An adjustable-rate mortgage (ARM) is a type of mortgage loan that allows the interest rate to be changed at specific intervals over the maturity of the loan, enabling borrowers to benefit from potentially lower interest rates initially compared to fixed-rate mortgages.
Amortization term refers to the time it takes to retire a debt through periodic payments. It is usually associated with loans and mortgages, indicating the full duration over which regular payments are made to fully repay the debt.
A blanket mortgage is a loan that covers more than one parcel of real estate. This type of mortgage is commonly used by developers who seek financing for a large tract of land that they plan to subdivide and sell without retiring the entire mortgage.
A buy down involves paying extra upfront to a lender in exchange for a lower interest rate on a mortgage loan. This lower rate can apply to either the entire loan term or part of it.
A Certificate of Reasonable Value (CRV) is a document issued by the Veterans Administration (VA) based on an approved appraisal, which establishes a ceiling on the maximum VA mortgage loan principal.
The Debt Coverage Ratio (DCR) is a financial metric used to evaluate the ability of an income property to cover its debt-related obligations, often applied in the underwriting of mortgage loans.
Discount points are amounts paid to the lender at the time a loan is originated, often by the seller, to bridge the gap between the market interest rate and the lower face interest rate of the note.
An agency of the federal government that makes mortgage loans on rural property to farmers and to individuals who provide services to farmers and ranchers. Loans are made at below-market interest rates. Borrowers are required to purchase stock in their local land bank association, which serves as additional security for the loan.
The Federal Agricultural Mortgage Corporation, known as Farmer Mac, is a stockholder-owned, federally chartered corporation established to improve the availability of long-term credit for America's rural communities by providing a secondary market for agricultural real estate and rural housing mortgage loans.
The Federal Land Bank is an agency that provides mortgage loans on rural property to farmers and individuals who offer services to farmers and ranchers. Borrowers must purchase stock in their local land bank association, which serves as extra security for the loan.
Federal Savings and Loan Associations are federally chartered institutions with a primary responsibility to accept people's savings deposits and provide mortgage loans for residential housing. Their role and scope were broadened by the Depository Institutions Deregulation and Monetary Control Act of 1980. Accounts are insured up to $250,000 by the FDIC.
A fixed-rate, level-payment mortgage loan with a maturity of fifteen years. This mortgage option became popular in the 1980s because it significantly reduces the amount of interest paid over the life of the loan, despite having higher monthly payments compared to a thirty-year mortgage.
A Housing Finance Agency (HFA) is a governmental (state or local) organization designed to provide housing assistance, often through tax-free bonds and low-interest mortgage loans for eligible borrowers.
A kicker is an added feature of a debt obligation, usually designed to enhance marketability by offering the prospect of equity participation. Common examples include convertible bonds, rights, and warrants. Kicker features may also be found in mortgage loans where ownership participation or a percentage of gross rental receipts is included. Kickers are also known as sweeteners.
A Liar Loan is a type of mortgage loan in which the borrower is allowed to take out the loan without providing standard documentation to prove income, employment, or assets. These loans were quite prevalent during the housing bubble of the mid-2000s and significantly contributed to the subsequent financial crisis due to their risky nature.
A mortgage banker is a financial individual or institution that originates, sells, and services mortgage loans. Unlike traditional banks or thrifts which fund loans from deposit accounts, mortgage bankers typically use funds from the sale of the mortgages.
An origination fee is a charge imposed by lenders on borrowers, particularly for mortgage loans, to cover the costs associated with issuing the loan. It can encompass a variety of expenses such as the salesman's commission, credit check, appraisal, and title expenses.
Permanent financing refers to long-term financing options available in both corporate finance and real estate, ensuring sustained capital over extended periods through debt or equity instruments.
Refi, short for refinanced mortgages, refers to the volume of mortgage loans originating from the refinancing of existing debt. This financial process involves replacing an existing mortgage with a new one, typically to achieve better interest rates, reduce monthly payments, or alter loan terms.
Savings and Loan Association (S&L) is a type of financial institution that specializes in accepting savings deposits and making mortgage loans.
A US financial institution that specializes in accepting savings deposits and making mortgage loans. They offer loans with a fixed rate of interest and have greater investment flexibility compared to UK building societies.
A teaser rate is an initially low interest rate applied to a mortgage loan for a limited period, which is designed as a marketing technique and is typically lower than the rate justified by the index determining the interest rate.
The Uniform Settlement Statement, commonly known as the HUD-1 form, is a document prescribed by the Real Estate Settlement Procedures Act (RESPA). It is used for federally related mortgage loans to provide a detailed account of all charges and credits to the buyer and seller in a real estate transaction.
