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Application Fee: This is a fee charged by mortgage lenders for the mortgage application processing costs.

Appraisal: A property comparison and analysis of similar properties is done to create an estimate for the property’s value.

Appreciation: The condition of the market improves or the homeowner makes home improvements to make the value of a property increase.

Assumption: A formal declaration where a new homebuyer takes on the primary responsibility of an existing mortgage.

Bankruptcy: A legal declaration where someone states that they can’t repay your debts. This declaration can affect your credit.

Broker: A person who deals with both the supplier and the buyer to broker a deal, such as for a mortgage.

Cap: The limit that interest rates or mortgage payments might increase or decrease with an adjustable-rate mortgage.

Closing:The process of completing a financial matter like a mortgage by signing documents and paying the agreed upon fees.

Closing Agent: This is the director of the closing process, which could be a person or company. They direct such actions as signing documents and payment of fees. This process is usually orchestrated by title companies, escrow companies or attorneys.

Closing Costs: These fees are charged for signing a mortgage that usually include title examination and insurance, a loan origination fee, attorney's fee, survey, and prepaid items, such as escrow deposits for taxes and insurance as well as others.

Co-borrower: Someone other than the primary borrower whose name also appears on the mortgage; the co-borrower also shares responsibility and liability.

Collateral: An asset offered as security in the hopes to ensure that a loan will get repaid. An example of collateral would be the actual house and property when it comes to a mortgage.

Condominium: A type of property where a person owns their individual unit in an apartment building.

Conventional Mortgage: A mortgage not insured by the government.

Conversion Option: Certain adjustable-rate mortgage loans allow the borrower to change the adjustable rate to a fixed-rate mortgage at an agreed upon time.

Convertible ARM: Where a borrower is able to convert an adjustable-rate mortgage to a fixed-rate mortgage.

Credit: Someone’s capability to repay borrowed money over time.

Credit Bureau: A company that is able to compile relevant materials on people who use credit and then sells that information as a report.

Credit History: A summary document of all debts and their status. Credit companies sell this information to interested parties, i.e. lenders.

Credit Score: An illustrative number denoting a person's financial risk based on info from the person’s credit history to evaluate them as a reliable borrower.

Creditor: The person that borrowed money is owed.

Debt-to-Income Ratio: Your gross monthly income compared against your total expenses such as rent, debt payments, credit cards, etc. expressed in a percentage.

Deed: The legal document that transfers ownership or the title to a property.

Deed-in-Lieu of Foreclosure: This transfers the title from the borrower to the lender because of a debt, sometimes this is done to avoid foreclosure.

Deed of Trust: A document that transfers the title from a borrower to an independent third-party trustee to hold on to for a lender. Once the loan gets repaid, then the trustee signs the deed back to the original borrower. However, if the original borrower ends up defaulting, then the trustee sells the property and pays the lender the debt with the sale amount.

Default: This is the inability to satisfy any legal obligation including the inability to complete payment for a financial obligation like a mortgage.

Delinquency: The failure to make a payment when it is due. Although a loan is technically delinquent if a payment is not received on the day it’s due, it is commonly referred to as delinquent when a loan is 30 days or more late on payment.

Depreciation: The value of a home goes down because the state of the house or market conditions change.

Down Payment: Part of the price of a home that gets paid up front. This is usually between 3% and 20% of the purchase price.

Equity: The amount that your home is worth above and beyond the total amount of any liens. For example, if you owe $50,000 but it’s worth $75,000, you have $25,000 of equity.

Escrow: Depositing money and any other items with a third party that delivers these items once certain conditions are met.

Eviction: This is the legal process of removing someone from their property.

Fair Credit Reporting Act: A law protecting consumers that regulates the disclosure of credit reports and explains how to dispute any errors found on credit reports.

Fair Market Value: The price a buyer would be willing to buy a property from a seller. Both of parties know all of the pertinent information.

Fannie Mae: A public company operating under a federal charter that is the nation’s biggest source of financing for home mortgages. Even though it doesn't lend money directly, it does help ensure that mortgage funds are available and affordable by buying loans from direct lenders.

Federal Housing Administration (FHA): A part of the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans given out by private lenders.

FHA-Insured Loan: A loan that is insured by the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD).

Fixed-Period Adjustable-Rate Mortgage: An adjustable rate mortgage (ARM) that remains fixed for an initial period and then adjusts periodically for the rest of the term.

Fixed-Rate Mortgage: A mortgage with an interest rate that remains the same for the life of the loan repayment.

