 |
 |
Get Comparisons of Texas Home Loans!
| A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z |
Adjustable Rate Mortgage (ARM) -
A mortgage in which the interest rate is adjusted periodically based
on an index. Also called a variable rate mortgage.
Annual Percentage Rate (APR) -
A figure that states the total yearly cost of a mortgage as
expressed by the actual rate of interest paid. The APR includes the
base interest rate, points, and any other add-on loan fees and
costs. As a result the APR is invariably higher for the rate of
interest that the lender quotes for the mortgage but gives a more
accurate picture of the likely cost of the loan. Keep in mind,
however, that most mortgages are not held for their full 15 or 30
year terms, so the effective annual percentage rate is higher than
the quoted APR because the points and loan fees are spread out over
fewer years.
Appraisal -
The determination of property value based on recent sales
information of similar properties.
Appreciation -
Increases in property value due to fluctuations in the market,
inflation, et al.
B
Biweekly Mortgage -
Mortgage loan payments that requires a payment twice monthly,
yielding thirteen payments per year instead of twelve. This
significantly reduces the time a principal is paid off.
Blanket Mortgage -
A mortgage secured by the pledging of more than one property or
collateral.
Broker -
An individual in the business of assisting in arranging funding or
negotiating contracts for a client but who does not loan the money
himself. Brokers usually charge a fee or receive a commission for
their services.
Bridge Loan -
An equity loan secured to solve short-term financing problem.
Budget Mortgage -
A mortgage that includes a portion for taxes and insurance as well
as principal and interest.
Buydown -
Allows loans to be made at less-than-market interest rates by paying
front-end discounts. The interest rate is brought down for a
temporary period, usually from one to three years. In oder to
acquire this discount, a lump sum is paid and held in an account
used to supplement the borrower's monthly payment. After the
discount period, the payment is calculated as the note rate.
C
Caps -
A set percentage amount by which an adjustable rate mortgage may
adjust each adjustment period. For adjustable loans, caps are
usually quoted as two numbers as in 2/6. The first number indicates
how much a loan may adjust at each adjustment period while the
second number indicates how much a loan may adjust over its
lifetime.
Loans like the 3/1 and 5/1 adjustable which have an initial fixed period are quoted with 3 numbers as in 3/2/6 which would mean that the first adjustment may be as much as 3%, subsequent adjustments are capped at 2% each, and the lifetime cap is 6%.
Two-Step loans are quoted with a single cap, which is the amount by
which the loan may adjust at its single adjustment date.
Certificate of Eligibility -
A veteran's evidence of entitlement for a VA-guaranteed loan.
Clear Title -
A title that is free of liens or any legal question as to the
ownership of the property.
Closing -
Final arrangements to transfer title of property as well as allocate
charges and credits.
Closing Costs -
Closing costs are fees paid by the borrower when a property is
purchased or refinanced. Costs incurred include a loan origination
fee, discount points, appraisal fee, title search, title insurance,
survey, taxes, deed recording fee, and credit report charges. All
closing costs are separated into "non-recurring," and "pre-paid."
Non-recurring charges are any items that are paid only once because
a loan was obtained or a property bought, such as a loan origination
fee. Pre-paid charges are those that recur over time, like insurance
and property taxes. These are summarized in the Good Faith Estimate.
Commitment -
A written letter of agreement detailing the terms and conditions by
which the lender will lend and the borrower will borrow funds to
finance a home.
Conforming Loan -
A loan for up to and including $417,000 in the continental United
States (Alaska and Hawaii limits are higher).
Construction Loan -
A short term loan for funding the cost of construction. The lender
advances funds to the builder as the work progresses.
Conventional Mortgage -
A mortgage loan that is obtained without any additional guarantees
for repayment, such as FHA insurance, VA guarantees, or private
insurance. This is usually given at an 80% loan-to-value ratio.
Credit Rating -
Borrowers are rated by lenders according to the borrower's
credit-worthiness or risk profile. Credit ratings are expressed as
letter grades such as A-, B, or C+. These ratings are based on
various factors such as a borrower's payment history, foreclosures,
bankruptcies and charge-offs. There is no exact science to rating a
borrower's credit, and different lenders may assign different grades
to the same borrower.
