisfaction piece is an essential legal document that indicates the final payment of a mortgage loan, effectively releasing the lien on the property. By recording a satisfaction piece, borrowers officially demonstrate that their loan obligation has been fulfilled.
A Variable-Rate Mortgage (VRM) is a long-term mortgage loan applied to residential properties, under which the interest rate adjusts on a scheduled basis, typically every six months. Rate increases are restricted to no more than ½ point per year and a total of 2½ points over the Term. The term Adjustable-Rate Mortgage (ARM) is now more commonly used.
