Select the letter that corresponds with the first letter of the word you're looking for.

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

A

Adjustable Mortgage Loan
A mortgage that does not have a fixed interest rate, and therefore does not have a fixed payment amount, for the term of the loan, or does not amortize to zero at the end of the term, when payments are made on time.

Adjustable Rate Mortgage (ARM)
ARMs are mortgages where the rate of the loan changes during the life of the loan. Rates usually change at one-, three-, or five-year intervals. The rate changes based on changes in an index like Treasury Bills, Treasury Securities Index, or a national or regional average cost of funds index (which index your loan follows depends on the terms of your loan). With an ARM, your payments on your loan fluctuate depending on the index your loan follows.

Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Amortization
Most loans follow amortization, which just means that the loan is paid off gradually through monthly payments on the principal (the amount borrowed).

Amortization Schedule
A loan's amortization schedule is the timetable for payments. It shows the amount of each payment applied to the principal (the amount borrowed) and the interest, and also shows the remaining balance on the loan after each payment is made.

Annual Percentage Rate (APR)
The APR is the percent of the loan that is paid in interest each year, including any additional costs and fees. APR is also called actual percentage rate.

Application
The statement of personal and financial information you provide when trying to secure a loan.

Application Fee
A fee charged by the lender to the borrower for applying for a loan.

Appraisal
The current market value of a specific property, in a written evaluation, based on recent sales of similar homes in a given market.

Appraised Value
The estimated amount of a property's fair market value, reported in an appraisal, and based on the appraiser's analysis of the property or determined by a computer calculation.

Appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property.

Approval
The granting of a loan

Automated Teller Machine (ATM)
An ATM allows you to get the benefits of a bank teller 24 hours a day, 7 days a week by processing deposits, withdrawals and other transactions via a computer. Most banks belong to an ATM network which allows you to use other banks' ATM machines. Some banks may charge you a small fee each time you

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B

Balance Sheet
A statement that shows assets, liabilities, and net worth as of a specific date

Balloon Loan/Mortgage
A loan with a regular payment schedule that is not fully paid off through the regular payments. The remaining amount owed on the loan is due in one lump sum at the end of the term of the loan.

Bankruptcy
A proceeding in a federal court in which a debtor who owes more than his or her assets can pay off the debt by transferring all of his or her assets to a trustee.

Beneficiary
The person designated to receive the income from a trust, estate, or a deed of trust.

Buy Down
Money advanced by a seller, builder, or other party to a buyer in order to reduce the buyer's monthly payments for a home mortgage either for the entire term of the loan or for a designed period at the beginning of the term of the loan.

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C

Cap
The limit on how much the interest rate can increase on adjustable rate mortgage.

Cash-Out Refinance
A refinance transaction in which the amount of money received from a new loan is more than the total needed to repay the existing mortgage, closing costs, points, and the amount required for any outstanding subordinate mortgage liens – there is cash left over.

Ceiling
The maximum allowable interest rate on an adjustable rate mortgage.

Certificate of Deposit (CD)
A CD is a savings account that allows you to earn a fixed amount of interest over a specific amount of time. CD's can be a short or long term way of saving money.

Check 21
The Check 21 Act improves the efficiency and cost of check writing by allowing a substitute check to be used in place of the original paper check. The image of the check is preserved while the paper checks are destroyed earlier in the return process to save money. This affects those banking because it allows the check to get to the payee faster and may cause the customer to overdraw an account more easily.

Closing
The event at which a sale is finalized and where the buyer signs the mortgage, and closing costs are paid; also called settlement.

Closing Costs
The costs associated with processing a loan, such as application fees, points, title search, insurance, and credit report.

Closing Day
The date on which the title for the property is passed from seller to buyer and/or the date on which the borrower signs the mortgage agreement.

Community Property
A form of ownership in some western and southwestern states where property acquired during a marriage is presumed to be owned jointly unless acquired separately by either spouse.

Community Reinvestment Act (CRA)
A federal law passed in 1977 to encourage depository institutions to get involved in the communities they service, especially low to moderate income neighborhoods. The CRA record of each bank is evaluated periodically and rated based on their community involvement. Home Loan Investment Bank has consistently maintained an "outstanding" CRA rating for more than 10 years.

