Basic mortgage terminology pdf

With that in mind, here is a quick guide to ten basic mortgage terms, explained in language that any reasonably intelligent sixyearold should be able to understand. Bridge loan a short term loan taken out against one property to finance the purchase of a new property. The guide is an important resource that will help to create a much greater understanding of. Our glossary of mortgage loan terminology defines a variety of terms. There are many factors that come into play for people looking to buy a house. Assumption an agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Mortgage terminology mortgage training loan originators.

See private mortgage insurance or fha mortgage insurance. Bridge loan a bridge loan is a shortterm financing that is used by borrowers between the purchase and sale of a real estate property. The cfpbs glossary of english spanish financial terms. A mortgage insured by the fha that protects a lender if the borrower defaults on the loan. Definitions of common mortgage terms mortage terms. How to talk the talk buying a home can be exciting.

To calculate your monthly mortgage payment, simply multiply the relevant number from the table below by the size of your mortgage expressed in divided by thousands of dollars. Va loans are only offered to qualifying veterans and surviving spouses, while fha loans are available to all qualifying borrowers. Mortgage terminology security national mortgage company. You will deal with mortgage options, credit reports, loan applications, contracts, points, appraisals, change orders. The right of the mortgagee lender to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor borrower, or by using the right vested in the due on sale clause. Mortgage terminology 101 granite state credit union. Mortgage terminology abandonment the voluntary surrender of property, owned or leased. It can help you understand terms like adjustable rate mortgage and. Trying to figure out the path to owning the home or property of your dreams. A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Basic mortgage terminology pdf applying for a home equity loan is similar but easier than applying for a new mortgage.

A condensed history of the title to a parcel of land. It also can be somewhat daunting, even if youve done it before. Adjustablerate mortgage an adjustablerate mortgage arm is a product with a floating or variable rate that adjusts based on some index. Basic mortgage terminology best home equity loans of 2019. Each lender will follow roughly the same steps when assessing your application. A lender may permit early payout of a closed mortgage under certain circumstances but will charge a prepayment. The mortgage underwriter will approve or reject your mortgage loan application based on your credit history, employment history, assets, debts and other factors. More than likely, your mortgage professional is throwing many new terms and expressions your way. Beginning to search for your dream home can be a lot more successful if you are already preapproved for a mortgage.

In fact, when you think about buying a house or refinancing your mortgage, you feel like a college freshman entering his or her. If you want smaller mortgage payments, you can increase the amortization period to 30 years maximum. An interest rate that is used as a benchmark, or index, for pricing variablerate loans such as adjustable. Adjustable rate mortgage loan arm these are mortgages where the interest rate changes based on market conditions. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Mortgage broker an individual or company that brings borrowers and lenders together for the purpose of loan origination.

The basic mortgage terminology canadian mortgages inc. A written promise to pay a sum of money at a stated interest rate during a specified term. Cap the highest rate that an adjustable rate mortgage may reach. Simple interest simple interest is calculated by multiplying the original loan amount or outstanding balance by the term duration of the loan and the rate of. Mortgage glossary archive zillow mortgage learning center. A mortgage in which the vendor uses his or her own equity to provide some or all of the mortgage financing in order to sell the property. A mortgage loan that requires the remaining principal balance be paid at a specific point in time. Though the va does not directly originate these loans, they establish the rules for those who may qualify, dictate the terms of the mortgages offered and insure va loans against default. There are many factors that go into applying for a mortgage. Its complicated and full of acronyms, terms and jargon, none of which you have much knowledge about.

An amount equal to the replacement value of damaged property minus depreciation. If you fail to make your payments, you may lose your house. Blanket mortgage a single home loan used to provide financing for multiple properties, such as rental units. With that in mind, here is a quick guide to ten basic mortgage terms, explained in language that any reasonably intelligent sixyearold should be able to. Essential bank domain knowledge for it professionals you know, one of the most common questions i get from my readers is this how do i increase my banking domain knowledge. A mortgage is different in several ways, but notably, mortgages are falling out of use due to the difficulty in. Mortgage terms courtesy of the canadian association of accredited mortgage professionals. The most commonly used mortgage terms understanding mortgage. Mortgage glossary basic mortgage terminology fk capital fund. Understanding mortgage terminology will allow you to have a smoother home buying transaction. If you know the basic mortgage terms you will be able to flow with the home buying process with adequate knowledge.

