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Loan Signing System > Other Mortgage definitions* > Flashcards

Other Mortgage definitions* Flashcards

1
Q

Acceleration Clause

A

A common provision of a mortgage or note providing the holder with the right to demand that the entire
outstanding balance is immediately due and usually payable in the event of default.

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2
Q

Adjustment Interval

A

The length of time between changes in the interest rate or monthly payment on an ARM loan.

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3
Q

Agreement of Sale

A

Contract signed by buyer and seller stating the terms and conditions under which a property will be sold

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4
Q

Alternative Documentation

A

A method of documenting a loan file that relies on information that the borrower is likely to be able to provide
instead of waiting on verification sent to third parties for confirmation of statements made in the application.

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5
Q

Annual Percentage Rate (APR)

A

includes both your interest and any additional costs or prepaid finance charges you
might pay such as prepaid interest, private mortgage insurance, closing fees, points, etc.

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6
Q

Application Fee

A

Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the
cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during
the process or the fee may be in addition to these charges.

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7
Q

Appraisal

A

a written analysis of the estimated value of your property. A qualified appraiser who has
knowledge, experience and insight into the marketplace prepares the document. It demonstrates
approximate fair market value based on recent sales in your neighborhood and is required to purchase or
refinance your new home or property.

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8
Q

Assessed Value

A

The valuation placed upon a property by a public tax assessor for the purposes of taxation.

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9
Q

Assignment

A

The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the
assignee.

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10
Q

Assumption

A

A method of selling real estate where the buyer of the property agrees to become responsible for the
repayment of an existing loan on the property.
VA loans are usually allow another party to assume the loan.

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11
Q

Balloon Mortgage

A

short-term fixed-rate loans with fixed monthly payments for a set number of
years followed by one large final balloon payment for all of the remainder of the principal. Typically, the
balloon payment may be due at the end of five, seven, or ten years. Borrowers with balloon loans may have
the right to refinance the loan when the balloon payment is due, but the right to refinance is not guaranteed.

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12
Q

Bequest

A

A gift of personal property by will.

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13
Q

Blanket Mortgage

A

A mortgage that covers more than one parcel of real estate.

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14
Q

Broker

A

An individual who brings buyers and sellers together and assists in negotiating contracts for a client.

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15
Q

Broker Processing Fee

A

The fee charged to you to have your file packaged and handed over to a selected lender

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16
Q

Caps (interest)

A

Caps (interest)
Consumer safeguards that limit the amount the interest rate on an adjustable rate mortgage can change in
an adjustment interval and/or over the life of the loan. For example, if your per-period cap is 1% and your
current rate is 7%, then your newly adjusted rate must fall between 6% and 8% regardless of actual changes
in the index.

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17
Q

Caps (payment)

A

Consumer safeguards that limit the amount monthly payments on an adjustable rate mortgage may change.
Since they do not limit the amount of interest the lender is earning, these consumer safeguards may cause
negative amortization

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18
Q

Cash Out

A

Any cash received when you get a new loan that is larger than the remaining balance of your current
mortgage, based upon the equity you have already built up in the house. The cash out amount is calculated
by subtracting the sum of the old loan and fees from the new mortgage loan. For example, if your existing
loan is $100,000, you might refinance it with a loan of $120,000. After you pay off your current loan
($100,000) and any loan-origination costs for the new loan (for example $2,000 in points), you would be left
with $18,000 cash out

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19
Q

Cash reserve

A

A requirement of many lenders that buyer have sufficient cash remaining after closing to make the first two
mortgage payments.

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20
Q

Ceiling

A

The maximum allowable interest rate of an adjustable rate mortgage.

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21
Q

Certificate of Eligibility

A

Document issued by the Veterans Administration to qualified veterans and that verifies a veteran’s eligibility
for a VA guaranteed loan. Obtainable through local VA office by submitting form DD-214 (Separation Paper)
and VA form 1880

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22
Q

Certificate of Reasonable Value (CRV)

A

An appraisal issued by the Veterans Administration showing the property’s current market value

23
Q

Clear title

A

A title that is free of liens and legal questions as to ownership of the property.

24
Q

Comparables

A

e properties like the property under consideration; they have reasonably the same size,
location, and amenities and have recently been sold. They help the appraiser determine the
approximate fair market value of the subject property.

25
Q

Compound Interest

A

Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods.

26
Q

Conforming Loan

A

A mortgage loan that meets all requirements to be eligible for purchase by federal agencies such as Fannie
Mae and Freddie Mac. The maximum conforming loan amount is $300,700 for a one-unit property ($451,050
in Alaska, Hawaii and the Virgin Islands).

27
Q

Construction Loan

A

A short term interim loan for financing the cost of construction. The lender advance funds to the builder at
periodic intervals as the work progresses.

28
Q

Conventional Loan

A

Loans that are not made under any government housing program; they are not subject to the restrictions of
government housing programs, such as loan size limits.

29
Q

Conveyance

A

The document used to affect a transfer, such as a deed, or mortgage.