Condominium
A condominium or condo is a form of homeownership in which the owner gets title to a housing unit and interest in the building's common areas.

Conventional Mortgage
Any mortgage that is not insured or guaranteed by the federal government.

Cost of Funds Index (COFI)
An index used to determine interest rate changes for certain adjustable-rate mortgages. This index represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

Credit
The promise to pay back the funds borrowed in the present by deferring the payments, usually with interest, until a later date.

Credit Card
A card which allows you to buy goods and borrow money based on credit.

Credit History
A record indicating the reliability of a person to repay funds accumulated by borrowing using credit.

Credit Score
A system implemented to reflect the credit history and worthiness of an individual based on a numerical score.

Current Account Balance
The amount of funds that you currently have available to you for withdrawal.

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D

Debt Ratio
The amount of debt or payments one must pay in relation to income earned. This ratio is calculated by dividing the amount of monthly debt by monthly income.

Deed
The document that proves ownership of a specific property and lists the owner(s) of the property.

Deed of Trust
Like a mortgage, whereby real property is given as security for a debt; however, there are three parties involved: the borrower, the trustee, and the lender (or beneficiary). The borrower transfers the legal title for the property to the trustee who holds the property in trust as security for the payment of the debt to the lender. If the borrower pays the debt as agreed, the deed of trust becomes void. If, however, the borrower defaults in the payment of the debt, the trustee may sell the property at a public sale.

Default
Failure to make payments on a timely basis or to comply with other loan requirements

Delinquency
A loan payment that is overdue but within the period allowed before default is declared; failure to pay an obligation when due.

Direct Deposit
An automatic method of payment that credit your savings account. Many people use direct deposit for reoccurring credits such as payroll or social security checks.

Disposable Income
All income remaining after all necessary expenses are paid, such as mortgage, car payment, insurance, etc.

Due-On-Sale Provision
A provision in a mortgage by which the lender can demand repayment of a loan in full if the borrower sells the property that serves as security for the loan.

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E

Encroachment
A building, or part of a building or an obstruction, that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line.

Encumbrance
A legal right or interest in land that affects a good or clear title, and diminishes the land's value. An encumbrance may be one of the following: zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. It does not legally prevent transfer of the property to another. A title search is usually done to reveal the existence of such encumbrances. The buyer must determine whether he or she wants to purchase with the encumbrance, or what can be done to remove it.

Equal Credit Opportunity Act (ECOA)
The ECOA is a federal law that requires lenders to loan without discrimination based on race, color, religion, national origin, sex, marital status or income from public assistance programs.

Equity Loan
A loan based on a borrower's equity in his or her home prior to closing; also, an account held by the lender into which a homeowner pays money for taxes and insurance.

Escrow Account
An account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses.

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F

Fair Credit Reporting Act
Fair Credit Reporting Act is a federal law designed to protect consumers from inaccurate credit information, which requires a lender who is rejecting a loan request because of adverse credit information to inform the borrower of the source of such information.

Fannie Mae or Federal National Mortgage Association (FNMA)
An organization that buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

FDIC
The Federal Deposit Insurance Corporation provides insurance of accounts for institutions whose deposits were formerly covered by the Federal Savings & Loan Insurance Corporation (FSLIC).

Fee Simple Estate
An unlimited, unconditional estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.

FHA Loan
Government loans are guaranteed or purchased by government organizations. The most popular Government Loans are the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).

Finance Charge
Total charges one must pay in order to get a loan.

Fixed-Rate Mortgage
A home loan whose interest rate will remain fixed for the entire loan term.

Flood Insurance
Property coverage to protect against losses caused by floods; required for real property located in "Designated Flood Hazard Areas" as designated by governmental agencies; used for the security of loans.

FNMA
The Federal National Mortgage Association or Fannie Mae is a government-sponsored corporation, owned solely by private investors, created to provide support to the secondary market for FHA and VA mortgages and conventional mortgages.

Forbearance
Refraining from taking legal action despite the fact that a mortgage is in arrears (is delinquent).

