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 7/23 and 5/25 MortgagesMortgages with a one time rate adjustment after seven years and five years respectively.
3/1 5/1 7/1 and 10/1 ARMsAdjustable rate mortgages in which rate is fixed for three year five year seven year and 10-year periods respectively but may adjust annually after that.
AccelerationThe right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of themortgagor (borrower) or by using the right vested in the Due on Sale Clause.
TOPAdjustable Rate Mortgage (ARM)A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also sometimes known as a renegotiable rate mortgage variable rate mortgage or Canadian rollover mortgage.
TOPAdjusted BasisThe cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
TOPAdjustment DateThe date that the interest rate changes on an adjustable rate mortgage (ARM).
TOPAdjustment IntervalOn an adjustable rate mortgage the time between changes in the interest rate and/or monthly payment typically one three or five years depending on the index.
TOPAdjustment PeriodThe period elapsing between adjustment dates for an adjustable rate mortgage (ARM).
TOPAffordability Analysis
An analysis of a buyer liabilities and available funds and considers the type of mortgage you plan to use the area where you want to purchase a home and the closing costs that are likely.
TOPAmortizationLoan payment divided into equal periodic payments calculated to pay off the debt at the end of a fixed period including accrued interest on the outstanding balance.
TOPAmortization TermThe length of time required to amortize the mortgage loan expressed as a number of months. For example 360 months is the amortization term for a 30-year fixed rate mortgage.
TOPAnnual Percentage Rate (APR)The measurement of the full cost of a loan including interest and loan fees expressed as a yearly percentage rate. Because all lenders apply the same rules in calculating the annual percentage rate it provides consumers with a good basis for comparing the cost of different loans.
TOPAppraisalAn estimate of the value of property made by a qualified professional called an "appraiser. based on an appraiser's knowledge experience and analysis of the property.
TOPAssessmentA local tax levied against a property for a specific purpose such as a sewer or street lights.
TOPAssignmentThe transfer of a mortgage from one person to another.
TOPAssumabilityAn assumable mortgage can be transferred from the seller to the new buyer. Generally requires a credit review of the new borrower and lenders may charge a fee for the assumption. If a mortgage contains a due on sale clause it may not be assumed by a new buyer.
TOPAssumptionThe agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt unlike a new mortgage where closing cost and new probably higher market rate interest charges will apply.
TOPAssumption FeeThe fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.
TOPBalloon MortgageA loan which is amortized for a longer period than the term of the loan. Usually this refers to a thirty year amortization and a five or seven year term. At the end of the term of the loan the remaining outstanding principal on the loan is due. This final payment is known as a balloon payment.
TOPBalloon PaymentThe final lump sum paid at the maturity date of a balloon mortgage.
TOPBiweekly Payment MortgageA plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one half of the monthly payment required if the loan were a standard 30-year fixed rate mortgage. The result for the borrower is a substantial savings in interest.
TOPBlanket MortgageA mortgage covering at least two pieces of real estate as securityfor the same mortgage.
TOPBorrower (Mortgagor)One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.
TOPBridge LoanA second trust that is collateralized by the borrower's present home allowing the proceeds to be used to close on a new house before the present home is sold. Also known as "swing loan." 
TOPBrokerAn 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 acommission for their services.
TOPBuy DownWhen the lender and/or the home builder subsidized the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low they will increase when the subsidy expires.
TOP

Cash FlowThe amount of cash derived over a certain period of time from an income producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment maintenance utilities etc...).
TOPCaps (interest)Consumer safeguards which limit the amount of change to the interest rate for an adjustable rate mortgage.
TOPCaps (payment)Consumer safeguards which limit the amount of change to the monthly payments for an adjustable rate mortgage.
TOPCertificate of EligibilityThe document given to qualified veterans which entitles them to VA guaranteed loans for homes business and mobile homes. Certificates of eligibility may be obtained by sending form DADA (Separation Paper) to the local VA office with VA form 1880 (Request for Certificate of Eligibility).
TOPCertificate of Reasonable Value (CRV)An appraisal issued by the Veterans Administration showing the property's current market value.
