Margin - The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.
Market Value - The 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.
Marketable Title - A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.
Mortgage - A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under government-insured or loan-guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.
Mortgage Commitment - A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.
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.
Mortgage Insurance Premium - The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of one-half of one percent paid by the mortgagor on a monthly basis.
Mortgage Note - A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.
Mortgage (Open-End) - A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no more than would raise the balance to the original loan figure.
Mortgagee - The lender.
Mortgagor - The borrower or homeowner.
Negative Amortization - 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 homebuyer 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.
Open-End Credit - A line of credit that may be used over and over again, including credit cards, overdraft credit accounts, and home equity lines.
Open-End Lease - A lease which may involve a balloon payment based on the value of the property when it is returned.
Origination Fee - 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.
PITI - Principal, interest, taxes, and insurance. Also called monthly housing expense.
Point-of-Sale (POS) - A method by which consumers can pay for purchases by having their deposit accounts debited electronically without the use of checks.
Power of Attorney - A legal document authorizing one person to act on behalf of another.
Pre-paid - 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, left on a loan.
Q-form - A Q-form is series of questions that you complete in order to request a loan. What does the Q stand for? You choose - quality, quick, qualification, questionnaire. Our unique Q-forms have been designed by Lending Tree specifically for the Internet to make your experience as easy as possible.
Rate - See Interest Rate.
Real Estate Broker - A middle man or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.
Realtor - 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.
Refinancing - The process of the same mortgagor paying off one loan with the proceeds from another loan.
Renegotiable Rate Mortgage (RRM) - A loan in which the interest rate is adjusted periodically. See Adjustable Rate Mortgage.
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.
