Amortization -

repayment of a mortgage debt in periodic payments over the length of the loan term. Payments usually include principal and interest.

Application -

a series of steps, usually including the completion of documents, that a lender requires of those seeking a loan

Appraisal -

an opinion or estimate of value. The process by which this estimate is obtained includes comparing a property to similar properties in the same market that have recently been sold.

Asset -

a property or right owned, tangible or intangible, that has monetary value and is capable of providing future benefits to its owner
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Buy-Down Mortgage -

a mortgage with a below-market interest rate made by a lender in return for an interest rate subsidy in the form of additional points paid by the builder, seller or buyer
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Cash Out Refinancing -

when the principal amount of a new mortgage involved in refinance is greater than the principal amount outstanding of the existing mortgage being refinanced, and all or a portion of the equity is being converted to cash

Closing -

repayment of a mortgage debt in periodic payments over the length of the loan term. Payments usually include principal and interest.

Closing Costs -

fees paid to effect the closing of a mortgage, such as an origination fee, discount points, title insurance fees, survey fees and attorney's fees

Collateral -

property pledged as security for a debt, for example, real estate pledged as security for a mortgage

Condominium -

a form of property ownership whereby the purchaser receives title to the unit and a proportionate interest in common areas

Conventional Financing -

in real estate, mortgage financing which is not insured or guaranteed by a government agency such as HUD/FHA or VA

Credit Report -

a report to a prospective lender on the credit withstanding of a prospective borrower, used to aid in the determination of creditworthiness
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Deed -

a written document sign, delivered and usually recorded, which conveys title to property from one owner to another

Downpayment -

a portion of the sales price paid a seller by a buyer to close a sales transaction, with the understanding that the balance will be paid later. Also the difference between the sale price and the mortgage amount.
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ECOA -

Equal Credit Opportunity Act. 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 form public assistance programs. Also called "Regulation B".

Escrow -

an item of value, money or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow Payment -

the portion of a mortgagor's monthly payment held by a lender to pay taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due
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Fannie Mae -

another name for the Federal National Mortgage Association (FNMA), the nation's largest mortgage investor. A quasi-governmental secondary market organization that offers various mortgage purchase and securitization programs.

Federal Home Loan Mortgage Corporation (FHLMC) -

see Freddie Mac

Federal National Mortgage Association (FNMA) -

see Fannie Mae

FHA Insurance -

the undertaking by FHA to insure the lender against loss arising from a default by the borrower

Fixed-Rate Mortgage -

a mortgage in which the interest rate and payments remain the same for the life of the loan

Freddie Mac -

another name for the Federal Home Loan Mortgage Corporation (FHLMC), a quasi-governmental secondary market organization that offers various mortgage purchase and securitization programs
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Gift Letter -

a letter certifying to the underwriter that the funds in an applicant's account are truly a gift and need not be repaid
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HUD -

the Department of Housing and Urban Development. A governmental entity responsible for the implementation and administration of housing and urban development.
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Interest -

consideration in the form of money paid for the use of money, usually expressed as an annual percentage
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Loan Origination -

the process by which a mortgage banker or direct lender brings into being a mortgage secured by real property

Loan-to-Value Ratio -

the ratio of mortgage amount to appraised value or sales price of real property. Used by lenders to determine maximum loan amounts as set by law.
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Mortgage Clause -

a clause that may be attached to an insurance policy stipulating that the lender will receive a portion of insurance proceeds sufficient to satisfy the unpaid amount of a loan in the event of a loss

Mortgage Insurance Premium -

the amount paid by a mortgagor for mortgage insurance either to FHA or a private mortgage insurance company
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Origination -

the process of creating residential mortgage loans

Origination Fee -

the lender's fee charged a borrower to prepare documents, make credit checks, inspect and sometimes appraise a property. Usually states as a percentage of the face value of the loan.
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PITI -

acronym for the items included in a monthly payment: principal, interest, taxes and insurance

Private Mortgage Insurance (PMI) -

insurance written by a private company protecting the mortgage lender against financial loss occasioned by a borrower defaulting on the mortgage

Point -

an amount equal to one percent of the principal amount of a mortgage

Principal -

the original balance of money lent, excluding interest. Also the remaining balance of a loan, excluding interest.
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Refinancing -

the repayment of a debt from the proceeds of a new loan using the same property as security
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Term -

the period of time between the commencement date and termination date of a note, mortgage, legal document or other contract
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Underwriting -

in mortgage banking, the analysis of the risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves the evaluation of the property as outlined in the appraisal report and of the borrower's ability and willingness to repay the loan.
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