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

     

7/23 and 5/25 Mortgages Mortgages with a one time rate adjustment after seven years and five years respectively.

3/1, 5/1, 7/1 and 10/1 ARMs Adjustable-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.

     

Accrued Interest

    Interest earned but not yet paid.

     

Acceleration Clause

    The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.

     

Adjustable rate mortgage (ARM)

    A mortgage in which the interest rate is adjusted periodically based on a preselected index. Also sometimes known as the renegotiable rate mortgage, the variable rate 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

Repayment of a loan with periodic payments calculated to pay off the loan's principal & interest for a fixed period of time.

 

Annual percentage rate (A.P.R.)

    A measurement of the full cost (including interest and loan fees) of a loan expressed as a yearly percentage rate. It provides consumers with a good basis for comparing the cost of loans. (Some would call it the "true rate")

 

Appraisal

    A written estimate of the property value, made by a qualified professional called an "appraiser".

     

Assessment

    A local tax levied against a property for a specific purpose, such as sewage or streetlights.

     

Assignment

    The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the assignee.

     

Assumption

    An agreement 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.

     

Balloon Mortgage

    A 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-year term. At the end of the term of the loan, the remaining outstanding principal on the loan is due  known as a balloon payment.

     

Bankruptcy

    A proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts.

     

Bearer

    The legal owner of a piece of property.

     

Bequest

    A gift of personal property by will.

     

Blanket Mortgage

    At least two pieces of real estate covered by the same mortgage.

     

Borrower (Mortgagor)

    An individual who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

     

Broker

    An individual in the business of assisting in arranging funding or negotiating contracts for a client. Brokers usually charge a fee or receive a commission for their services.

     

Buy-down

    Mortgage loan with a below-market rate.

    The lender and/or the home builder subsidizes the mortgage during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

     

Buyer's Market

    Market conditions that favor buyers. With more sellers than buyers in the market, sellers may be forced to make better sales price.

     

Caps

    Interest: Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage which may change per year and/or the life of the loan.

    Payment: Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

     

Cash Flow

    The 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.).

     

Cash Reserves

Money left in the bank after the loan funds. Cash in the bank is a very important factor - you have to have some after the loan closes just in case you run into unforeseen circumstances. The usual requirement is at least 2 months worth of house payments.

 

Cash Out

    Cash received when getting a new loan that is larger than the remaining balance of your current mortgage.

     

Ceiling

    The maximum allowable interest rate of an ARM.

     

Certificate of Eligibility

    The 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 DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility)

     

Certificate of Reasonable Value (CRV)

    An appraisal issued by the Veterans Administration showing the property's current market value

     

Certificate of Title

    Written opinion of the status of title to a property, given by an attorney or title company. 

     

Certificate of veteran status

    The 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).

     

Closing (or Settlement)

    The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands, also called settlement.

     

Closing costs

    It usually includes 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 cost of service for initiating the loan.

     

COFI (Cost of Funds Index)

    Adjustable-rate mortgage with rate that adjusts based on a cost-of-funds index, often the 11th District Cost of Funds.

     

Collateral

    Assets (such as your home) pledged as security for a debt.

     

Commission

    Money paid to a real estate agent or broker for negotiating a real estate or loan transaction.

     

Conditions

Tasks that must be completed before your loan can be funded. What kind of conditions might you expect to see?

 

Construction loan

    A 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 progresses.

     

Contingency

    A condition which must be satisfied before a contract is legally binding.

     

Contract 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 of installment sale.

     

Conventional loan

    A mortgage not insured by FHA or guaranteed by the VA.

     

Conforming loans

"Conform" to the criteria and limits set forth by the largest buyers of loans, FNMA (Fannie Mae) and FHLMC (Freddie Mac).

 

Conversion Clause

A provision in some ARMs that allows you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate will be set at current rates, and there may be a charge for the conversion feature.

 

Credit Report

    A report documenting the credit history and current status of a borrower's credit standing.

     

Credit History

The timeliness with which you've paid your bills in the past. Most important is the last two years.

 

Debt-to-Income 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 gross monthly income. See housing expenses-to-income ratio.

     

Deed of trust

    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

    When 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

     

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.

     

Disclosures

documents we must mail to you within 3 business days after we receive your application. You have to sign and return them to us.

 

Discount Point

    see point

     

Down Payment

    Money paid to make up the difference between the purchase price and the mortgage amount.

     

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.

     

Earnest Money

    Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

     

Entitlement

    The VA home loan benefit is called entitlement. Entitlement for a VA guaranteed home loan. This is also known as eligibility.

     

Equal Credit Opportunity Act (ECOA)

    Is 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. The value an owner has in real estate over and above the obligation against the property.

     

Escrow

    An account held by the lender into which the home buyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing.

     

Fannie Mae

    See Federal National Mortgage Association.

     

Farmers Home Administration (FmHA)

    provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

     

Federal Deposit Insurance Corporation (FDIC)

    Independent deposit insurance agency created by Congress to maintain stability and public confidence in the nation's banking system.

