|
Contact Peach State For:
Largest Cities in Tennessee: Memphis
Nashville Knoxville
Chattanooga Clarksville
Murfreesboro Jackson
Johnson City Kingsport
Franklin
|
|
Glossary of
Tennessee Home Mortgage Loan Terms
Shopping for a home mortgage in Tennessee? If you are one of the tens of
thousands of today's home shoppers, you probably have discovered
that mortgage lending has a language all its own. For example,
you've probably heard about "points",
"margins", and "repayment penalties." Should
you look for an "assumption?" What are
"acceleration clauses?" For the unprepared, this new
terminology can be quite confusing. As with any contract, before
you sign your mortgage, you should know what you are signing.
[ 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 ]
-
- Allows the lender to speed up the rate at which your loan
comes due or even to demand immediate payment of the entire
outstanding balance of the loan should you default on you
loan.
-
-
- A mortgage in which the interest rate is adjusted
periodically, based on a pre-selected index. Also sometimes
known as the renegotiable rate mortgage, the variable rate
mortgage or the Canadian rollover mortgage.
- Adjustment Interval
-
- On 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.
-
- Amortization
-
- Means loan payment by equal periodic payments calculated
to pay off the debt at the end of a fixed period, including
accrued interest on the outstanding balance.
-
-
- An interest rate reflecting the cost of a mortgage as a
yearly rate. This rate is likely to be higher than the
stated note rate or advertised rate on the mortgage, because
it takes into account points and other credit costs. The APR
allows homebuyers to compare different types of mortgages
based on the annual cost for each loan.
-
- Appraisal
-
- An estimate of the value of property, made by a qualified
professional called an "appraiser."
-
- Assumption
-
- The 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 costs and new, possibly higher,
market-rate interest charge will apply.
-
-
- Usually a short-term fixed-rate loan which involves small
payments for a certain period of time and one large payment
for the remaining amount of the principal at a time
specified in the contract.
-
- 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.
-
- Buy down
-
- When the lender and/or the home builder subsidizes 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.
-
-
- Consumer safeguards which limit the amount the interest
rate on an adjustable rate mortgage may change per year
and/or the life of the loan.
-
- Caps (Payment)
-
- Consumer safeguards which limit the amount monthly
payments on an adjustable rate mortgage may change.
-
-
- The meeting between the buyer, seller and lender or their
agents, where the property and funds legally change hands.
Also called settlement.
-
-
- Usually include an origination fee, discount points,
appraisal fee, title search and insurance, survey, taxes,
deed recording fee, credit report charge and other costs
assessed at settlement. The costs of closing are usually
about 3 percent to 6 percent of the mortgage amount.
-
- Commitment
-
- An agreement, often in writing, between a lender and a
borrower to loan money at a future date subject to the
completion of paperwork or compliance with stated
conditions.
-
- Construction Loan
-
- A short term interim loan for financing the cost of
construction. The lender advances funds to the builder at
periodic intervals as the work progresses.
-
- Conventional Loan
-
- A mortgage not insured by FHA or guaranteed by the VA or
Farmers Home Administration (FmHA).
-
- Credit Ratio
-
- The ratio, expressed as a percentage, which results when a
borrower's monthly payment obligation on long-term debts is
divided by his or her net effective income (FHA/VA loans) or
gross monthly income (Conventional loans). See Housing
Expenses-to-Income Ratio.
-
-
-
- In many states, this document is used in place of a
mortgage to secure the payment of a note.
-
- Default
-
- Failure to meet legal obligations in a contract,
specifically, failure to make the monthly payments on a
mortgage.
-
- Deferred Interest
-
- See Negative
Amortization.
-
- Delinquency
-
- Failure to make payments on time. This can lead to
foreclosure.
-
- Department of Veterans Affairs (VA)
-
- An independent agency of the federal government which
guarantees long-term, low- or no-down payment mortgages to
eligible veterans.
-
-
- 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 $100,000 mortgage would cost $2,000).