Credit Report -
A report to a prospective lender on the credit standing of a
prospective borrower. Used to help determine creditworthiness.
Information regarding late payments, defaults, or bankruptcies will
appear here.
D
Debt-to-Income Ratio (DTI) -
The ratio of aggregate monthly debt to aggregate monthly income.
Deed -
A legal document which affects the transfer of ownership of real
estate from the seller to the buyer.
Deed of Trust -
Synonymous to a mortgage. A deed of trust or mortgage is obtained,
depending on the state in which the borrower will reside.
Default -
The failure to make payments on a loan.
Delinquency -
Late- or non-payments of principal, interest, taxes, or insurance.
Deposit -
A lump sum given in advance as security. A deposit is always paid of
a larger amount to be paid in the future. In mortgage and real
estate terms, this is called the "earnest money deposit."
Depreciation -
In real estate and mortgage terms, the decline in the property
value.
Discount Points -
A term used in government subsidized loans, such as FHA and VA
loans. Refers to any "points" (one percent of the loan amount) paid
in addition to the one percent loan origination fee.
Down Payment -
Money paid by a buyer from his own funds, as opposed to that portion
of the purchase price which is financed.
E
Equal Credit Opportunity Act (ECOA) -
The act declaring the elimination of discrimination on the basis of
age, sex, and race in finance.
Equity -
The difference between the current market value of a property and
the principal balance of all outstanding loans.
Escrow -
A third party agent that receives, holds, and/or disburses certain
funds or documents upon the performance of certain conditions. For
example, an earnest money deposit is put into escrow until the
transaction is closed. Only then can the seller receive the deposit.
Estate -
The ownership interest an individual holds in real property. This is
also the sum total of all the real property and personal property
owned by an individual at time of death.
Eviction -
The legal removal of real property occupants for unlawful actions
carried out by those occupants.
F
Fair Credit Reporting Act -
A law that protects consumer that regulates the reporting of
consumer credit by agencies and establishes procedures for
correcting errors on an individual record.
Fannie Mae (FNMA) -
The Federal National Mortgage Association is a congressionally
chartered, shareholder-owned company. This organization is the
nation's largest supplier of home mortgage funds.
Fannie Mae's Community Home Buyer's Program -
A program that offers flexible underwriting guidelines to subsidize
a low- to moderate-income family's purchase of a home. The program
usually decreases the total amount of cash needed to purchase a
home.
Federal Housing Administration (FHA) -
An agency under the U.S. Department of Housing and Urban Development
(HUD), it insures loans made by approved lenders to qualified
borrowers, in accordance with its regulations.
Fees -
Up-front costs associated with a loan. Clicking on the word VIEW
shown under the "Fees Detail" column on the quotes results page will
display detailed information about the financial institution's fees
and requirements pertaining to that rate.
Fee Simple -
The best title that one can obtain; unqualified and conveys the
highest bundle of rights.
FHA Loan -
A government-backed mortgage loan supported by the US FHA and the
Department of Housing and Urban Development (HUD).
Finance Charge -
The total dollar amount your loan will cost you. It includes all
interest payments for the life of the loan, any interest paid at
closing, your origination fee and any other charges paid to the
lender and/or broker. Appraisal, credit report and title search fees
are not included in the finance charge calculation.
First Mortgage -
A mortgage that has priority over other mortgages.
Fixed-Rate Mortgage -
A mortgage where the interest rate does not change for the life of
the loan.
Foreclosure -
A legal procedure in which real estate is sold by the lender to pay
a defaulting borrower's debt .
G
Good Faith Estimate -
An estimate of charges which a borrower is likely to incur in
connection with a loan closing.
Government National Mortgage Association (Ginny Mae) -
Provides funds for government loans and takes over special
assistance and liquidation functions of
Fannie Mae.
Gross Monthly Income -
The total amount the borrower earns per month, not counting any
taxes or expenses. Often used in calculations to determine whether a
borrower qualifies for a particular loan.
H
Hazard Insurance -
A form of insurance in which the insurance company protects the
insured from certain losses, such as fire, vandalism, storms and
certain other natural causes.
