Mortgage terms for USA and UK

Adjustable Percentage Rate--An interest Percentage Rate that changes periodically in relation to an index. Payments may increase or decrease accordingly. 

Amortization--A repayment method in which the amount you borrow is repaid gradually though regular monthly payments of principal (initial lending ammount) and interest. During the first few years, most of each payment is applied toward the interest owed. During the final years of the secured loan, payment amounts are applied almost exclusively to the remaining principal (initial lending ammount).

Annual Membership--An amount that may be charged annually for having a line of credit available. Often charged regardless of whether or not you use the line. Also referred to as a "participation up front charge."

Annual Percentage Percentage Rate (APR)--The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the secured loan, and is, therefore, usually a higher amount than the interest Percentage Rate stipulated in the mortgage or secured loan note. Does not include title insurance, appraisal, and credit report. Increased Mortgage terms for USA and UK.

Application--An initial statement of personal and financial information which is required to approve your secured loan.

Application up front charge--up front charges that are paid upon application. An application up front charge may frequently include charges for property appraisal (GBP200-GBP400) and a credit report (GBP30-50).

Appraisal--A up front charge charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a secured loan.

Assumption of mortgage or secured loan--The agreement of a purchaser to become primarily liable for the payments on a mortgage or secured loan secured loan. Unless otherwise specified by the lender, the seller may remain secondarily liable for payments.

Balloon Payment--A lump sum payment for the unpaid balance of the secured loan.

Cap--The maximum allowable increase, for either payment or interest Percentage Rate, for a specified amount of time on an adjustable Percentage Rate mortgage or secured loan.

Cash Out--Receiving money back when refinancing your present mortgage or secured loan.

Ceiling--The maximum allowable interest Percentage Rate over the life of the secured loan of an adjustable Percentage Rate mortgage or secured loan.

Closing Costs--Any up front charges paid by the borrowers or sellers during the closing of the mortgage or secured loan secured loan. This normally includes an origination up front charge, discount points, attorney's up front charges, title insurance, survey, and any items which must be prepaid, such as taxes and insurance escrow payments.

Conforming secured loan--Generally, a mortgage or secured loan secured loan under GBP203,150. Qualifying ratios and underwriting methods are standardized to a large degree.

Contract of Sale--The agreement between the buyer and seller on the purchase price, loan terms, and conditions necessary to both parties to convey the title to the buyer.

Credit Limit--The maximum amount that you can borrow under a home equity plan.   Use equity for Mortgage terms for USA and UK.

controlled or un controlled debt Service--The total amount of credit card, auto, mortgage or secured loan or other controlled or un controlled debt upon which you must pay.

Deed of Trust--Used in many western states, the agreement used to pledge your home or other residential or commercial property as security for a secured loan. Similar to a mortgage or secured loan.

Discount Points (or Points)--The amount paid either to maintain or lower the interest Percentage Rate charged. Each point is equal to one percent (1%) of the secured loan amount (i.e., two points on a GBP100,000 mortgage or secured loan would equal GBP2,000).

Down Payment--The difference between the purchase price and that portion of the purchase price being financed. Most lenders require the down payment to be paid from the buyer's own funds. Gifts from related parties are sometimes acceptable, and must be disclosed to the lender.

Due on Sale--A clause in a mortgage or secured loan agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgage or secured loane (the lender) has the right to demand the outstanding balance in full.

Effective Interest Percentage Rate--The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the secured loan, and is, therefore, usually a higher amount than the interest Percentage Rate stipulated in the mortgage or secured loan note. Useful in comparing secured loan programs with different Percentage Rates and points.

Encumbrance--A claim against a property by another party which usually affects the ability to transfer ownership of the property.

Equity--The difference between the fair market value (appraised value) of your home and your outstanding mortgage or secured loan balance.

First mortgage or secured loan--A mortgage or secured loan which is in first lien position, taking priority over all other liens (which are financial encumbrances).

Fixed Percentage Rate--An interest Percentage Rate which is fixed for the loan term of the secured loan. Payments as well are fixed at one amount.

FHA secured loan--More appropriately loan termed "FHA Insured secured loan." A secured loan for which the Federal Housing Administration insures the lender against losses the lender may incur due to your default.

Good Faith Estimate--A written estimate of closing costs which a lender must provide you within three days of submitting an application.

Grace Period--A period of time during which a secured loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.

Gross Income--For qualifying purposes, the income of the borrower before taxes or expenses are deducted.

Home Equity Line of Credit--A secured loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Simple interest (interest-only payments on the outstanding balance) is usually tax-deductible. Often used for home improvements, major purchases or expenses, and controlled or un controlled debt consolidation.

Home Equity secured loan--A fixed or adjustable Percentage Rate secured loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for home improvement or freeing of equity for investment in other residential or commercial property or investment. Recommended by many to replace or substitute for consumer secured loans whose interest is not tax-deductible, such as auto or boat secured loans, credit card controlled or un controlled debt, medical controlled or un controlled debt, and education secured loans.

