| Adjustable Rate Mortgage |
 | a mortgage loan in which the interest varies in accordance with
changes in a specified index, and may result in changed monthly
payments.
|
| Adverse Action |
| a denial of a loan in an amount and on terms acceptable to the
borrower.
|
| Annual Percentage Rate (APR) |
| the actual cost of credit to the borrower, including interest and
certain other charges,expressed as a yearly rate and calculated over the
life of the loan.
|
| Application |
| an oral or written request for an extension of credit. Usually a
printed form on which the lender collects credit, income and debt
information about a prospective borrower, plus facts about the property
being used to secure the loan. A fee may be charged at the time of
application.
|
| Appraisal |
| an inspection of the property to assure that its market value
exceeds the amount of the loan. A fee may be charged for the appraisal.
|
| Borrower |
| the person, sometimes referred to as the mortgagor, who obtains a
mortgage loan.
|
| Closing |
| the time and date set for the transfer of the property from seller
to buyer and/or for the signing of the loan documents.
|
| Closing Costs (settlement costs) |
| fees, in addition to the purchase price of the property, charged at
closing which include but are not limited to lawyer's fees, title search
and insurance, survey charges and fees to record the deed, mortgage and
other documents.
|
| Commitment Letter |
| a lender's written offer to grant a mortgage loan outlining the
terms, the amount of the loan, the interest rate, and any other
conditions. It can also serve as a communication of the lender's
decision on the borrower's application.
|
| Counter Offer |
| an offer made by the lender to grant credit other than in the amount
or terms requested by the application.
|
| Equal Credit Opportunity Act |
| federal and state laws that prohibit discrimination in the granting
of credit based on race, color, religion, national origin, sex, marital
status, age, or whether a person is receiving public assistance or
alimony.
|
| Escrow Account |
| money collected in advance by the lender, usually on a monthly
basis, for the payment of real estate taxes, betterment's and/or
insurance.
|
| Fixed Rate Mortgage |
| a conventional mortgage loan with a set interest rate and equal
monthly payments for the entire term of the loan.
|
| Lender |
| the entity or person, sometimes referred to as the mortgagee, who
offers the mortgage loan.
|
| Lien |
| a legal claim, granted by contract or by a court, against a
property. A mortgage is one link of lien.
|
| Loan to Value Ratio |
| the percentage comparison between the unpaid principal balance of
the mortgage and the sales price or the appraised value of the property,
whichever is lower.
|
| Mortgage |
| a lien placed by the lender on the borrower's property and removed
when the note has been paid in full. If the borrower defaults on the
note, the lender can sell the property to satisfy the debt.
|
| Mortgage Review Board |
| a voluntary board consisting of an equal number of lenders and
community representatives who will review the residential mortgage loans
denied by participating lenders where the applicants believe the denial
was based on the location of the property.
|
| Note |
| the borrower's legally binding written promise to repay a debt to a
lender on a specific date.
|
| Point |
| a sum of money, equal to one percent of the principal amount of the
mortgage, charged by the lender to cover certain costs of making a loan
or to "buy down" your interest rate.
|
| Private Mortgage Insurance |
| protection for lenders against borrower default. Paid for by the
borrower and usually required when the down payment is less than 20% of
the purchase price.
|
| Rate Lock Agreement/Interest Rate Commitment |
| a written agreement by which a lender will hold an interest rate on
a mortgage for a specified period of time. The terms and conditions of a
rate lock agreement vary from lender to lender.
|
| Real Estate Settlement Procedures Act (RESPA) |
| a federal law that requires a good faith estimate of closing costs
required to be given on certain first mortgage.
|
| Right of Rescission |
| state and federal laws that allow consumers who refinance first
mortgage and certain second mortgages to cancel their contract and
receive a refund of all the mortgage fees. This must take place within
three business days following the closing, or following the delivery of
the required information and rescission forms and disclosures, whichever
occurs last.
|
| Secondary Mortgage Market |
| investors who purchase residential mortgages originated by lenders.
|
| Title Insurance |
| protection against loss due to defects in the title that were not
uncovered in the title search and not listed in the title report. Both
the lender and the borrower may purchase title insurance to protect
their own interest.
|
| Title Search |
| an examination of legal records to check the validity and
completeness of the title to the property. The title search should
uncover any liens, overdue assessments or other claims against the
property.
|
| Truth in Lending |
| federal and state laws that require lenders to provide borrowers
with full disclosure of the true cost of a loan and easy to understand
information about the annual percentage rate and terms of the loan.
|
| Urea Formaldehyde Insulation Notice (UFFI) |
| a state law requiring a borrower or seller to disclose to a lender
the absence or presence of UFFI and formaldehyde lever in a dwelling.
|
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