The Annual Mortgage Constant is a ratio that quantifies the total annual mortgage payments, including both principal and interest, compared to the initial loan principal. It is used by lenders and borrowers to determine the yearly cost of a mortgage and assess its affordability.
A balloon payment is the final and often significantly large payment on a loan, typically required after a series of smaller installment payments. It clears the remaining debt owed on the loan.
A coupon book is provided by mortgage lenders to borrowers, containing a set of preprinted coupons that detail the account number, payment amount, and due date for each monthly mortgage payment. It simplifies the payment process, helping borrowers keep track of their payments.
Partial Payment is a payment that is less than the required monthly mortgage payment. Normally, lenders do not accept partial payments, but a lender may make exceptions during times of difficulty.
PITI stands for Principal, Interest, Taxes, and Insurance, which are the components of a mortgage payment. Understanding PITI is crucial for homeowners and prospective buyers as it determines the total cost of owning a home.