Home Equity Line of Credit -
A mortgage loan in second position that allows a borrower to obtain
cash drawn against home equity, up to a certain amount.
Home Inspection -
A thorough assessment by a professional regarding the structural and
mechanical condition of a property.
Homeowner's Insurance -
An insurance policy that combines personal liability insurance and
hazard insurance for a home and its contents.
Homeowner's Warranty -
An insurance policy that is purchased by a buyer that covers certain
repairs, should they be necessary over a certain period.
HUD -
Department of Housing and Urban Development; regulates Fannie Mae
and Ginny Mae.
I
Interest -
Consideration in the form of money paid for the use of money,
usually expressed as an annual percentage. Also, a right, share, or
title in property.
Interest Only -
A term loan arrangement calling for payments of interest only, not
to include any amount for principal.
Interest Rate -
The percentage of an amount of money that's paid for its use over a
specified time period.
J
Jumbo Loan -
A loan for $417,001 or more in the continental United States (Alaska
and Hawaii limits are higher). These limits are set by the Federal
National Mortgage Association and the Federal Home Loan Mortgage
Corporation. Because jumbo loans cannot be funded by these two
agencies, they usually carry a higher interest rate.
L
Lease -
A written agreement between a property owner and a tenant that
stipulates the payment and conditions under which the tenant may
possess the real estate for a specified period of time.
Lease Option -
A rental agreement indicating a tenant's option to purchase a
property. Monthly payments consists not only of rent, but an overage
that can be applied towards a down payment on an already established
amount.
Lender -
The bank, mortgage company, or mortgage broker offering the loan.
Many institutions only "originate" loans and then resell the
obligation to third parties.
Liability Insurance -
Insurance that protects property owners against claims that alleges
negligence or inappropriate action that resulted in bodily injury or
property damage to another party.
Lien -
A legal claim by one party against the property of another as
security for a debt. Must be paid off when property is sold. A
mortgage or a first trust deed is a lien.
Loan -
The principal, or amount of total borrowed money, that is repaid
with interest.
Loan Amount -
The amount of money that you intend on borrowing from a financial
institution for the purchase of your home. Subtracting the down
payment from the purchase price of the home will provide you with
the loan amount.
Loan Officer -
An intermediary between lending institutions and borrowers, loan
officers solicit loans, represent creditors to borrowers, and
represent borrowers to creditors.
Loan Origination -
What the process of obtaining new loans is called.
Loan-To-Value Ratio -
The relationship between the amount of the mortgage loan and the
appraised value of the property expressed as a percentage. A LTV
ratio of 90 means that a borrower is borrowing 90% of the value of
the property and paying 10% as a down payment. For purchases, the
value of the property is assumed to be the purchase price, for
refinances the value is determined by an appraisal.
Lock Noun -
The period, expressed in days, during which a lender will guarantee
a rate. Some lenders will lock rates at the time of application
while others will allow the borrower to lock the rate after the
application is taken. Request information from your lender regarding
lock procedures.
Lock Verb -
The act of committing to a mortgage rate. This action, taken by a
borrower some time between the application and the closing dates, is
sometimes accompanied by a payment by the borrower to the lender.
Lock-in Clause -
Clause in a loan agreement that states that the borrower cannot
repay a loan prior to a specified date.
M
Margin -
The amount a lender adds to the quoted index rate for an adjustable
rate loan to determine the new interest rate.
Maturity -
The "Due Date" of a loan.
Merged Credit Report -
A credit report that reports data from two or more major credit
repositories.
Monthly Housing Expense -
Total principal, interest, taxes, and insurance paid by the borrower
on a monthly basis. Used with gross income to determine
affordability.
Mortgage -
A legal document that pledges property to a creditor for the
repayment of the loan, and is the term used to describe the loan
itself. Some states use the term First Trust Deeds to refer to
mortgage loans.
Mortgagee -
The lender in a mortgage agreement.
Mortgage Banker -
A financial intermediary that originates or funds loans, collects
payments, inspects the property, and forecloses if necessary. The
main difference between a mortgage banker and a loan officer is a
banker funds their own loans and sell them on the secondary market,
usually to Fannie Mae, Freddie Mac, or Ginny Mae.