Abandonment does not relieve obligations associated with ownership or lease. Failing to understand some of the terms could end up being quite expensive, so its important to get educated on the process before you begin. However, since banking is a significant part of our business and personal life, it is useful for consumers to learn some common banking terms. Basic terminology ina immigration nationality act uscis us citizenship and immigration services homeland security foreign national a foreign national is a person who is not a citizen of the us. Amortization amortization is a decrease in the value of assets with time, which is normally the useful life of tangible assets. The calculation assumes that you maintain the mortgage for the full term. The note contains a complete description of the conditions under which the loan is to be repaid and when it is due. The most commonly used mortgage terms understanding. Basic loan terminology, acronyms and resources universalclass. Answers to common questions, helpful borrower tips, and fha guidelines to make your fha loan experience a predictable and simple one. A mortgage is an important part of your financial picture, and you want to make sure you pick a home that you can afford. For more information, call 8774381199 to speak to one of our friendly mortgage professionals.

Here are definitions for some of the most commonly used terms within the financial lending industry, as well as links and summaries for key industry websites. Having launched it originally in 2004 we have now updated it with modern terminology to meet with the increasing demand for the book. The abstract consists of a synopsis of every recorded instrument affecting the title to that land arranged in chronological order of. Its important to understand the terms used in mortgage transactions to decide if a certain loan is right for you. Apr is an industry standard calculation and enables direct comparison of mortgages from all lenders. Zillow group is committed to ensuring digital accessibility for individuals with disabilities. Usually relates to a decrease in taxes or payments due. The loan is underwritten based on the value of the collateral home and the life expectancy of the borrower.

The main reason to take out a home equity loan is that it offers a cheaper way of borrowing cash than an unsecured personal loan. Mortgage insurance mortgage insurance is a product that guarantees debt repayment in the event of permanent disability or death of the policyholder. After all, it would be disappointing to look at a home only to discover you cant afford it. Many professionals i know particularly those in it and engineering want to make a switch over to the banking industry, citing better pay and prospects.

Mortgage payable office supply store utilities corporation taxes due. Mortgage insurance can be issued by a private company or by a government. Essential bank domain knowledge for it professionals. An adjustablerate mortgage, also known as a variablerate mortgage, generally starts out with an interest rate lower than a fixedrate mortgage. You will deal with mortgage options, credit reports, loan applications, contracts, points, appraisals, change orders, inspections, warranties, walkthroughs, settlement. Mortgage underwriter the mortgage underwriter is the professional authorized to assess if you are eligible for the mortgage loan you are applying for. It can be expressed as the actual rate or as the amount of change allowed above the start rate. But making this leap to homeownership is a big step, and its one that should be taken with careful.

A mortgage is commonly used to describe bank loans secured by real estate, but in california and many other states, a deed of trust is used rather than a mortgage. Housing apr annual percentage rate the total cost of a loan, including interest charges and product fees, shown as a percentage rate. Mortgage terminology explained when you first apply for a mortgage, you may feel youve stepped into a different culture with a language all its own. A reverse mortgage is a special home loan product that allows a homeowner aged 62 or older the ability to access the equity that has accumulated in their home. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to. The interest rate will be tied to some index such as the prime rate for example. Apr the annual percentage rate is the cost of borrowing money from the lender, shown as a percentage of your mortgage amount. Generally, there are three basic mortgage programs. Income statement financial statement of a business that reports the revenue, expenses and the net income loss of. Useful mortgage terminology to learn about and understand.

One of the most important, and confusing, decisions that people make is buying a home and taking out a mortgage to pay for the house. The reason behind this is a lack of knowledge for the basic mortgage related terminology. Federal housing administration fha loans, department of veterans affairs va loans and conventional mortgage loans. Here is a list of basic mortgage terms you should be familiar with. We are continuously working to improve the accessibility of our web experience for everyone, and we welcome feedback and accommodation requests. This az pocket guide to understanding financial terms is just one of the achievements of ebss partnership with nala. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost.

If a mortgage contains a dueonsale clause, it may not be assumed by a new buyer. If you own or want to own real estate, you need to understand mortgages. The mortgage business seems to have its own language. This glossary of mortgage terminology will help you get familiar with the home loan process. Once you understand basic mortgage terminology, you will better be able to make the best choices for your individual situation. Biweekly mortgage a mortgage where 26 half payments, or full payments, are made annually.