Foreclosure
A legal course of action in which property mortgaged as security for a loan is sold to pay the defaulting borrower's debt.

Freddie Mac or Federal Home Loan Mortgage Corporation (FHLMC)
FHLMC is a corporation authorized by Congress to purchase residential mortgages as well as conventional home mortgages insured by the Federal Housing Administration or guaranteed by the Veterans Administration. FHLMC sells participation certificates whose principal and interest are guaranteed by the Federal Home Loan Mortgage Corporation.

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G

Good Faith Estimate
An estimated detailing the closing/settlement costs.

Grace Period
The grace period is specified as part of the terms of the loan in the note and is the period of time during which a loan payment may be made after its due date without incurring a late penalty.

Gross Monthly Income
Total monthly income earned before deductions (taxes).

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H

Hazard Insurance
Insurance that protects against damage caused to property by windstorm, fire, or other common hazards.

Home Equity Loan
A loan based on the equity the borrower has in his or her home.

Home Equity Line of Credit
An open-end credit loan that is based on the equity the borrower has in his or her home that allows them to borrow repeatedly against the loan until their limit is reached.

HUD-1 Statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include commissions, loan fees, points and initial escrows. Also referred to as a "closing statement" or "settlement sheet."

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I

Individual Retirement Account (IRA)
An individual retirement account (IRA) allows you to put money in a tax-deferred or tax-free account that you can draw upon once you retire.

Insurance Binder
Documentation that states that insurance is temporarily in effect. Because this coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

Interest
The cost paid for use of money borrowed.

Interest Rate
The percentage of an amount of money which is paid for its use for a specified time.

Interest Rate Cap
The limit on how much interest rates may increase per adjustment period as a provision of an ARM.

Interest Rate Ceiling
The maximum interest rate, as specified in the mortgage note, for an adjustable-rate mortgage (ARM).

Interest Rate Floor
The minimum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage note.

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J

Judgment
A decision by a court of law. The court may place a lien in judgments that require the repayment of a debt. Liens may be placed against the debtor's real property as collateral for the judgment's creditor.

Judgment Lien
A decree from a court to place a lien on the property of a debtor.

Jumbo Loans
The term used to describe a loan that does not conform to Fannie Mae or Freddie Mac guidelines.

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K

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L

Late Charge
A penalty fee a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.

Lifetime Cap
The limits of the total increase in interest rates over the life of the loan as a provision of an ARM.

Lifetime Payment Cap
A limit on the amount that payments can increase or decrease over the life of the mortgage, for an adjustable-rate mortgage (ARM).

Loan Origination Fee
The administrative costs of processing a loan charged by a lender.

Loan-to-Value
The total amount of the loans (mortgages) divided by the market value or the appraised value.

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M

Margin
A margin or "spread" is an amount the lender adds to the index to determine the Fully Indexed Accrual Rate.

Market Value
Based upon comparable selling prices of other properties in the same area, the price a property can realistically sell for.

Maturity
When the money in a particular account has accumulated the maximum amount of interest allowed for that term.

Merged Credit Report
A credit report that contains information from three credit repositories that is compared for duplicate entries, which are then combined to create a summary of credit.

Money Market Account
An account that provides you with a more competitive interest rate than other savings accounts while still allowing you to have ATM access and check writing capabilities.

Mortgage
A piece of real estate that a loan is secured by. The mortgagor (the buyer) promises to keep the home insured, repay principal and interest, and to pay all taxes and to keep the property in good condition.

Mortgage Broker
A third party who will find someone else to lend money to a customer. A mortgage broker cannot approve a loan for a customer.

Mortgage Origination Fee
A fee by the lender for the work involved in the servicing and preparation of a mortgage request.

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N

Negative Amortization
(Also called "Deferred Interest"). A slow increase in mortgage debt that occurs when the monthly payment is not big enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create negative amortization

Non-Conventional or Non-Conforming Mortgage
A mortgage loan that doesn't conform to agency-established limits such as loan-to-value ratio, term, and other characteristics. Regulatory limits often have to do with Fannie Mae, Freddie Mac, and other government-established guidelines.

Note
A legal document showing the existence of a debt and stating terms of repayment.

