[vc_row][vc_column]
Appraisal:<\/strong> A professional estimate of the current market value of a property. Required by most lenders to obtain a loan.<\/p>\n ARM:<\/strong> Acronym for \u201cAdjustable Rate Mortgage.\u201d<\/p>\n Balloon Mortgage:<\/strong> A mortgage that requires a lump-sum payment at the end of the term of the mortgage.<\/p>\n Cash-Out Refinance<\/a>:<\/strong> When a property owner refinances and borrows more than what is currently owed on the property, generating additional cash for other needs. For example, a property owner could have a $100,000 mortgage on a $200,000 property. The property owner could replace this mortgage with a $150,000 mortgage \u2014 $100,000 would pay off the previous mortgage, and $50,000 would be the \u201ccash out\u201d portion of the mortgage.<\/p>\n Conforming Mortgage:<\/strong> A mortgage up to $417,000. Qualifying requirements and underwriting methods for conforming mortgages are standardized.<\/p>\n FHA Loan:<\/strong> Also known as an “FHA Insured Loan.” A loan in which the Federal Housing Administration insures the lender against losses due to your default.<\/p>\n First Mortgage:<\/strong> The mortgage that has first claim on a property in the event of a default. First Mortgages have priority over Second Mortgages (see below).<\/p>\n Fixed Rate Mortgage:<\/strong> A mortgage with an interest rate that remains constant over the life of the mortgage. Your monthly payments will remain constant throughout the life of the mortgage as well. \u201c30-year fixed\u201d loans means the interest rate on the loan will be fixed and, at the end of 30 years, the loan will be fully paid off; \u201c15-year fixed\u201d loans means the interest rate will be fixed and, at the end of 15 years, the loan will be fully paid off. (see also: Fixed Rate vs Adjustable Rate Mortgages<\/a>)<\/p>\n Fully-Amortizing Loan:<\/strong> A loan which has monthly payments that consist of both interest and principal. The principal steadily decreases such that, at the end of the term of the loan, the principal balance is zero, and the loan is fully paid back.<\/p>\n Home Equity<\/a>:<\/strong> The difference in the fair market value of your property and the total mortgage balance on the property.<\/p>\n Home Equity Line of Credit (HELOC)<\/a>:<\/strong> A financial instrument that gives you the option (but not the obligation) to borrow up to a certain amount, secured against equity in your home. A HELOC is similar to a credit card \u2013 you have a maximum credit line available to you, you may have an outstanding balance, and the balance accrues interest. HELOCs differ from credit cards because the interest incurred may be tax deductible, and because the credit line is secured against your home equity, the interest rates charged are typically lower than credit card rates. HELOCs are commonly used for home improvements, major purchases or expenses, and consolidation of more expensive debts.<\/p>\n HELOC:<\/strong> Acronym for Home Equity Line of Credit.<\/p>\n Home Equity Loan<\/a>:<\/strong> A loan which is secured by the home equity you have already built up in your home. Interest on a home equity loan is typically tax deductible and can be used to pay off more expensive loans (like credit card debt) that do not have tax deductible interest. Consult a tax advisor to determine if you may qualify.<\/p>\n Home Improvement<\/a>:<\/strong> Home improvement is the process of renovating, modifying, or making additions to a home. Home improvement is a costly affair that necessitates some type of financing. Any loan offered to homeowners in which the home is used as security is called a home improvement loan.<\/p>\n Interest-Only Mortgage:<\/strong> A mortgage that has a minimum monthly payment equal to the interest on the loan. Many interest-only mortgages are interest-only for a fixed period of time, after which monthly payments increase to pay both interest and principal.<\/p>\n Jumbo Mortgage Loan:<\/a><\/strong> Jumbo mortgages are home loans at amounts higher than the prevailing conforming loan limit. They currently range from $417, 000 to $729,500, depending on your geographic location.<\/p>\n Loan-to-Value Ratio (LTV):<\/strong> The ratio that measures the size of a mortgage to the value of the underlying property. For example, a $180,000 mortgage on a property that has a market value of $200,000 has an LTV of 90%. Lenders may choose to lend up to a certain maximum LTV ratio.<\/p>\n Mortgage:<\/strong> A loan secured by real estate.<\/p>\n Negative Amortization Mortgage:<\/strong> A loan which allows your initial monthly payments to be lower than the actual interest due, thereby increasing the total balance of the mortgage. Negative amortization loans allow borrowers to have lower monthly payments in the short-term, but, in the long term, monthly payments will probably increase significantly. Negative amortization loans may also lead to a steady decrease in home equity, especially if the market value of the property does not increase as fast as the mortgage balance is increasing.<\/p>\n PITI: <\/strong>Acronym for principal, interest, taxes and insurance, the components of your monthly mortgage payment. Some mortgage only require payment of principal and interest. (Taxes and insurance still need to be paid, but are not bundled together with your monthly mortgage payment.)<\/p>\n Points:<\/strong> An amount paid up-front at the start of a mortgage to decrease the rate of the mortgage. A point is 1% of the value of the mortgage. Also called \u201cDiscount Points.\u201d<\/p>\n