TOPCertificate of Veteran StatusThe document given to veterans or reservists who have served 90 days of continuous active duty (including training time). It may be obtained by sending DD 214 to the local VA office with form 26-8261a (Request for Certificate of Veteran Status). This document enables veterans to obtain lower down payments on certain FHA insured loans.
TOPChange FrequencyThe frequency (in months) of payment and/or interest rate changes in an adjustable rate mortgage (ARM).
TOPClosingThe meeting between the buyer seller and lender or their agents where the property and funds legally change hands also calledsettlement. Closing costs usually include an origination feediscount points appraisal fee title search and insurance surveytaxes deed recording fee credit report charge and other costs assessed at settlement. The cost of closing usually are about 3 percent to 6 percent of the mortgage amount.
TOPClosing CostsExpenses over and above the price of the property that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee property taxes charges for title insurance and escrow costs appraisal fees etc. Closing costs will vary according to the area country and the lenders used.
TOPCOFIAn adjustable-rate mortgage with a rate that adjusts based on a cost-of-funds index often the 11th District Cost of Funds.
TOPConstruction LoanA short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he or she progresses.
TOPConsumer Reporting Agency (or Bureau)An organization that handles the preparation of reports used by lenders to determine a potential borrower's credit history. The agency gets data for these reports from a credit repository and other sources.
TOPContract Sale or Deed:A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form ofinstallment sale.
TOPConventional LoanA mortgage not insured by FHA or guaranteed by VA.
TOPConversion ClauseA provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra.
TOPCredit ReportA report documenting the credit history and current status of a borrower's credit standing.
TOPCredit Risk ScoreA credit risk score is a statistical summary of the information contained in a consumer's credit report. The most well known type of credit risk score is the Fair Isaac or FICO score. This form of credit scoring is a mathematical summary calculation that assigns numerical values to various pieces of information in the credit report. The overall credit risk score is highly relative in the credit underwriting process for a mortgage loan.
TOP

Debt-to-Income RatioThe ratio expressed as a percentage which results when a borrower's monthly payment obligation on long term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.
TOPDeed of TrustIn many states this document is used in place of a mortgage to secure the payment of a note.
TOPDefaultFailure to meet legal obligations in a contract specifically failure to make the monthly payments on a mortgage.
TOPDeferred InterestWhen a mortgage is written with a monthly payment that is less than required to satisfy the note rate the unpaid interest is deferred by adding it to the loan balance. See negative amortization.
TOPDelinquencyFailure to make payments on time. This can lead to foreclosure.
TOPDepartment of Veterans Affairs (VA)An independent agency of the federal government which guarantees long term low-or-no-down payment mortgages to eligible veterans.
TOPDiscount PointSee point
TOPDown PaymentMoney paid to make up the difference between the purchase price and the mortgage amount.
TOPDue-on-Sale-ClauseA provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.
TOPEarnest MoneyMoney given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.
TOPEntitlementThe VA home loan benefit is called an entitlement (i.e. entitlement for a VA guaranteed home loan). This is also known as eligibility.
TOPEqual Credit Opportunity Act (ECOA)A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race color religion national origin age sex marital status or receipt of income from public assistance programs.
TOPEquityThe difference between the fair market value and current indebtedness also referred to as the owner's interest. The value an owner has in real estate over and above the obligation against the property. 
TOPEscrowAn account held by the lender into which the home buyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing.
TOPEscrow DisbursementsThe use of escrow funds to pay real estate taxes hazard insurance mortgage insurance and other property expenses as they become due.
TOPEscrow PaymentThe part of a mortgagor hazard insurance mortgage insurancelease payments and other items as they become due.


Fannie MaeSee Federal National Mortgage Association.
TOPFarmers Home Administration (FmHA)Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.
TOPFederal Home Loan Bank Board (FHLBB)The former name for the regulatory and supervisory agency for federally chartered savings institutions. The agency is now called the Office of Thrift Supervision
TOPFederal Home Loan Mortgage Corporation(FHLMC) also called "Freddie Mac"A government sponsored entity that purchases conventional mortgage from insured depository institutions and HUD-approved mortgage bankers.