Mortgage dictionary glossary of key mortgage terms the. Basic mortgage terminology pdf best home equity loans of 2019. While the specifics differ from loan to loan, the basic tenet is that the borrower has been delinquent in making a payment on their loan default for a certain number of days or has failed to comply with one or more of the other terms of the promissory note. A fixedrate mortgage is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan. Mortgage insurance a contract that insures the lender against loss caused by a mortgagors default on a government mortgage or conventional mortgage. Basic mortgage concepts mortgage information mortgage terms. The mortgage underwriter will approve or reject your mortgage loan application based on your credit history, employment history, assets, debts. Financial statements financial statements written reports that describe the financial health of a company. Basic mortgage terminology pdf it is recommended for financing major oneoff expenses, including home renovations or repairs, medical bills, repayment of credit card debt, or funding college tuition. Yet securing a mortgage to buy real estate can be a task. Adjustable rate mortgage arm a mortgage in which the interest rate is adjusted periodically based on a preselected index.

An index is the interest rate fluctuation timetable for the adjustable rate mortgage. A mortgage is different in several ways, but notably, mortgages are falling out of use due to the difficulty in processing a foreclosure proceeding. Basic mortgage concepts mortgage information mortgage. Adjustablerate mortgage arm an adjustablerate mortgage, also known as a variablerate mortgage, generally starts out with an interest rate lower than a fixedrate mortgage. Ortgage arm also known as a variable rate loan, an arm usually offers a lower initial rate than a fixed rate loan. Fixed rate mortgages a fixed rate mortgage is where the rate of interest and payment amount are fixed for a specific term. Therefore, the following is a blog entry that encompasses a. Diplomat a diplomat is a person appointed by a state to conduct diplomacy with one or more other states or international organizations. In order to get the best deal for your mortgage you need to do your homework and shop around. Basic mortgage terminology definitions of common mortgage terms. Basic mortgage terminology definitions of common mortgage terms one of the most important, and confusing, decisions that people make is buying a home and taking out a mortgage to pay for the house. Mortgage dictionary adjustablerate mortgage an adjustablerate mortgage arm is a product with a floating or variable rate that adjusts based on some index.

Basic loan terminology, acronyms and resources basic loan terminology, acronyms and resources. For example, a loan may be amortized as if it would be paid. Oct 25, 2016 purchasing a home and conquering financial responsibility is a goal for many people. The basic mortgage terminology 12 october, 2010 by bryan jaskolka. Bridge loan a short term loan taken out against one property to. Your stepbystep mortgage guide freddie mac singlefamily. Purchasing a home and conquering financial responsibility is a goal for many people. The interest rate can change at a specified time, known as an adjustment period. But for highratio mortgages, the amortization period is 25.

A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a. Basic mortgage terminology pdf best home equity loans of. The lender will ask you for much of the same information as it would when applying for abn mortgage rates a mortgage. There are a lot of people that sit down with a mortgage broker, and are unable to follow exactly what they are saying. A contract in which a borrowers property is pledged as security for a loan that is to be repaid on an installment basis.

Department of veterans affairs to help vets and their families obtain home financing. Introduction listening and responding to consumers is central to the bureau s work to educate and empower. This list of mortgage terms should help you as you prepare to buy a new home. Part of doing your homework is learning the terminology of the mortgage industry. Here is a list of some mortgage related terms that will help you in your homebuying process. Mortgage broker a mortgage broker is a professional who acts as an intermediary between homebuyers and financial entities and helps clients to find a suitable mortgage product. Banking terms list of important banking terminology pdf. The basic result is that instead of making twelve monthly payments during the year, you make thirteen.

A full list of mortgage terms can be found at the canadian association of accredited mortgage professionals website. This glossary of common financial terms was created and is used by the bureau for translating consumer education materials from english to spanish. Flexible mortgage a closed mortgage agreement does not provide options for payout before the maturity date. Money paid to insure the mortgage when the down payment is less than 20 percent. This saves you money early on, and may help you qualify for a more expensive home. Jun 01, 2016 failing to understand some of the terms could end up being quite expensive, so its important to get educated on the process before you begin. Unfortunately for most of us, the mortgage field is jammed with jargon and fraught with fiscal pitfalls. Looking for basic mortgage terminology home builder construction loans pine river mortgage reit index purdue federal mortgage rates ptm in home loan premier mortgage.