Warning: session_start() [function.session-start]: Cannot send session cookie - headers already sent by (output started at /home/content/08/10268208/html/InterlincMortgageBranches/randypitts/index.php:2) in /home/content/08/10268208/html/InterlincMortgageBranches/randypitts/libraries/joomla/session/session.php on line 423

Warning: session_start() [function.session-start]: Cannot send session cache limiter - headers already sent (output started at /home/content/08/10268208/html/InterlincMortgageBranches/randypitts/index.php:2) in /home/content/08/10268208/html/InterlincMortgageBranches/randypitts/libraries/joomla/session/session.php on line 423

Warning: Cannot modify header information - headers already sent by (output started at /home/content/08/10268208/html/InterlincMortgageBranches/randypitts/index.php:2) in /home/content/08/10268208/html/InterlincMortgageBranches/randypitts/libraries/joomla/session/session.php on line 426
Mortgage Terms

Mortgage Terms

Adjustable Rate Mortgage (ARM)
An ARM loan is subject to changes in interest rates. The ARM monthly interest payment may increase or decrease at the specific intervals established in the note you sign at closing; the maximum amount that the interest rate can change at any one time and over the life of the loan, however, is usually subject to a Cap
Amortization is the schedule of monthly mortgage payments of principal and interest due over the life of the loan. At the end of an amortized mortgage, such as a 30 year fixed rate mortgage, the loan balance will be zero.

Annual Percentage Rate (APR)
The APR reflects the cost of financing, including all interest, points and fees associated with a loan, expressed as an annual percentage rate over the life of the loan. Because the calculation for APR includes the costs of a loan, it will generally be higher than the actual interest rate, even on a fixed rate loan. APR will also vary from lender to lender for loans with the same interest rate, depending on the amount of points and fees each lender charges.

An appraisal is an estimate or informed opinion on the value of a property, as given by a certified appraiser. The appraisal is provided in a standard format, and shows the value of comparable properties, as well as any adjustments to the property value for differences in size, improvements or unusual characteristics. Lenders generally require a current appraisal before approving a new loan in order to confirm the value of the property is in line with the loan amount.

An appraiser is an individual who has been trained and certified to evaluate the value of real estate. Look for an appraiser who holds a certification from a major national organization, such as the National Association of Real Estate Appraisers, the American Society of Appraisers, the National Association of Independent Fee Appraisers or the Appraisal Institute.

See Adjustable Rate Mortgage

Balloon Mortgage
Balloon mortgage loans have a lower principal and interest payment, based on a 30 year amortization for the term of the loan, which is often 7 – 10 years. At the conclusion of the 7 – 10 year loan term, the loan balance becomes due.

Bi-Weekly Mortgage
A Bi-Weekly mortgage has payments due every two weeks instead of the standard monthly payment. By making 26 bi-weekly payments instead of 12 monthly payments each year, the borrower reduces the loan balance more quickly. A bi-weekly mortgage has the same effect as paying 13 monthly payments each year; a borrower can make one extra payment each year and achieve the same result, without the higher fees often associated with a bi-weekly mortgage.

Bridge Loan
A bridge loan is a short term loan used to fund the down payment required to close on a new loan prior to the sale of the borrower’s current home. When the sale of the first home closes; the bridge loan is paid off.

Cash-Out Refinance
A cash-out refinance loan or Home Equity loan is when the amount borrowed on the new loan is more than the amount required to pay off the prior mortgage. The additional cash is given to the borrower at closing.

Certificate of Title
The Certificate of Title is a document detailing the ownership of real property. It is prepared by an attorney or title company after researching public land and tax records to identify any encumbrances or liens, which must be cleared at closing.

Closing is the process of signing all the legal papers associated with the purchase of a property, including the loan documents. Closing, also known as settlement, occurs once all documents have been executed and the funds have been paid to transfer the property from seller to buyer.

Closing Costs
The costs associated with closing on a home sale and mortgage loan. These costs, and who pays them (buyer or seller) vary by type of transaction, as well as by state or locale. Typical closing costs include lender fees and the cost of the appraisal, title insurance and government recording and transfer taxes. Projected closing costs are detailed on the Good Faith Estimate (GFE) provided by the lender when a borrower applies for a loan.