TOPFederal Housing Administration (FHA)A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages. 
TOPFederal National Mortgage Association (FNMA) also know as "Fannie Mae"A government sponsored entity that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. 
TOPFHA LoanA loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans they are generous enough to handle moderately priced homes almost anywhere in the country.
TOPFHA Mortgage InsuranceRequires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition FHA mortgageinsurance requires an annual fee of up to 0.5 percent of the current loan amount paid in monthly installments. The lower the down payment the more years the fee must be paid.
TOPFHLMCThe Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as "Freddie Mac."
TOPFirm CommitmentA promise by FHA to insure a mortgage loan for a specified property and borrower. A promise from a lender to make a mortgage loan. 
TOPFirst MortgageThe primary lien against a property.">
TOPFixed InstallmentThe monthly payment due on a mortgage loan including payment of both principal and interest.
TOPFixed Rate MortgageThe mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.
TOPFully Amortized ARMAn adjustable rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance at the interest accrual rate over the amortization term.
TOPFNMAThe Federal National Mortgage Association is a secondary mortgage institution. FNMA buys VA FHA and conventional mortgages from primary lenders. Also known as "Fannie Mae." 
TOPForeclosureA legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property.
TOPFreddie MacSee Federal Home Loan Mortgage Corporation 
TOPGinnie MaeSee Government National Mortgage Association.
TOPGovernment National Mortgage Association (GNMA)Also known as "Ginnie Mae." Provides sources of funds for residential mortgages insured or guaranteed by FHA or VA.
TOPGraduated Payment Mortgage (GPM)A type of flexible payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.
TOPGrowing Equity Mortgage (GEM)A fixed rate mortgage that provides scheduled payment increases over an established period of time. The increased amount of the monthly payment is applied directly toward reducing the remaining balance of the mortgage.
TOPGuarantyA promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.
TOPGuarantee MortgageA mortgage that is guaranteed by a third party.
TOPHazard InsuranceA form of insurance in which the insurance company protects the insured from specified losses such as fire windstorm and the like.
TOPHousing Expenses-to-Income RatioThe ratio expressed as a percentage which results when a borrower's housing expenses are divided by his/her gross monthly income. See debt-to-income ratio.
TOPHUD-1 StatementA document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions loan fees points and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.
TOPImpoundThe portion of a borrower's monthly payments held by the lender or servicer to pay for taxes hazard insurance mortgage insurance lease payments and other items as they become due. Also known as reserves.
TOPIndexA published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one three and five year U.S. Treasury security yields the monthly average interest rate on loans closed by savings and loan institutions and the monthly average costs-of-funds incurred by savings and loans) which is then used to adjust the interest rate on an adjustable mortgage up or down.
TOPIndexed RateThe sum of the published index plus the margin. For example if the index is 4% and the margin is 2.75% the indexed rate would be 6.75%. Often lenders charge less than the indexed rate the first year of an adjustable rate mortgage.
TOPInitial Interest RateThis refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable rate mortgage (ARM). It's also known as "start rate" or "teaser."
TOPInstallmentThe regular periodic payment that a borrower agrees to make to a lender.
TOPInsured MortgageA mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI).
TOPInterestThe fee charged for borrowing money.
TOPInterest Accrual RateThe percentage rate at which interest accrues on the mortgage. In most cases it is also the rate used to calculate the monthly payments.
TOPInterest Rate Buydown PlanAn arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.
TOPInterest Rate CeilingFor an adjustable rate mortgage (ARM) the maximum interest rate as specified in the mortgage note.
TOPInterest Rate FloorFor an adjustable rate mortgage (ARM) the minimum interest rate as specified in the mortgage note.
TOPInterim FinancingA construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion.
TOPInvestorA money source for a lender.
TOPJumbo LoanA loan which is larger than the limits 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.
TOPLate ChargeThe penalty a borrower must pay when a payment is made a stated number of days after the due date.