Note Rate
A mortgage note's stated interest rate.

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O

Online Banking
A banking service that allows you to use the internet on your computer to access account information, view your account history, transfer funds between accounts, and pay bills.

Online Bill Payment
A banking service used in conjunction with online banking that allows you to pay your bills by automatically withdrawing the money from your checking account.

Open-end credit
A line of credit that may be borrowed against repeatedly until you reach the predetermined limit. Also referred to as revolving credit or a charge account.

Origination Fee
A fee for processing a loan application paid to a lender.

OTS
The OTS is The Office of Thrift Supervision which charters federal thrifts, serves as the primary federal examiner and regulator of federal and state-chartered savings associations, and administers laws governing savings and loan holding companies.

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P

Payment Cap
A limit on the amount a payment can be changed at the end of each Payment Adjustment Period.

Planned Unit Development (PUD)
A subdivision or project that has common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.

Power of Attorney
A legal document that authorizes complete authority or limited authority to another person for a certain act or periods of time to act on one's behalf.

Prime Rate
The interest rates charge to preferred customers by banks.

Private Mortgage Insurance (PMI)
Insurance that protects lenders against loss if a borrower defaults provided by nongovernmental insurers.

Promissory Note
A contract/agreement between the lender and the borrower for repayment of a loan (also called a "note").

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Q

Qualifying Ratios
Guidelines lenders apply to determine how large a loan to grant a homebuyer.

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R

Real Estate Settlement Procedures Act (RESPA)
RESPA is a consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Refinance
Retiring an existing debt from the proceeds of a new loan using the same collateral as security.

Rescission Period
A three-business-day waiting period from the time the final loan papers are signed to receipt of the actual loan money. A customer can cancel the loan without any penalty during this period, according to federal law.

Revolving Account
An account with no set term of when money borrowed has to be paid back. The balance owed can change, as can the payment being made. Most credit card accounts are revolving.

Right of Rescission
A customer's right to cancel a loan transaction in which a security interest is or will be retained or acquired for a consumer's principal dwelling.

Roth IRA
A personal retirement account that offers a tax-free way to save for retirement. This account if funded using after-tax dollars. You will not be taxed on withdrawals prior to age 59 ½.

RTC
Resolution Trust Corporation was formed to resolve thrift failures over the next three years and dispose of their assets and liabilities.

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S

Securitization
The process of selling non-conventional loan packages to investors (public or private) who represent an interest in the cash flow generated by asset-backed loans. Loans are sold to a trustee (for cash), who in turn sells the loan (in bond form) to investors.

Servicer
A party who has entered into an agreement with the insured to service a loan.

Settlement
The process of closing a mortgage loan.

Settlement Costs
See Closing Costs.

Survey
A map or plot made by a licensed surveyor showing the results of measuring the land with its elevations, boundaries, improvements, and its relationship to surrounding tracts of land. Often a survey is required by the lender to assure him that a building is actually sited on the land according to its legal description.

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T

Tax Lien
A claim for the amount of unpaid taxes against real estate.

Title
A form of a certificate or deed that is evidence of a person's legal right to ownership of property.

Title Insurance
Insurance that protects lenders or homeowners against loss of their interest in property due to legal defects in title. It may be issued to a mortgagee's title policy. The insurance benefits are paid only to the named insured in the title policy. Because of this it is important that an owner purchase an owner's title policy if he desires the protection of title insurance.

Townhouse
A row house on a small lot that has exterior limits common to other similar units; title to the unit and its lot is vested in the individual owner with a fractional interest in common areas, if any.

Traditional IRA
A personal retirement account that offers a tax-deferred way to save for retirement. You are taxed when withdraw the funds from this account.

Truth in Lending Act
A federal law that requires disclosure of credit terms using a standard format; intended to facilitate comparisons between the lending terms of financial institutions.

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U

Underwriting
A process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analyzing the borrower's creditworthiness and the quality of the property itself.

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V

Variable-Rate Mortgage
A mortgage in which interest rates fluctuate with the market and according to a schedule set out in the loan agreement, similar to an adjustable rate mortgage.

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W

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X

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Y

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Z

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