-
- Down Payment
-
- Money paid to make up the difference between the purchase
price and mortgage amount. Down payments usually are 10
percent to 20 percent of the sales price on Conventional
loans, and no money down up to 5 percent on FHA and VA
loans.
-
- Due-On-Sale Clause
-
- A 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.
-
-
-
- Money given by a buyer to a seller as part of the purchase
price to bind a transaction or assure payment.
-
- Equal 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.
-
- Equity
-
- The difference between the fair market value and current
indebtedness, also referred to as the owner's interest.
-
- Escrow
-
- Refers to a neutral third party who carries out the
instructions of both the buyer and seller to handle all the
paperwork of settlement or "closing." Escrow may
also refer to an account held by the lender into which the
homebuyers pays money for tax or insurance payments.
-
-
- See Federal
National Mortgage Association.
-
- Farmers Home Administration (FmHA)
-
- Provides financing to farmers and other qualified
borrowers who are unable to obtain loans elsewhere.
-
-
-
-
- Also called Freddie Mac, is a quasi-governmental
agency that purchases conventional mortgages from insured
depository institutions and HUD-approved mortgage bankers.
-
- Federal 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.
-
-
- Also known as Fannie Mae. A tax-paying corporation
created by Congress that purchases and sells conventional
residential mortgages as well as those insured by FHA or
guaranteed by VA. This institution, which provides funds for
one in seven mortgages, makes mortgage money more available
and more affordable.
-
- FHA Loan
-
- A 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
moderate-priced homes almost anywhere in the country.
-
-
- Requires a small fee (up to 3 percent of the loan amount)
paid at closing or a portion of this fee added to each
monthly payment of an FHA loan to insure the loan with FHA.
On a 9.5 percent $75,000 30-year fixed-rate FHA loan, this
fee would amount to either $2,250 at closing or an extra $31
a month for the life of the loan. In addition, FHA mortgage
insurance requires an annual fee of 0.5 percent of the
current loan amount, the more years the fee must be paid.
-
- Fixed-Rate Mortgage
-
- A mortgage on which the interest rate is set for the term
of the loan.
-
- Foreclosure
-
- A legal procedure in which property securing debt is sold
by the lender to pay a defaulting borrower's debt .
-
- Freddie Mac
-
- See Federal
Home Loan Mortgage Corporation.
-
-
- See Government
National Mortgage Association.
-
-
- Also known as Ginnie Mae, provides sources of funds
for residential mortgages, insured or guaranteed by FHA or
VA.
-
- Graduated 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.
-
- Gross Monthly Income
-
- The total amount the borrower earns per month, before any
taxes or expenses are deducted.
-
- Guarantee
-
- A 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.
-
- A form of insurance in which the insurance company
protects the insured from specified losses, such as fire,
windstorm and the like.
-
-
- The ratio, expressed as a percentage, which results when a
borrower's housing expenses are divided by his/her net
effective income (FHA/VA loans) or gross monthly income
(Conventional loans).
-
- That 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.
-
- Index
-
- A 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.
-
- Investor
-
- Money source for a lender.
-
- A 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.
-
- A claim upon a piece of property for the payment or
satisfaction of a debt or obligation.
-
- Loan-To-Value Ratio
-
- The relationship between the amount of the mortgage loan
and the appraised value of the property expressed as a
percentage.
-
-
- The amount a lender adds to the index on an adjustable
rate mortgage to establish the adjusted interest rate.
-
- Market Value
-
- The highest price 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.
-
- Mortgage Insurance
-
- Money paid to insure the mortgage when the down payment is
less than 20 percent. See Private
Mortgage Insurance or FHA
Mortgage Insurance.
-
- Mortgagee
-
- The lender.
-
Mortgagor
-
- The borrower or homeowner.
-
-
-
- Occurs when 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 danger of
negative amortization is that the homebuyers ends up owing
more than the original amount of the loan.
-
- Net Effective Income
-
- The borrower's gross income minus federal income tax.
-
- Non-Assumption Clause
-
- A statement in a mortgage contract forbidding the
assumption of the mortgage without the prior approval of the
lender.