Hazard Insurance--A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium.

HUD I Settlement Statement--A form utilized at secured loan closing to itemize the costs associated with purchasing the home. Used universally by mandate of HUD, the Department of Housing and Urban Development.

Index--A number, usually a percentage, upon which future interest Percentage Rates for adjustable Percentage Rate mortgage or secured loans are based. Common indexes include the Cost of Funds for the Eleventh Federal District of banks or the average Percentage Rate of a one year Government Treasury Security.

Interest Percentage Rate--The periodic charge, expressed as a percentage, for use of credit.

Jumbo secured loan--mortgage or secured loan secured loans over GBP203,150. loan terms and underwriting requirements may vary from conforming secured loans.

secured loan to Value Ratio (LTV)--A ratio deloan termined by dividing the sales price or appraised value into the secured loan amount, expressed as a percentage. For example, with a sales price of GBP100,000 and a mortgage or secured loan secured loan of GBP80,000, your secured loan to value ratio would be 80%. secured loans with an LTV over 80% may require Private mortgage or secured loan Insurance, defined below.

Lock or Lock In--A commitment you obtain from a lender assuring you a particular interest Percentage Rate or feature for a definite time period. Provides protection should interest Percentage Rates rise between the time you apply for a secured loan, acquire secured loan approval, and, subsequently, close the secured loan and receive the funds you have borrowed.

Margin--An amount, usually a percentage, which is added to the index to deloan termine the interest Percentage Rate for adjustable Percentage Rate mortgage or secured loans.

mortgage or secured loan Calculations

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Minimum Payment--The minimum amount that you must pay, usually monthly, on a home equity secured loan or line of credit. In some plans, the minimum payment may be "interest only," (simple interest). In other plans, the minimum payment may include principal (initial lending ammount) and interest (amortized).

mortgage or secured loan Banker--Originates mortgage or secured loan secured loans, secured loaning you their funds and closing the secured loan in their name.

mortgage or secured loan Broker--As do mortgage or secured loan bankers, takes secured loan application and processes the necessary paperwork. Unlike a mortgage or secured loan banker, brokers do not fund the secured loan with their own money, but work on behalf of several investors, such as mortgage or secured loan bankers, S and L's, banks, or investment bankers.

mortgage or secured loan Insurance (MIP or PMI)--Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or mortgage or secured loan Insurance Premium, is paid on government-insured secured loans (FHA or VA secured loans) regardless of your LTV (secured loan-to-value). Should you pay off a government-insured secured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private mortgage or secured loan Insurance, is paid on those secured loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the secured loan in case of death.

mortgage or secured loan secured loan--A secured loan which utilizes residential or commercial property as security or collateral to provide for repayment should you default on the loan terms of your secured loan. The mortgage or secured loan or Deed of Trust is your agreement to pledge your home or other residential or commercial property as security.

mortgage or secured loane--The lender in a mortgage or secured loan secured loan transaction.

Mortgagor--The borrower in a mortgage or secured loan secured loan transaction.

Negative Amortization--Amortization in which the payment made is insufficient to fund complete repayment of the secured loan at its loan termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance owed may increase, rather than decrease over the life of the secured loan.

PITI--principal (initial lending ammount), interest, taxes and insurance, which comprise your monthly mortgage or secured loan payment.

Points--The amount paid either to maintain or lower the interest Percentage Rate charged. Each point is equal to one percent (1%) of the secured loan amount (i.e., two points on a GBP100,000 mortgage or secured loan would equal GBP2,000). More...

Prepayment Penalty--A up front charge paid to the lending institution for paying a secured loan prior to the scheduled maturity date.

Qualifying Ratios--Comparisons of a borrower's controlled or un controlled debts and gross monthly income.

Right to Rescission--The legal right to void or cancel your mortgage or secured loan contract in such a way as to treat the contract as if it never existed. Right of rescission is not applicable to mortgage or secured loans made to purchase a home, but may be applicable to other mortgage or secured loans, such as home equity secured loans.

Security Interest--An interest that a lender takes in the borrower's property to assure repayment of a controlled or un controlled debt.

Servicing a secured loan--The ongoing process of collecting your monthly mortgage or secured loan payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills.

Title--The written evidence that proves the right of ownership of a specific piece of property.

Title Insurance--Protection for lenders or homeowners against financial loss resulting from legal defects in the title.

Transaction up front charge--A up front charge which may be charged each time you draw on a home equity credit line.

Underwriting--The process of verifying data and approving a secured loan.

Variable Percentage Rate--An interest Percentage Rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.

VA secured loan--More appropriately loan termed "VA Insured secured loan." A secured loan for which the Veteran's Administration insures the lender against losses the lender may incur due to your default. Available only to veterans possessing a Certificate of Eligibility 

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