TOPLease-Purchase Mortgage LoanAn alternative financing option that allows low and moderate income home buyers to lease a home with an option to buy. Each month's rent payment consists of principal interest taxes and insurance (PITI) payments on the first mortgage plus an extra amount that accumulates in a savings account for a down payment.
TOPLiabilitiesA person's financial obligations. Liabilities include long term and short term debt.
TOPLienA claim upon a piece of property for the payment or satisfaction of a debt or obligation.
TOPLifetime Payment CapFor an adjustable rate mortgage (ARM) a limit on the amount that payments can increase or decrease over the life of the mortgage.
TOPLifetime Rate CapFor an adjustable rate mortgage (ARM) a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap.
TOPLoanA sum of borrowed money (principal) that is generally repaid with interest.
TOPLoan to Value RatioThe relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.
TOPLockA lender's guarantee that the mortgage rate quoted will be good for a specific number of days from the day of application.
TOPMarginThe amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.
TOPMarket ValueThe highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.
TOPMaturityThe date on which the principal balance of a loan becomes due and payable.
TOPMIP (Mortgage Insurance Premium)Insurance from FHA to the lender against incurring a loss on account of the borrower's default.
TOPMonthly Fixed InstallmentThe portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes the monthly fixed installment does not include any amount for principal reduction and doesn't cover all of the interest. The loan balance therefore increases instead of decreasing.
MortgageA legal document that pledges a property to the lender as security for payment of a debt.
Mortgage BankerA company that originates mortgages for resale in the secondary mortgage market.
Mortgage BrokerAn individual or company that charges a service fee to bring borrowers and lenders together for the purpose of loan origination.
MortgageeThe lender.
Mortgage InsuranceMoney paid to insure the mortgage when the down payment is less than 20 percent. See private mortgage insurance FHA mortgage insurance.
Mortgage Life InsuranceA type of term life insurance. In the event that the borrower dies while the policy is in force the mortgage debt is automatically paid by insurance proceeds.
MortgagorThe borrower or homeowner.
Negative AmortizationWhen your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The home buyer ends up owing more than the original amount of the loan.
Net Effective IncomeThe borrower's gross income minus federal income tax.
Non Assumption ClauseA statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.
Non Recourse loan A loan that only is secured by the subject property. Self-directed IRA investors who choose to purchase investment real estate are able to leverage their purchase with a non-recourse loan. Because of the IRS regulations, it would be deemed a violation of the qualified retirement account status to personally guarantee any loan on real estate owned by a self-directed IRA.
NoteA legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
Office of Thrift Supervision (OTS)The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board
One Year Adjustable Rate MortgageMortgage where the annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin chosen by the lender.
Origination FeeThe fee charged by a lender to prepare loan documents make credit checks inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan.
Owner FinancingA property purchase transaction in which the party selling the property provides all or part of the financing.
Payment Change DateThe 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 adjustment date.
Periodic Payment CapA limit on the amount that payments can increase or decrease during any one adjustment period.
Periodic Rate CapA limit on the amount that the interest rate can increase or decrease during any one adjustment period regardless of how high or low the index might be.
Permanent LoanA long term mortgage usually ten years or more. Also called an "end loan."
PITIPrincipal interest taxes and insurance. Also called monthly housing expense.
Pledged Account Mortgage (PAM):Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments.
Points (Loan Discount Points)Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100000 mortgage would cost $2000).
Power of AttorneyA legal document authorizing one person to act on behalf of another.
PreapprovalThe process of determining how much money you will be eligible to borrow before you apply for a loan.
Prepaid ExpensesNecessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes hazard insurance private mortgage insurance and special assessments.
PrepaymentA privilege in a mortgage permitting the borrower to make payments in advance of their due date.
Prepayment PenaltyMoney charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states.
Primary Mortgage MarketLenders such as savings and loan associations commercial banks and mortgage companies who make mortgage loans directly to borrowers. These lenders sometimes sell their mortgages to the secondary mortgage markets such as FNMA orGNMA etc Interest Taxes and Insurance (PITI)The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the monthly cost of property taxes and homeowners insurance whether these amounts are paid into an escrow account each month or not.