Foreclosure: The legal action of ceasing ownership rights due to a homeowner not making payments on the mortgage or otherwise defaults.

Gross Monthly Income: The amount earned or received before taxes and any other deductions.

Home Equity Line of Credit: A revolving loan that allows homeowners to receive advances of their loans at their discretion, with the amount depending on their equity in their homes.

Home Inspection: A professional inspection of a home that determines the condition of the property based on the plumbing, roof, wiring, heating and cooling systems, pest infestation, and foundation.

Homeowner's Insurance: A policy type that protects the homeowner and lender from damage to the structure of a home or certain possessions within it, or a liability such as an injury to a visitor.

Homeowners' Association: An official group of homeowners living near each other or residing in the same community who want to maintain communal property and facilities for the benefit of all the residents.

Income Property: Real estate developed or purchased in the hopes to produce income, such as a rental unit.

Index: The number that gets used to calculate the interest rate for an adjustable-rate mortgage. It is usually released as a number or percentage like the average interest rate. There is a margin added to the index to determine how much the interest rate will change on an adjustable-rate mortgage.

Inflation: An increase in price and also the corresponding decrease in the value of money.

Initial Interest Rate: The starting interest rate on an adjustable-rate mortgage.

Installment Debt: A type of loan that is repaid on a schedule (like payments made every month).

Interest: This is the added cost of borrowing money that needs to get paid back to a lender on top of the principal, usually stated as a percentage of what’s been borrowed.

Lien: With a mortgage, the lender has a secured interest in the property and can then take title to the property if the borrower defaults on their mortgage.

Loan Origination: This is the process where a loan is made, which may include accepting a loan application, processing and underwriting the application, and closing the loan.

Loan Origination Fees: The fees that get paid to a mortgage lender for processing an application for a mortgage.

Loan-To-Value (LTV) Ratio: A loan amount compared to the value of a property (the lower amount between the appraisal value and the sale price). For example if a home is valued at $100,000 and has a $75,000 mortgage, it has an LTV of 66.66%.

Lock-In Rate: A written arrangement that guarantees a specific mortgage interest rate for a particular time period.

Mortgage: A loan where your home is considered collateral. In some cases, it also refers to the document you’ve signed to give the mortgage lender a lien on your home. It can also mean the amount of money, with interest, that is borrowed to finance your home purchase.

Mortgage Broker: This is a person or company that will work with both lender and borrower for the purpose of the loan origination. A mortgage broker usually doesn't fund the loans but does process them. They often work with independent contractors, and not the agents of borrowers or lenders.

Mortgage Insurance (MI): A type of insurance that protects the lender from losses if the borrower defaults on a mortgage. This type of insurance is usually required if the borrower puts a down payment less than 20%.

Mortgage Lender: This is the lender who funds a mortgage. They typically establish and maintain the loan underwriting and credit-approval processes.

Mortgage Rate: The interest rate that is paid when money is borrowed for a mortgage.

Mortgagee: The person lending the capitol for a mortgage.

Mortgagor: The person borrowing the capitol from a lender to use for a home purchase.

Negative Amortization: The increase of a loan balance when unpaid interest is added to the balance of a loan.

Net Monthly Income: The amount of money received from a paycheck after taxes.

Original Principal Balance: The total amount of principal that is owed on a mortgage before any payments get made.

Origination Fee: The processing cost of a loan application, paid to the lender, usually stated as a point or percentage of the mortgage amount.

PITI: The acronym for the four main parts of a monthly mortgage payment: Principle, Interest, Taxes, and Insurance.

Principal: The actual amount of money that is borrowed when buying a house or the actual amount of the loan that is to be repaid to the lender. This amount doesn't include interest or taxes.

Refinance: Obtaining a new mortgage and then using the new mortgage to pay off part or the entirety of the original one.

Second Mortgage: A mortgage that has a lien position subordinate to the first mortgage.

Servicer: A company that facilitates the loan process by taking mortgage payments, paying taxes and insurance payments for the borrower. They also manage the escrow account.

Title: The right to and ownership of a property. A title or deed can also be used to prove that someone owns the land.

Underwriting: This is the process where loan approval is determined by evaluating the property and deciding if the borrower will be able to repay the mortgage.

Veterans Affairs (U.S. Department of Veterans Affairs): An agency of the federal government that helps veterans and their families by providing them benefits like healthcare, financial assistance, educational assistance, and guaranteed home loans.

VA Guaranteed Loan: A type of mortgage guaranteed by the Department of Veterans Affairs.

Zoning: A standard land-use planning protocol.

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