Mortgage terms and definitions for
home buyers, home sellers, and real estate consumers. Use
the links below to find the word you're looking for.
A debt security in where the issuer has the right to redeem
the security at a specified price on or after a specified
date, but prior to its stated final maturity date.
A set percentage amount by which an adjustable rate mortgage
may adjust each adjustment period. For adjustable loans,
caps are usually quoted as two numbers as in 2/6. The first
number indicates how much a loan may adjust at each adjustment
period while the second number indicates how much a loan
may adjust over its lifetime.
Loans like the 3/1 and 5/1 adjustable which have an initial
fixed period are quoted with 3 numbers as in 3/2/6 which
would mean that the first adjustment may be as much as 3%,
subsequent adjustments are capped at 2% each, and the lifetime
cap is 6%.
Two-Step loans are quoted with a single cap, which is the
amount by which the loan may adjust at its single
A loan in which a seller agrees to finance a buyer in order
to complete a property sale.
of Eligibility -
A veteran's evidence of entitlement for a VA-guaranteed
of Reasonable Value (CRV) -
An appraisal that has been performed on a property that
is being paid for a VA loan. After the property has been
appraised, the Veterans Administration issues a CRV.
A title that is free of liens or any legal question as to
the ownership of the property.
Final arrangements to transfer title of property as well
as allocate charges and credits.
Closing costs are fees paid by the borrower when a property
is purchased or refinanced. Costs incurred include a loan
origination fee, discount points, appraisal fee, title search,
title insurance, survey, taxes, deed recording fee, and
credit report charges. All closing costs are separated into
"non-recurring," and "pre-paid." Non-recurring charges are
any items that are paid only once because a loan was obtained
or a property bought, such as a loan origination fee. Pre-paid
charges are those that recur over time, like insurance and
property taxes. These are summarized in the Good Faith Estimate.
An outstanding claim or encumbrance, that, if valid, would
affect or impair the owner's property title.
Property, real or personal, pledged as a security to back
up a promise. In a home loan, the property is considered
collateral that can be revoked if loan is not repaid according
to the terms of the mortgage or deed of trust.
A written letter of agreement detailing the terms and conditions
by which the lender will lend and the borrower will borrow
funds to finance a home.
A mortgage loan for up to $300,700 in the continental United
States (Alaska and Hawaii limits are higher).
A short term loan for funding the cost of construction.
The lender advances funds to the builder as the work progresses.
The right of a borrower to convert an adjustable or balloon
loan into a fixed loan. The possible options are as follows...
May Not Convert This Loan.
May Convert But Must Requalify.
Conversion Fee Applies
May Convert And Is Automatically Qualified.
Conversion Fee Applies
Conventional Mortgage -
A mortgage loan that is obtained without any additional
guarantees for repayment, such as FHA insurance, VA guarantees,
or private insurance. This is usually given at an 80% loan-to-value
A credit loan is a mortgage that is issued on only the financial
strength of a borrower, without great regard for collateral.
The ratio of credit-related losses to the dollar amount
of MBS outstanding and total mortgages owned by the corporation.
Borrowers are rated by lenders according to the borrower's
credit-worthiness or risk profile. Credit ratings are expressed
as letter grades such as A-, B, or C+. These ratings are
based on various factors such as a borrower's payment history,
foreclosures, bankruptcies and charge-offs. There is no
exact science to rating a borrower's credit, and different
lenders may assign different grades to the same borrower.
The sum of foreclosed property expenses plus the provision
The sum of foreclosed property expenses plus charge-offs.
A report to a prospective lender on the credit standing
of a prospective borrower. Used to help determine creditworthiness.
Information regarding late payments, defaults, or bankruptcies
will appear here.