     

Federal Home Loan Bank Board (FHLBB)

    The former name for the regulatory and supervisory agency for federally chartered savings institutions. Agency is now called the Office of Thrift Supervision

     

Federal Home Loan Mortgage Corporation(FHLMC) also called "Freddie Mac",

    is a quasi-governmental agency that purchases conventional mortgage 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.

     

Federal National Mortgage Association (FNMA) also know 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.

     

Fee Simple

    Absolute ownership of real property.

     

FHA loan

    A loan, fixed or adjustable-rate,  insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans ($240,000 as of 1/1/99), they are generous enough to handle moderately-priced homes almost anywhere in the country.

     

FHA mortgage insurance

    Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance 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.

     

First Mortgage

    A mortgage which is in first lien position, taking priority over all other liens. In the case of a foreclosure, the first mortgage will be repaid before any other mortgages. The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as "Freddie Mac."

     

Firm Commitment

    A promise by FHA to insure a mortgage loam for a specified property and borrower. A promise from a lender to make a mortgage loan.

     

Fixed Rate Mortgage

    The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

     

Flood Insurance

    Insurance that compensates for physical damage to a property by flood. Typically not covered under standard hazard insurance.

     

FNMA

    The Federal National Mortgage Association is a secondary mortgage institution which is the largest single holder of home mortgages in the United States. FNMA buys VA, FHA, and conventional mortgages from primary lenders. Also known as "Fannie Mae."

     

Forbearance

    The act by the lender of refraining from taking legal action on a mortgage loan that is delinquent.

     

Foreclosure (or Repossession)

    A 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.

     

Freddie Mac

    see Federal Home Loan Mortgage Corporation

     

Ginnie Mae

    see Government National Mortgage Association.

     

Good Faith Estimate

Written estimate of all the fees and charges associated with getting your loan. In the case of third party fees like title insurance and homeowner's insurance, these are purely estimates.

Under the Real Estate Settlement Procedures Act (RESPA), the lender is required to provide this disclosure to the borrower within three days of receiving a loan application.

 

Government National Mortgage Association (GNMA)

    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.

     

Grace Period

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

     

Guaranty

    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.

     

Hazard Insurance

    A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.

     

Housing Expenses-to-Income Ratio

    The 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.

     

HUD

    Housing and Urban Development. A U.S. government agency established to implement federal housing and community development programs; oversees the Federal Housing Administration.

     

Impound

    That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard & 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 ARM and that earned by other investments (such as one- three-, and five-year U.S. Treasury security yields).  It is then used to adjust the interest rate on an adjustable mortgage up or down.

     

Indexed rate

    The sum of the published index plus the margin. For example if the index were 9% and the margin 2.75%, the indexed rate would be 11.75%. Often, lenders charge less than the indexed rate the first year of an adjustable-rate mortgage.

     

Interest Rate

    The annual rate of interest on the loan, expressed as a percentage of 100.

     

Interim Financing

    A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion.

     

Investor

    A money source for a lender.

 

Jumbo Loan

    A loan which is larger (more than $240,000 as of 1/1/99) 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.

     

Junior Mortgage

    A mortgage subordinate to the claim of a prior lien or mortgage. In the case of a foreclosure, a senior mortgage or lien will be paid first.

     

Lender

    The bank, mortgage company, or mortgage broker offering the loan.

     

Lien

    A claim upon a piece of property for the payment or satisfaction of a debt or obligation.

     

LIBOR (London Inter-Bank Offering Rate) and Prime

Another less common index is called LIBOR, an acronym. This index is more volatile than the other two and can go quite high. It is typically offered on risky loans -- those with negative credit issues or where income is hard to verify.

Prime is typically used only on equity-line second mortgages. It tends to be very stable for a long time, but moves more in response to government monetary policy than market conditions.

 

Loan program

Description of whether the rate can change or not and how long the loan will last. So when you hear the term "30 Year Fixed" it means the loan is going to last 30 Years (!) and that the rate will never change. Since most loans last 30 years, the name of some programs assume it will last that long. A "One Year ARM" is not a loan that is paid off in one year! It's a 30 year loan that has a rate that starts changing after one year.

 

Loan-to-Value Ratio

    The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.

If you have a $100,000 house with a $90,000 loan you have a 90% loan-to-value.

     

Lock

    Lender's guarantee that the mortgage rate quoted will be good for a specific number of days from day of application.

     

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.

     

MIP (Mortgage Insurance Premium)

    It is insurance from FHA to the lender against incurring a loss on account of the borrower's default.

     

Mortgage

    A legal document by which real property is pledged as security for the repayment of a loan.

     

Mortgage Banker

    An individual or company that originates and/or services mortgage loans.

     

Mortgage Broker

    An individual or company that arranges financing for borrowers.

     

Mortgage Insurance

    Money paid to insure the mortgage when the down payment is less than 20 percent. See private mortgage insurance, FHA mortgage insurance.

     

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 homebuyer will end 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. Note: The signed obligation to pay a debt, as a mortgage note.