Mortgage Broker -
A mortgage company that originates loans, joining the borrower and
lender for a real estate loan, earning a placement fee.
Mortgage Insurance -
Insurance that covers the lender against losses incurred as a result
of a default on a home loan. This is usually required on all loans
that have a loan-to-value higher than eighty percent. Mortgages that
have an 80% LTV that do not require mortgage insurance have higher
interest rates. The lenders then pay the mortgage insurance
themselves. In addition, FHA loans and some first-time homebuyer
programs require mortgage insurance regardless of the loan-to-value.
Mortgagor -
The borrower in a mortgage agreement.
N
Negative Amortization -
Essentially occurs when a borrower makes a minimum payment that may
not cover the interest that is due. Loan balance then increases as a
result.
No Cash-out Refinance -
A refinance transaction that is not intended to put cash in the hand
of the borrower, but instead calculates a new balance to cover the
balance due on a current loan and any costs with obtaining a new
mortgage.
No-Cost Loan -
A no-cost loan can either be: 1) a loan that has no "lender costs"
associated with it or, 2) a loan that also covers purchases or
refinancing costs, which may be incurred in buying a home, obtaining
and/or refinancing a loan, but are not directly charged by the
lender. The interest rate on this type of loan is higher.
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 stated interest rate on a mortgage note.
O
Origination Fee -
The fee imposed by a lender to cover certain processing expenses in
connection with making a loan. Usually a percentage of the amount
loaned.
Owner Financing -
A property purchase that is partly or wholly financed by the seller.
Owner's Title Policy -
A policy protecting the buyer for the amount of the purchase price
in the event of a future title dispute.
P
Personal Property -
Movable property that does not fit the definition of realty.
PITI -
PITI stands for principal, interest, taxes, and insurance. An
"impounded" loan means that the monthly payment covers all of these,
and perhaps mortgage insurance, if your loan so calls for it. If one
does not have an "impounded" account, then the lender still
calculates these amounts separately and uses it as part of
determining one's debt-to-income ratio.
PITI Reserves -
A cash amount that a borrower must have on hand after making a down
payment and paying all closing costs for the purchase of a home. The
PITI (principal, interest, taxes, and insurance) must equal the
amount that the borrower would have to pay for PITI for a determined
number of months.
Points -
The site allows lenders to post rates via point ranges. Points are
broken out on the site for Discount and Origination. The definitions
for each are as follows:
• Discount Points = Interest Charges paid up-front when a
borrower closes a loan. A point is equal to 1 percent of the loan
amount (e.g. 1.5 points on a $100,000 mortgage would cost the
borrower $1,500). Generally, by paying more points at closing, the
borrower reduces the interest rate of his loan and thus future
monthly payments.
• Origination Points = A fee imposed by a lender to cover
certain processing expenses in connection with making a real estate
loan. Usually a percentage of the amount loaned, such as one
percent.
Pre-Approval -
A term used to mean that a borrower has completed a loan application
and provided debt, income, and savings information that has been
reviewed and pre-approved by an underwriter.
Pre-Paids -
Expenses such as taxes, insurance, and assessments, which are paid
in advance of their due date, and on a prorated basis at closing.
Prepayment Penalty -
Lenders who impose prepayment penalties will charge borrowers a fee
if they wish to repay part or all of their loan in advance of the
regular schedule.
Pre-Qualification -
After a loan officer has made inquiries about a borrower's debt,
income, and savings, he or she can write a written statement
(pre-qualification) about the borrower's chances for qualifying for
a home loan.
Prime Rate -
Interest charged by financial institutions to top-rate borrowers.
Principal -
The amount of debt, not counting interest, left on a loan.
Private Mortgage Insurance (PMI) -
Paid by a borrower to protect the lender in case of default. PMI is
typically charged to the borrower when the Loan-to-Value Ratio is
greater than 80%.
Q
Qualifying Ratio -
The ratio of the borrower's fixed monthly expenses to his gross
monthly income. Ratios are expressed as two numbers like 28/36 where
28 would be the Front-End Ratio and 36 would be the Back-End Ratio.
