![]() Origination Fee:Ī fee charged by a lender for making a mortgage. The ability of mortgage borrowers to deduct the interest paid on a home loan for purposes of federal and state income taxes. Mortgage Broker:Īn individual or company that arranges mortgage financing between a borrower and a lender. Mortgage Banker:Ī company which originates mortgages for sale into the secondary mortgage market (e.g., to Fannie Mae and Freddie Mac). The mediator is not empowered to impose a settlement or decision on the parties, rather the mediator facilitates discussions and negotiation between the parties with the goal of assisting the parties in reaching a mutually acceptable settlement of their dispute. ![]() In mediation, the parties to the dispute are assisted by a neutral third person called a mediator. Mediation:Ī process used to resolve disputes. The LTV ratio for a $100,000 home financed with a $90,000 mortgage would be 90 percent, for example. The ratio of the amount of money owed on a home to the home’s value. Impound accounts are normally required on mortgages with down payments of 10 percent or less. Impound Account:Īn account established by a lender to collect a borrower’s property tax and insurance payments. Homeowner’s Warranty:Ī policy that covers certain repairs (e.g., plumbing or heating) of a newly purchased home for a certain period of time. Fixed-Rate Mortgage (FRM):Ī loan on which the interest rate and monthly payment do not change.Ī policy which protects against the damage to a property caused by fire, wind or other hazards. Fannie Mae and Freddie Mac are the key secondary mortgage market agencies. Government-sponsored, privately owned entities which purchase mortgages from lenders and turn the mortgages into securities which are bought by investors. Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation): The holding of documents and money by a neutral third party prior to closing. The difference between a home’s value and the mortgage amount owed on the home. Earnest money usually is refundable to homebuyers in the event a contingency of the sales contract cannot be met. The deposit given by a buyer to a seller to show that the buyer is serious about purchasing the home. The portion of the home’s purchase price the buyer pays in cash. Deed:Ī legal document conveying ownership of property. Lenders use a housing DTI ratio (house payment divided by monthly income) and a total DTI ratio (total debt payments including the house payment divided by monthly income) to determine whether a borrower’s income qualifies him or her for a mortgage. ![]() The ratio of monthly debt payments to monthly gross income. Conventional Mortgage:Ī loan not guaranteed, insured or made by the federal or state government. ![]() Common closing costs include escrow fees, title insurance fees, document recording fees and real estate commissions. Closing Costs:Įxpenses in addition to the price of the home incurred by buyers and sellers when a home is sold. The seller pays closing costs and receives the net proceeds from the home sale. The buyer signs the mortgage, pays closing costs and receives title to the home. The meeting at which a home sale is finalized. A payment cap limits how much the payment due on the loan can increase or decrease. Provisions of an ARM limiting how much the interest rate can change at each adjustment period (e.g., every six months, once a year) or over the life of the loan (rate cap). Basically, arbitration is a dispute resolution system where the parties submit arguments and evidence to a neutral person, know as the arbitrator, who then renders a decision, called an award, based upon the evidence and arguments presented. Arbitration: The term used to describe a form of dispute resolution that occurs outside of the court system. Appraisal/Appraised Value:Īn opinion of the market value of a home expressed by a real estate appraiser. The annual cost of a mortgage, including interest, loan fees and other costs, stated as a percentage of the loan amount. Later in the mortgage, more of the payment goes toward reducing the loan’s principal balance. In the early years of a mortgage, most of the monthly payment goes toward interest. The gradual repayment of a mortgage through monthly (e.g., installment) payments.
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