30
Q

Covenant

A

A written agreement or restriction on the use of land or promising certain acts. Homeowner Associations
often enforce restrictive covenants governing architectural controls and maintenance responsibilities.
However, land could be subject to restrictive covenants even if there is no homeowner’s association

31
Q

Due-on-Sale Clause

A

Provision in a mortgage or deed of trust allowing the lender to demand immediate payment of the loan
balance upon sale of the property.

32
Q

Earnest Money

A

Deposit made by a buyer towards the down payment in evidence of good faith when the purchase
agreement is signed.

33
Q

Fair, Isaac and Co.

A

The company that invented credit-scoring software

34
Q

Finance Charge

A

Your finance charge is the total of all the interest you would pay over the entire life of the loan, assuming you
kept the loan to maturity, as well as all prepaid finance charges. If you pre-pay any principal during your
loan, your monthly payments remain the same, but your total finance charge will be reduced.

35
Q

Guideline Ratios

A

Your finance charge is the total of all the interest you would pay over the entire life of the loan, assuming you
kept the loan to maturity, as well as all prepaid finance charges. If you pre-pay any principal during your
loan, your monthly payments remain the same, but your total finance charge will be reduced.

36
Q

Index

A

Most lenders generally tie adjustable rate mortgage loan (ARM) interest rate changes to an “index.” An index
is a widely published rate such as LIBOR, T-Bill, or 11th District Cost of Funds (COFI). Lenders use these
indices to establish the interest rates charged on mortgage loans. For ARMs, a predetermined margin is
added to the index to compute the interest rate adjustment.

37
Q

Joint Liability

A

Liability shared among two or more people, each of whom is liable for the full debt.

38
Q

Jumbo Loan

A

A mortgage larger than the limits set by Fannie Mae and Freddie Mac as shown below: Lower 48 States 1
unit $322,700 2 unit $413,100 3 unit $499,300 4 unit $620,500 Alaska and Hawaii 1 unit $484,050 2 unit
$619,650 3 unit $748,950 4 unit $930,750

39
Q

LIBOR (London Interbank Offered Rate)

A

The interest rate charged among banks in the foreign market for short-term loans to one another-a common
index for ARM loans.

40
Q

Lock or Lock-In

A

A lender’s guarantee of an interest rate for a set period of time-usually between loan application approval
and loan closing. The lock-in protects you against rate increases during that time.

41
Q

Margin

A

The percentage difference between the index for a particular loan and the interest rate charged. This is a
number predetermined by the lender.

42
Q

Negative Amortization

A

A loan payment schedule in which the outstanding principal balance of a loan goes up rather than down
because the payments do not cover the full amount of interest due. The monthly shortfall in payment is
added to the unpaid principal balance of the loan.

43
Q

Non-Assumption Clause

A

A statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without
the prior approval of the lender.

44
Q

Per Diem Interest

A

Interest calculated per day. (Depending on the day of the month on which closing takes place, you will have
to pay interest from the date of closing to the end of the month. Your first mortgage payment will probably be
due the first day of the following month.)

45
Q

Planned Unit Development (PUD)

A

a project or subdivision that consists of common property and
improvements that are owned and maintained by an owner’s association for the benefit and use of the
individual units within the project. For a project to qualify as a PUD, the owners’ association must require
automatic, non-severable membership for each individual unit owner, and provide for mandatory
assessments

46
Q

Private Mortgage Insurance (PMI)

A

Insurance to protect the lender in case you default on your loan. With conventional loans, mortgage
insurance is generally not required if you make a down payment of at least 20% of the home’s purchase
price. (Note, however, that FHA and VA loans have different insurance guidelines.)

47
Q

Real Financing Cost

A

The real financing cost is a consumer-oriented rate that takes into account specific costs, fees, potential rate
changes and the projected amount of time you will have the loan. The fees and costs are distributed over
the time you plan to be in the house, allowing you to do an apples-to-apples comparison of a variety of loan
types. The real financing cost is not the APR. The APR assumes that you keep your loan for the entire term
(e.g. 30 years for a 30-year fixed loan) and includes only some of your loan fees. The total financing cost
takes into account all of your closing costs associated with your loan and also how long you plan to be in
your house.

48
Q

RESPA

A

The Real Estate Settlement Procedures Act (RESPA) is a federal law that gives consumers the right to
review information about loan settlement costs after you apply for a loan and again at loan settlement. The
law obliges lenders to provide these settlement costs only after application

49
Q

Right to Rescission

A

Under the provisions of the Truth-in-Lending Act, the borrower’s right, on certain kinds of loans, to cancel the
loan within three days of signing a mortgage.

50
Q

Tax Lien

A

Claim against a property for unpaid taxes.

51
Q

Trade Lines

A

our different credit accounts listed on your credit report.

52
Q

Underwriting

A

In mortgage lending, the process of determining the risks involved in a particular loan and establishing
suitable terms and conditions for the loan

53
Q

Verification of Deposit (VOD)

A

Document signed by the borrower’s bank or other financial institution verifying the borrower’s account
balance and history.

Loan Signing System (4 decks)

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