Glossary Definitions for M - O
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The number of percentage points added to an index to calculate the interest rate on an ARM at each adjustment.
The average rate charged by lenders for conventional, fixed-rate loans.
The highest price that a buyer would pay for a property and the lowest price a seller would accept.
A title that is free and clear of liens, clouds, or other defects that would prevent the sale of the property.
- The end of the period for which a mortgage loan is written.
- The date(s) on which some types of investments as bonds may be redeemed at face value.
- The date on which a note, time draft, bill of exchange, certificate of deposit or other negotiable instrument becomes due and payable.
A savings account, offered by financial institutions, that pays fluctuating market rates of interest as long as the balance does not fall below a predetermined minimum.
This is the total monthly expense of principal, interest, taxes, and insurance.
A legal document by which real property is pledged as security for the repayment of a loan; the pledge is canceled when the debt is paid in full.
Originates and services mortgage loans, funding them with their own money.
A mortgage broker arranges financing for borrowers, but places loans with lenders rather than funding them with their own money.
Insurance purchased by a buyer to cover the lender’s risk when a down payment is less than 20% of the purchase price.
Insurance purchased by borrower to insure against default on government (FHA or VA) loans.
An advance of funds from a lender, called the mortgagee, to a borrower, called the mortgagor, secured by real property and evidenced by a document called a mortgage. The mortgage sets forth the conditions of the loans, the manner and duration or repayment and reserves to the mortgagee the right to repossess the pledged property if the mortgagor fails to repay any portion of principal and interest.
Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period – the agreement is secured by a mortgage.
A mortgagor is the borrower in a mortgage loan transaction.
Increase in principal balance that occurs when monthly payments are not large enough to pay all interest due on a loan, usually caused when payment caps prevent sufficient payment increases. Unpaid deferred interest is added to the loan balance, which means the borrower ends up owing more than the original amount of the loan.
A written promise or order signed by the maker to transfer a specified sum of money on demand or at a fixed future time to the person named on the instrument or to the bearer. A negotiable instrument is usually in the form of a check, draft, bill of exchange, promissory note or acceptance.
The amount remaining after certain deductions have been made from the gross amount.
Net income equals gross income less expenses, including taxes and insurance, but before depreciation, additions to reserves or distribution of earnings.
Net worth is the value in dollars of all assets less all liabilities.
This is a statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender.
A non-conforming loan does not comply with Fannie Mae or Freddie Mac guidelines, but is larger than $240,000.
Debt, such as taxes, that cannot be forgiven in a bankruptcy liquidation.
A public figure authorized to attest to the signing of documents, such as deeds or mortgages. The notary public certifies that he or she has witnessed the signing of the document by also signing the document and affixing his or her official seal.
An instrument bearing legal evidence of debt – a note is signed by the maker (borrower) and promises to pay a specified sum of money to the lender at a certain future date and place.
Written notice to a borrower that a default has occurred and legal action may be taken.
The requirement imposed on a debtor to pay a debt and the legal right of a creditor to enforce payment.
The oldest federal financial regulatory body, which oversees the nation’s federally chartered banks.
This is the regulatory and supervisory agency for federally chartered savings institutions.
Fee charged by a lender for processing a mortgage, usually expressed as a percentage of the loan (or points), which pays for the work in evaluating and processing the loan.
A check that has not yet been presented for payment to the financial institution on which it was drawn.
That portion of a debt which remains unpaid. Outstanding loan balance refers to that portion of principal that has not been repaid.
A draft or check written for an amount that exceeds the funds in the account on which the check is drawn.
The status of a payment that is late and not yet paid.
This is a purchase in which the seller provides all or part of the financing.