Private Mortgage Insurance (PMI)In the event that you do not have a 20 percent down payment lenders will allow a smaller down payment - as low as 3 percent in some cases. With the smaller down payment loans however borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on your loan's structure.
Qualifying RatiosCalculations used to determine if a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
Rate LockA commitment issued by a lender to a borrower or another mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.
Realtor®A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.
Real Estate AgentA person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
Real Estate Settlement Procedures Act (RESPA)A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
RecissionThe cancellation of a contract. With respect to mortgage refinancing the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.
Recording FeesMoney paid to the lender for recording a home sale with the local authorities thereby making it part of the public records.
RefinanceObtaining a new mortgage loan on a property already owned often to replace existing loans on the property.
Renegotiable Rate MortgageA loan in which the interest rate is adjusted periodically. Seeadjustable rate mortgage.
RESPAShort for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement costs once after application and once prior to or at settlement. The law requires lenders to furnish the information after application only.
Reverse Annuity Mortgage (RAM)A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home ascollateral for and repayment of the loan.
Revolving LiabilityA credit arrangement such as a credit card that allows a customer to borrow against a pre-approved line of credit when purchasing goods and services.
Satisfaction of MortgageThe document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage."
Second MortgageA mortgage made subsequent to another mortgage and subordinate to the first one.
Secondary Mortgage MarketThe place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders.
SecurityThe property that will be pledged as collateral for a loan.
Seller Carry BackAn agreement in which the owner of a property provides financing often in combination with an assumable mortgage. See owner financing.
ServicerAn organization that collects principal and interest payments from borrowers and manages borrower escrow accounts. The servicer often services mortgages that have been purchased by aninvestor in the secondary mortgage market.
ServicingAll the steps and operations a lender performs to keep a loan in good standing such as collection of payments payment of taxes insurance property inspections and the like.
Settlement/Settlement CostsSee closing/closing costs
Shared Appreciation Mortgage (SAM)A mortgage in which a borrower receives a below market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the futureappreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.
Simple InterestInterest which is computed only on the principle balance.
Standard Payment CalculationThe method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
Step Rate MortgageA mortgage that allows for the interest rate to increase according to a specified schedule (i.e. seven years) resulting in increased payments as well. At the end of the specified period the rate and payments will remain constant for the remainder of the loan.
SurveyA measurement of land prepared by a registered land surveyor showing the location of the land with reference to known points its dimensions and the location and dimensions of any buildings.
Sweat EquityEquity created by a purchaser performing work on a property being purchased.
Third Party OriginationWhen a lender uses another party to completely or partially originate process underwrite close fund or package the mortgages it plans to deliver to the secondary mortgage market.
TitleA document that gives evidence of an individual's ownership of property.
Title InsuranceA policy usually issued by a title insurance company which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests.
Title SearchAn examination of municipal records to determine the legal ownership of property. Usually is performed by a title company. 
Total Expense RatioTotal obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts.
Truth in LendingA federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.
Two Step MortgageA mortgage in which the borrower receives a-below-market interest rate for a specified number of years (most often seven or 10) and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. Also called "Super Seven" or "Premier" mortgage.
UnderwritingThe decision whether to make a loan to a potential home buyer based on credit employment assets and other factors and the matching of this risk to an appropriate rate and term or loan amount.
UsuryInterest charged in excess of the legal rate established by law.
VA LoanA long term low-or-no down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.
VA Mortgage Funding Fee A premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a fixed rate loan. On a $75000 fixed-rate mortgage with no down payment this would amount to $1406 either paid at closing or added to the amount financed.
Variable Rate Mortgage (VRM)See adjustable rate mortgage
Verification of Deposit (VOD)A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.
Verification of Employment (VOE)A document signed by the borrower's employer verifying his/her position and salary.
Wraparound MortgageResults when an existing assumable loan is combined with a new loan resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner who then forwards the payments to the first lender after taking the additional amount off the top.

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