Mortgage Terminology

The highest rate that an adjustable rate mortgage may reach. It can be expressed as the actual rate or as the amount of change allowed above the start rate. For example, a 7.99 % start rate with a 6% rate change cap would have a maximum interest rate cap of 13.99%.

Any funds disbursed directly to the borrower.

A certificate issued by local city government to a builder, stating that the building is in proper condition to be occupied.

A true copy, attested to be true by the officer holding the original. It should have a stamp and signature stating that it is a true copy.

The loan is ready to be closed with no additional conditions.

The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement.

Usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The costs of closing usually are about 3 percent to 6 percent of the total mortgage amount. Or any costs being charged to facilitate granting of the credit request.

An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

Property owned in common by a husband and wife, which was not acquired as separate property. A classification of property peculiar to certain states. In community property states, assets may be owned in part by a spouse even if their name does not appear on the title.

A property with the same basic characteristics as the property you are attempting to find the value of (usually a real estate appraisal.) It should have been sold recently and be as similar as possible.

Property owned as a group, with rights to occupy specific units of the structure. An overseeing board often referred to as a Homeowners Association, governs the property.

A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.

Credit owed by the individual, not secured by real estate.

A mortgage not insured by FHA or guarantee by the VA or Farmers Home Administration (FMHA).

A provision in some ARMS, (Adjustable Rate Mortgage) that allows you to change the ARM to a fixed-rate loan at some point during the loan term.

The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her net effective income (FHA/VA loans) or gross monthly income (Conventional loans).

History of buyers past credit performance.

The score given to an individual to determine the credit worthiness. These scores come from TRW, Equifax and Trans Union.