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Mortgage Glossary

Glossary A-B | Glossary C-L | Glossary M-R | Glossary S-X

Margin
The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

Marketable Title
Title which can be readily marketed to a reasonably prudent purchaser aware of the facts and their legal meaning concerning liens and encumberances.

Mechanics Lien
A lien created by statue for the purpose of securing priority of payment for the price of value of work performed and materials furnished in construction of repair of improvements to land, and which attached to the land as well as the improvements.

Mortgage Broker
One who for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security. Also known as a loan broker.

Mortgage Guaranty Insurance Corporation (MGIC)
A private corporation which, for a fee, insures mortgage loans similar to FHA and VA insurance, although not insuring as great a percentage of the loan.

Mortgage or Deed of Trust
Written pledge of real property given by the mortgagor to secure a debt. Should be recorded in the County Recorders Office.

Mortgagee
The lender of money or the receiver of the mortgage document.

Mortgagor
The borrower of money or the giver of the mortgage document.

Mortgage Insurance
Insurance required for loans with a loan above 80.01%.

Mortgage Warehousing
A system whereby a mortgage company will hold loans which would ordinarily be sold, in order to sell later at a lower discount. These are used as collateral security with a bank to borrow new money to loan.

Negative Amortization
Amortization means that monthly payments are large enough to pay the interest and reduce the principal on your mortgage. Negative amortization occurs when the monthly payments do not cover all of the interest cost. The interest cost which is not covered by the payment is added to the unpaid principal balance. This means that even after making many payments, you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARMhas a payment cap that results if monthly payments not high enough to cover the interest due.

Nonconforming Use
A property which does not conform to the zoning of an area.

Note
A written promise to repay a certain sum of money on specified terms.

Open End Mortgage
A mortgage permitting the mortgagor to borrow additional money under the same mortgage, with certain conditions, usually, as to the assets of the mortgage.

Origination Fee
A fee or charge for work involved in the evaluation, preparation and submission of a proposed mortgage loan.

Owners Policy
Title insurance for the owner of property, rather than a lienholder.

Package Mortgage
Mortgage covering both real and personal property.

Paper
A mortgage, deed of trust, or land contract, which is given instead of cash.

Partial Release
A release of a portion of property covered by a mortgage.

Perc Test (Percolation)
The test to determine the capability of the soil to absorb liquid, both for construction and septic systems.

Permanent Mortgage
A mortgage on completed construction on the same property under one mortgage or trust deed. PMI Private Mortgage Insurance Insurance similar to FHA or VA insurance, insuring part of the first mortgage or deed of trust, enabling a lender to make a conventional loan of a higher percentage of the property value. Points A point is equal to one percent of the principal amount of your mortgage. For example, if you get a mortgage for $100,000, one point is means you pay $1000 to the lender. Lenders frequently charge points in both fixed-rate and adjustable-ratemortgages in order to increase the yield of the mortgage and to cover loan closing costs. These points are usually collected at closingand may be paid by the borrower or the home seller, or may be split between them.

Property Tax
Generally, tax levied on both real and personal property.

Prorate
To divide in proportionate shares, such as taxes, insurance, rent, or other items.

Purchase Money Mortgage
A Mortgage given by the buyer to the seller as part of the purchase consideration, as opposed to a hard money mortgage.

Quit Claim Deed
A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property.

Real Estate
Land and anything permanently affixed to the land, and those things attached to the building.

Recital
Setting forth in a deed or other writing some explanation for the transaction.

Recourse
The right of the holder of a note secured by a mortgage or deed of trust to look personally to the borrower or endorser for payment.

Refinancing
The repayment of a debt from the proceeds of a new loan using the same property as security.

Reissuerate
A charge for a title insurance policy if a previous policy on the same property was issued within a specified period. Reissue is less than the original charge.

REIT (Real Estate Investment Trusts)
A method in investing in real estate in a group, with certain tax advantages.

Release
An instrument releasing property from the lien of the mortgage, judgment, etc.

Recision of Contract
Annulling a contract and placing the parties to it in a positionas if there had not been a contract.

RESPA (Real Estate Settlement Procedures Act)
A federal statute requiring disclosure of certain costs in the sale of residential improved property which is to be financed by a federally insured lender.

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