     

Note

    Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. A mortgage or deed of trust or other security instrument secures the agreement.

     

Notice of Default

    Written notice to a borrower that a default has occurred and that legal action may be taken.

     

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

    Mortgage whose annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender.

     

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 the face value of the loan.

     

Per Diem Interest

    Interest calculated per day. (Depending on the day of the month on which closing takes place, you will have to pay interest from the date of closing to the end of the month. Your first mortgage payment will probably be due the first day of the following month.)

     

Permanent Loan

    A long term mortgage, usually ten years or more. Also called an "end loan."

     

PITI

    Abbreviation for Principal, 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 $100,000 mortgage would cost $2,000).

     

Points

Fees paid up-front that are used to lower the interest rate. It's like pre-paying the interest on your loan in one lump sum to save money every month you keep the loan. The trouble is, it takes about 5 - 7 years to recoup the money you pay to lower the rate. So if you don't plan on keeping the property very long (or you think you might refinance), it doesn't pay to pay points. Each point is 1% of the loan balance. So if your loan amount is $100,000, each point equals $1,000.

 

Power of Attorney

    A legal document authorizing one person to act on behalf of another.

     

Pre-Approval

A process that lets you get approved for a loan amount before you find a house to buy. Allows you to shop for a home within that amount and also give you leverage when bidding for that perfect home.

 

Preliminary approval

Your income and credit meet the guidelines for the loan you've chosen. This approval is in writing, is mailed to you and contains any necessary conditions to provide the final approval (discussed in more detail later).

 

Prepaid 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

    Fee charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states.

     

Primary Mortgage Market

    Lenders making mortgage loans directly to borrowers such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc.

     

Principal

    The amount of debt, not counting interest, left on a loan.

     

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 you loan's structure.

     

Property Appraisal

Report written by an appraiser who visits the property to measure it, draw a simple floor plan and take photos. The appraiser also compares the property to other properties in the area that have sold in the last 6 months. This is to determine what the "fair market value" is, that is, what others have paid for similar properties.

 

Rate Lock

    A guarantee the rate you want will be in effect when your loan closes. Rates change everyday sometimes more than once, so if your rate isn't locked it can be pretty nerve wracking. The choice to lock or not is entirely up to you.

    "Floating" means your rate is not locked - it's floating with the market.

     

Realtor

    A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.

     

Recission

    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.

     

Reconveyance

    The transfer of property back to the owner when a mortgage loan is fully repaid.

     

Recording

    The act of entering documents concerning title to a property into the public records.

     

Recording Fees

    Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.

     

Refinance

    Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property.

     

Renegotiable Rate Mortgage

    A loan in which the interest rate is adjusted periodically. See adjustable rate mortgage.

     

RESPA (Real Estate Settlement Procedures Act)

     Federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a 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 as collateral for and repayment of the loan.

     

Right to Rescission

    Under the provisions of the Truth-in-Lending Act, the borrower's right, on certain types of loans, to cancel the loan within three days of signing a mortgage.

     

Satisfaction of Mortgage

    The document issued by the mortgagee when the mortgage loan is paid in full. Also called a "release of mortgage."

     

Second Mortgage

    A mortgage made subsequent to another mortgage and subordinate to the first one.

     

Secondary Mortgage Market

    The 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.

     

Servicing

    All 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 (or Closing)

    The settlement or closing is the conclusion of your real estate transaction. It includes the delivery of your security instrument, signing of your legal documents and the disbursement of the funds necessary to the sale of your home or loan transaction (refinance).

     

Settlement Costs

    Also known as closing costs, these costs are for services that must be performed before your loan can be initiated. Examples include title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, taxes, and surveying fees.

     

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 future appreciation 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 Interest

    Interest which is computed only on the principle balance.

     

Survey

    A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.

     

Sweat Equity

    Equity created by a purchaser performing work on a property being purchased.

     

Tax Impound

    Money paid to and held by a lender for annual tax payments.

     

Tax Lien

    Claim against a property for unpaid taxes.

     

Tax Sale

    Public sale of property by a government authority as a result of non-payment of taxes.

     

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 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 Search

    An examination of municipal records to determine the legal ownership of property. Usually performed by a title company.

     

Total Debt Ratio

The percentage of your gross monthly income it takes to pay your house payment plus other monthly payments you make, like car payments, credit cards, student loans and so on.

 

Truth-In-Lending

    A 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 Mortgage

    A 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.

     

Underwriting

    The 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.

     

USURY

    Interest charged in excess of the legal rate established by law.

     

VA Loan

    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 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 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.

     

Verifications

Sent to your bank, your employer and to your landlord if you're renting to verify what you put on the application.

 

Warehouse Fee

    Many mortgage firms must borrow funds on a short term basis in order to originate loans which are to be sold later in the secondary mortgage market (or to investors). When the prime rate of interest is higher on short term loans than on mortgage loans, the mortgage firm has an economic loss which is offset by charging a warehouse fee.

     

Wraparound mortgage

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.