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Mortgage Glossary
Legal Fees and Disbursement - Some of the legal costs associated with the sale or purchase of a property. It's in your best interest to engage the services of a real estate lawyer.
Lender - The bank, mortgage company, or mortgage broker offering the loan.
Lender Processing Fee - The lender processing fee covers the cost of analyzing your loan application and compiling and packaging the necessary supporting documentation to close your loan.
Lien - A legal claim by one person on the property of another for security for payment of a debt.
Loan Fraud - Loan Fraud occurs when trying to qualify for a better loan by giving false information.
Loan Origination Fee - Fee charged by a lender to cover administrative costs of processing a loan. This usually includes the evaluation, preparation, and submittal of the loan.
Loan-To-Value Ratio (or LTV) - The percentage of the loan amount to the appraised value (or the sales price, whichever is less) of the property. The Loan-to-Value Ratio and down payment are different ways of expressing the same set of facts. This is calculated by taking the amount to be borrowed divided by the value of the home. For example, Jane wants to buy her first house which costs $100,000. She has a down payment of $15,000 and needs to borrow the remaining $85,000. The loan-to-value is 85% ($85,000 divided by $100,000).
Lock or Lock-In - 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.
London Interbank Offered Rate (or LIBOR) - The interest rate charged among banks in the foreign market for short-term loans to one another-a common index for ARM loans.
back to topManufactured Home - A factory assembled home built in units or sections that are transported to a permanent site and erected on a foundation. Manufactured Homes can range from small trailers to a large residence, manufactured homes are usually built without knowing where they will be sited, and are subject to a Federal building code administered by HUD.
Market Value - A factory assembled home built in units or sections that are transported to a permanent site and erected on a foundation. Manufactured Homes can range from small trailers to a large residence, manufactured homes are usually built without knowing where they will be sited, and are subject to a Federal building code administered by HUD.
Maturity - The date when the principal loan balance is due.
Maximum Cash Out - The maximum amount of money you are allowed to get back from your mortgage transaction based on the loan information provided and the amount of equity you have in your home.
Maximum Monthly Payment - As part of your Mortgage 1stuml; approval, you are given a maximum monthly payment for which you qualify based on the information you provided. This maximum payment is inclusive of the four major components of a typical mortgage payment: taxes, insurance, loan principal and interest.
Monthly Mortgage Payment - A monthly mortgage payment typically contains four parts called the PITI (principal, interest, taxes, and insurance). If you pay your taxes and insurance on your own, you pay only principal and interest to your lender.
Monthly Principle and Interest (or P&I) Payment - Principal and interest is the dollar portion to repay the loan. All interest that occurs is calculated on the current balance owing. The principal reduces the remaining balance of a mortgage.
Mortgage - A legal document by which real property is pledged as security for the repayment of a loan. Not to be confused with a mortgage loan.
Mortgage Broker - An individual or company that arranges financing for borrowers. The mortgage broker matches lenders with borrowers who meet the lenders criteria. The mortgage broker does not fund the loan but they do receive a payment from the lender for their services.
Mortgage Insurance - 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 appraised value. (Note, however, that FHA and VA loans have different insurance guidelines.)
Mortgage Note - Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage or deed of trust or other security instrument.
Mortgagor - (see borrower).
back to topNegative Amortization - 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.
Non-Assumption Clause - A statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender.
Notice of Default - Written notice to a borrower that a default has occurred and that legal action may be taken.
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Quicken Loans
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