-
-
- The fee charged by a lender to prepare loan documents,
make credit checks, inspect and sometimes appraise a
property; usually computed as a percentage of face value of
the loan.
-
- Principal, interest, taxes, and insurance. Also called
monthly housing expense.
-
- Points
-
- See Discount
Points
- Power of Attorney
-
- A legal document authorizing one person to act on behalf
of another.
-
- Prepaids
-
- Expenses necessary 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.
-
- Prepayment
-
- A privilege in a mortgage permitting the borrower to make
payments in advance of their due date.
-
- Prepayment Penalty
-
- Money charged for an early repayment of debt. Prepayment
penalties are allowed in some form (but not necessarily
imposed) in 36 states and the District of Columbia.
-
- Principal
-
- The amount of debt, not counting interest.
-
-
- In the event that you do not have a 20 percent down
payment, lenders will allow a smaller down payment-as low as
5 percent in some cases. With the smaller down payments
loans, however, borrowers are usually required to carry
private mortgage insurance. Private mortgage insurance will
require an initial premium payment of 1.0 percent to 5.0
percent of your mortgage amount and may require an
additional monthly fee depending on your loan's structure.
On a $75,000 house with a 10 percent down payments, this
would mean either an initial premium payment of $2,025 to
$3,375, or an initial premium of $675 to $1,130 combined
with a monthly payment of $25 to $30.
-
-
- A real estate broker or an associate holding active
membership in a local real estate board affiliated with the
National Association of Realtors.
-
- Recision
-
- The 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 Fees
-
- Money paid to the lender for recording a home sale with
the local authorities, thereby making it part of the public
records.
-
- Renegotiable Rate Mortgage (RRM)
-
- A loan in which the interest rate is adjusted
periodically. See Adjustable
Rate Mortgage.
-
- Real Estate Settlement Procedures Act (RESPA)
-
- 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 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 as security.
-
- All the steps and operations a lender perform to keep a
loan in good standing, such as collection of payments,
payment of taxes, insurance, property inspections and the
like.
-
- Settlement
-
- See Closing.
-
- Settlement Costs
-
- See Closing
Costs.
-
- Shared Appreciation Mortgage (SAM)
-
- A mortgage in which a borrower receives a below-market
interest rate in return for which a lender (or another
investor such as a family member or other partner) receives
a portion of the future appreciation in the value of the
property. May also apply to mortgages where the borrower
shares the monthly principal and interest payments with
another party in exchange for a part of the appreciation.
-
- Survey
-
- A 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 building.
-
-
- See Balloon Payment Mortgage.
-
- Title
-
- A document that gives evidence of an individual's
ownership of property.
-
- Title Insurance
-
- A policy, usually issued by a title Insurance company,
which insures a homebuyer against errors in the title
search. The cost of the policy is usually a fraction of the
value of the property, and is often borne by the purchaser
and/or seller.
-
- Title Search
-
- An examination of municipal records to determine the legal
ownership of property. Usually is performed by a title
company.
-
- Truth-in-Lending
-
- A federal law requiring disclosure of the Annual
Percentage Rate to homebuyers shortly after they apply
for the loan.
-
- Two-Step Mortgage
-
- A mortgage in which the borrower receives a below-market
interest rate for a specified number of years (most often
seven or 10 years), 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 within 30 days notice at the end of seven or 10
years. Also called "Super Seven" or
"Premier" mortgage.
-
- The decision whether to make a loan to a potential
homebuyers based on credit, employment, assets, and other
factors and the matching of this risk to an appropriate rate
and term or loan amount.
-
-
- A 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 2 percent (depending on the size of the
down payment) paid on a VA-backed loan. On a $75,000 30-year
fixed-rate mortgage with no down payment, this would amount
to $1,406 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.
-
- Results 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.
 Click
The Peach to pre-qualify
Peach State
Mortgage Corp. 135
Powers Ferry Rd. Marietta,
Ga. 30067 800-533-0728
fax 770-565-7836 Email Click
The Peach to pre-qualify
|
|