The Front-End Ratio is the percentage of a borrower's gross monthly income (before income taxes) that would cover the cost of PITI (Mortgage Principal Payment + Mortgage Interest Payment + Property Taxes + Homeowners Insurance). In the case of a 28% Front-End Ratio a borrower could qualify if the proposed monthly PITI payments were 28% or less than the borrower's gross monthly income.
The Back-End Ratio is the percentage of a borrower's gross monthly
income that would cover the cost of PITI plus any other monthly debt
payments like car or personal loans and credit card debt.
Please note that qualifying ratios are only a rough guideline in
determining a potential borrower's credit-worthiness. Many factors
such as excellent or poor credit history, amount of down payment,
and size of loan will influence the decision to approve or
disapprove a particular loan. Moving.com urges all borrowers to
discuss their particular situation with a qualified lender
regardless of the outcome of any self-qualification exercise.
R
Rate Lock -
A commitment issued by a lender to a borrower or other mortgage
originator guaranteeing a specified interest rate for a specified
period of time at a specific cost.
Real Estate -
A portion of the earth's surface extending downward to the center to
the earth and upward into space, including all things permanently
attached thereto by nature or man and all legal rights therein.
Real Estate Agent -
A person licensed to negotiate and transact the sale of real estate.
Real Estate Settlement Procedures Act (RESPA) -
An act requiring the revelation of all costs involved in a real
estate closing to all participants.
Realtor -
A real estate agent, broker, or associate that holds an active
membership in a local real estate board that is affiliated with the
National Association of Realtors.
Recording -
The formal filing of documents affecting a property's title.
Regulation Z -
A truth-in-lending provision that requires lenders to reveal the
actual costs of borrowing.
Refinancing -
The process of paying off one loan with the proceeds from a new
loan, using the same property as security.
Reverse Annuity Mortgage (RAM) -
A system developed for an elderly property owner in which regular
monthly payments can be received from a lender. When the total
reaches a pre-determined amount, the owner begins repaying the loan
or sells the property.
Revolving Debt -
A credit arrangement that allows a customer to borrow against a
pre-approved line of credit used to purchase goods and services. The
borrower is responsible for the actual amount borrowed plus any
interest due.
S
Secondary Mortgage Market -
A market where mortgage originators may sell them, freeing up funds
for continued lending and distributes mortgage funds nationally from
money-rich to money poor areas.
Second Mortgage -
A mortgage that has a lien position subordinate to the first
mortgage.
Secured Loan -
A loan that is backed by collateral.
Security -
Something given, deposited, or pledged to make secure the
fulfillment of an obligation, usually the repayment of a debt.
Servicer -
An organization that collects principal and interest payments from
borrowers and manages borrowers' escrow accounts. The servicer often
services mortgages that have been purchased by an investor in the
secondary mortgage market.
Servicing -
The collection of mortgage payments from borrowers and related
responsibilities of a loan servicer.
Survey -
A drawing or map the shows the precise legal boundaries of a
property, the location of improvements, easements, rights of way,
encroachments, and other physical features.
Sweat Equity -
Increase in property value due to improvement by owners.
T
Tax Lien -
A claim against real estate for the amount of its unpaid taxes.
Title -
A legal document showing a person's right to or ownership of a
property.
Title Company -
A company that specializes in examining and insuring titles to real
estate.
Title Insurance -
Title Insurance policies typically insure a homebuyer against any
title-search errors or mistakes, and against loss due to disputes
over property ownership. Title Insurance can additionally offer
protection to the lender under similar circumstances. The cost of
title insurance is usually a set value per thousand of dollars of
the total loan amount.
Title Search -
A check of the title records to make sure that the seller is the
actual legal owner of the property, and that there are no liens or
other claims outstanding.
Truth-in-Lending Law -
Provision that requires lenders to reveal the actual costs of
borrowing.
V
VA Loan -
A government-backed mortgage loan supported by the US Veterans
Administration.
Variable Rate Mortgage -
See Adjustable Rate Mortgage.
Z
Zoning -
The right of a community, under its police power, to dictate the use
of property within its boundaries.