Vocabulary IV Flashcards
mortgagor
The borrower in a mortgage agreement.
multidwelling units
Properties that provide separate housing units for more than one family, although they secure only a single mortgage.
negative amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it
may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called “deferred interest.” The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.
no cash-out refinance
A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the
current loan and any costs associated with obtaining the new mortgage. Often referred to as a “rate and term refinance.”
no-cost loan
Many lenders offer loans that you can obtain at “no cost.” You should inquire whether this means there are no “lender” costs associated with the loan, or if it
also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal,
recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by
the lender. Keep in mind that, like a “no-point” loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.
note
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
note rate
The interest rate stated on a mortgage note.
no-cost loan
Almost all lenders offer loans at “no points.” You will find the interest rate on a “no points” loan is approximately a quarter percent higher than on a loan where you pay one point.
notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken
original principal balance
The total amount of principal owed on a mortgage before any payments are made.
origination fee
On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called “discount points.” One
point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.
owner financing
A property purchase transaction in which the property seller provides all or part of the financing.
partial payment
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times
of hardship you can make this request of the loan servicing collection department.
payment change date
The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the
payment change date occurs in the month immediately after the interest rate adjustment date.
periodic payment cap
For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the
amount that payments can increase or decrease during any one adjustment period.
