What Is Mortgage Terms?

What Is Mortgage Terms?
By [http://ezinearticles.com/?expert=Jim_Power]Jim Power

When looking at getting a mortgage, there are some terms
that you should familiarize yourself with so you know what
your mortgage lender is talking about. Below is a list of
the most commonly-used "mortgage phrases" and their
meanings to help you understand them better:


Adjustable Rate Mortgage (ARM) - A mortgage in which the
interest rate is adjusted periodically based on an index.

Appraisal - The determination of property value based on
recent sales information of similar properties.

Asset - Valuable items, encumbered or not, owned by a
person, corporation, or entity.

Biweekly Mortgage - Mortgage loan payments that requires a
payment twice monthly, yielding thirteen payments per year
instead of twelve. This significantly reduces the time a
principal is paid off.

Closing - Final arrangements to transfer title of property
as well as allocate charges and credits.

Closing Costs - Closing costs are fees paid by the borrower
when a property is purchased or refinanced. Costs incurred
include a loan origination fee, discount points, appraisal
fee, title search, title insurance, survey, taxes, deed
recording fee, and credit report charges.

Credit Report - A report to a prospective lender on the
credit standing of a prospective borrower. Used to help
determine creditworthiness. Information regarding late
payments, defaults, or bankruptcies will appear here.

Debt-to-Income Ratio (DTI) - The ratio of aggregate monthly
debt to aggregate monthly income.

Down Payment - Money paid by a buyer from his own funds, as
opposed to that portion of the purchase price which is
financed.

Earnest Money Deposit - A deposit made by a potential home
buyer to show that they are serious about purchasing the
property.

Equity - The difference between the current market value of
a property and the principal balance of all outstanding
loans.

Fixed-Rate Mortgage - A mortgage where the interest rate
does not change for the life of the loan.

Good Faith Estimate - An estimate of charges which a
borrower is likely to incur in connection with a loan
closing.

Gross Monthly Income - The total amount the borrower earns
per month, not counting any taxes or expenses. Often used
in calculations to determine whether a borrower qualifies
for a particular loan.

Interest Rate - The percentage of an amount of money that's
paid for its use over a specified time period.

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

Loan - The principal, or amount of total borrowed money,
that is repaid with interest.

Loan Officer - An intermediary between lending institutions
and borrowers, loan officers solicit loans, represent
creditors to borrowers, and represent borrowers to
creditors.

Loan-To-Value Ratio - The relationship between the amount
of the mortgage loan and the appraised value of the
property expressed as a percentage. A LTV ratio of 90 means
that a borrower is borrowing 90% of the value of the
property and paying 10% as a down payment. For purchases,
the value of the property is assumed to be the purchase
price, for refinances the value is determined by an
appraisal.

Mortgage - A legal document that pledges property to a
creditor for the repayment of the loan, and is the term
used to describe the loan itself.

Mortgage Broker - A mortgage company that originates loans,
joining the borrower and lender for a real estate loan,
earning a placement fee.

Origination Fee - The fee imposed by a lender to cover
certain processing expenses in connection with making a
loan. Usually a percentage of the amount loaned.

Pre-Approval - A term used to mean that a borrower has
completed a loan application and provided debt, income, and
savings information that has been reviewed and pre-approved
by an underwriter.

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

Purchase Agreement - A written contract signed by the buyer
and seller stating the terms and conditions under which a
property will be sold.

Refinancing - The process of paying off one loan with the
proceeds from a new loan, using the same property as
security.


You'll probably hear several of these phrases from your
mortgage lender when getting a loan. Whenever you don't
understand something, be sure to ask him or her to explain
it in layman's terms to be sure you understand the whole
mortgage process.

Jim Power is writer for the mortgage saving information site [http://mortagesave.com/] where there is more information to be found interest only mortgage [http://mortagesave.com/how-to-get-an-interest-only-mortgage/] can be found.

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