| periodic cap |
| The maximum rate increase
for a specific period for a specific loan (ARM) only. |
|
| PITI |
| Principal, interest,
taxes and insurance--the components of a monthly mortgage payment. |
|
| Planned Unit Developments
(PUD) |
| A subdivision of five
or more individually owned lots with one or more other parcels owned in
common or with reciprocal rights in one or more other parcels. |
|
| points |
| Charges levied by
the mortgage lender and usually payable at closing. One point represents
1% of the face value of the mortgage loan. |
|
| prepaids |
| Those expenses of
property which are paid in advance of their due date and will usually
be prorated upon sale, such as taxes, insurance, rent, etc. |
|
| prepayment penalty |
| A charge imposed by
a mortgage lender on a borrower who wants to pay off part or all of a
mortgage loan in advance of schedule. |
|
| principal |
| Amount of debt, not
including interest. The face value of a note or mortgage. |
|
| private mortgage insurance
(PMI) |
| Insurance provided
by nongovernment insurers that protects lenders against loss if a borrower
defaults. Fannie Mae generally requires private mortgage insurance for
loans with loan-to-value (LTV) percentages greater than 80%. |
|
| qualifying ratios |
| The ratio of your
fixed monthly expenses to your gross monthly income, used to determine
how much you can afford to borrow. The fixed monthly expenses would include
PITI along with other obligations such as student loans, car loans, or
credit card payments. |
|
| rate |
| The annual rate of
interest on a loan, expressed as a percentage of 100. |
|
| rate cap |
| A limit on how much
the interest rate can change, either at each adjustment period or over
the life of the loan. |
|
| rate lock-in |
| A written agreement
in which the lender guarantees the borrower a specified interest rate,
provided the loan closes within a set period of time. |
|
| rebate |
| Compensation received
from a wholesale lender which can be used to cover closing costs or as
a refund to the borrower. Loans with rebates often carry higher interest
rates than loans with "points" (see above). |
|
| refinancing |
| The process of paying
off one loan with the proceeds from a new loan using the same property
as security. |
|
| residential mortgage credit
report (RMCR) |
| A report requested
by your lender that utilizes information from at least two of the three
national credit bureaus and information provided on your loan application. |
|
| seller carry back |
| An agreement in which
the owner of a property provides financing, often in combination with
an assumed mortgage. |
|
| stated/documented income |
| Some loan products
require only that applicants "state" the source of their income
without providing supporting documentation such as tax returns. |
|
| survey |
| A print showing the
measurements of the boundaries of a parcel of land, together with the
location of all improvements on the land and sometimes its area and topography. |
|
| tenants-in-common |
| An undivided interest
in property taken by two or more persons. The interest need not be equal.
Upon death of one or more persons, there is no right of survivorship. |
|
| term |
| The period of time
which covers the life of the loan. For example, a 30 year fixed loan has
a term of 30 years. |
|
| title |
| The evidence one has
of right to possession of land. |
|
| title insurance |
| Insurance against
loss resulting from defects of title to a specifically described parcel
of real property. |
|
| title search |
| An investigation into
the history of ownership of a property to check for liens, unpaid claims,
restrictions or problems, to prove that the seller can transfer free and
clear ownership. |
|
| total debt ratio |
| Monthly debt and housing
payments divided by gross monthly income. Also known as Obligations-to-Income
Ratio or Back-End Ratio. |
|
| Truth-in-Lending Act |
| A federal law requiring
a disclosure of credit terms using a standard format. This is intended
to facilitate comparisons between the lending terms of different financial
institutions. |
|
| Veterans Administration
(VA) |
| A government agency
guaranteeing mortgage loans with no down payment to qualified veterans. |
|
