California Mortgage & Home Loan Rates Online

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

 A

adjustment interval This is a period of time between changes in either the interest rate and/or the monthly payment. The interest rate on most ARMs may change after one, three, or five years, although other adjustment intervals may be negotiated with lenders.

adjustable rate mortgage loan (ARM) A California mortgage loan that changes interest rate periodically based upon the changes  in a specified index.

adjustment date The date on which the interest rate changes for an adjustable-rate California mortgage loan (ARM).

adjustment period The period that elapses between the adjustment dates for an adjustable-rate California mortgage loan (ARM). amortization The repayment of a California mortgage loan loan by installments with regular payments to cover the  principal and interest.

amenity A feature that enhances a property's attractiveness and increases the occupant's or user's satisfaction (although the feature is not essential to the property's use). Natural amenities include a desirable location near water and scenic views of the surrounding area.

amortization A repayment method in which the amount you borrow is repaid gradually through regular monthly payments of principal and interest for a predetermined length of time. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.

amortization schedule A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.

amortization term The amount of time required to pay off the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

amortize To repay a mortgage with regular payments of both principal and interest.

annual cap The limit on the amount an adjustable rate mortgage's interest rate can change over a 12-month period. An annual cap prevents your payments from changing too dramatically, even if the factors that determine changes in an adjustable mortgage's rate rise or fall sharply during that period.

annual percentage rate (APR) The cost of a California mortgage loan  stated as a yearly rate; includes such items as interest, California mortgage loan insurance,  and loan origination fee (points).

application A form, commonly referred to as a 1003 form, used to apply for a California mortgage loan and to provide information regarding a prospective mortgagor and the proposed security.

application fee Fees that are paid upon application. An application fee may frequently include charges for property appraisal and a credit report.

appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser.

appraised value An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.

appraiser A  person qualified by education, training, and experience to estimate the value of real property and personal property.

appreciation An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

assessed value The valuation placed on property by a public tax assessor for the purposes of taxation.

assessment The process of placing a value on property for the purpose of taxation.

assessor A public official who establishes the value of a property for taxation purposes.

asset Anything of monetary value that is owned by a person. Assets include real  property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).

assignment The transfer of a mortgage loan from one person to another.

assumable mortgage loan A mortgage loan that can be taken  over ("assumed") by the buyer when a home is sold.

assumption The transfer of the seller's existing mortgage loan to the buyer.

assumption clause A provision in an assumable California mortgage loan that allows a buyer to assume responsibility for the California mortgage loan from the  seller. The loan does not need to be paid in full by the original borrower  upon sale or transfer of the property.

assumption fee The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing California mortgage loan.

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 B

balance sheet A financial statement that shows assets, liabilities, and net worth as of a specific date.

balloon mortgage loan A mortgage loan that has level monthly payments that will amortize it over a stated term but that provides for a lump  sum payment to be due at the end of an earlier specified term.

balloon payment The final lump sum payment that is made at the maturity date of  a balloon California mortgage loan.

bankrupt A person, firm, or corporation that, through a court proceeding, is relieved  from the payment of all debts after the surrender of all assets to a court-appointed trustee.

bankruptcy A proceeding in a federal court in which a debtor who owes more than his  or her assets can relieve the debts by transferring his or her assets  to a trustee.

before-tax income Income before taxes are deducted.

beneficiary The person  designated to receive the income from a trust, estate, or a deed of trust.

binder A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

biweekly payment mortgage loan A mortgage loan that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate California mortgage loan, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.

blanket mortgage loan The California mortgage loan that is secured by a cooperative  project, as opposed to the share loans on individual units within the  project.

bond An interest-bearing certificate of debt with a maturity date. An obligation of a government  or business corporation. A real estate bond is a written obligation usually  secured by a California mortgage loan or a deed of trust.

borrower The individual applying for or receiving a loan or line of credit

breach A violation of any legal obligation.

bridge loan A form  of second trust that is collateralized by the borrower's present home  (which is usually for sale) in a manner that allows the proceeds to be  used for closing on a new house before the present home is sold. Also  known as "swing loan."

broker A person who, for a commission or a fee, brings parties together and assists in negotiating  contracts between them.

buydown mortgage loan A temporary buydown is a California mortgage loan on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a California mortgage loan. A permanent buydown reduces the interest rate over the entire life of a California mortgage loan.

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 C

call option A provision in the California mortgage loan that gives  the California mortgage loane the right to call the California mortgage loan due and payable at the end of a specified period for whatever reason.

cap A provision of an adjustable-rate California mortgage loan (ARM) that limits how much the interest rate or California mortgage loan payments may increase or decrease.

capital improvement Any structure  or component erected as a permanent improvement to real property that adds to its value and useful life.

cash-out refinance A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed  to repay the existing first California mortgage loan, closing costs, points, and the amount  required to satisfy any outstanding subordinate California mortgage loan liens. In other  words, a refinance transaction in which the borrower receives additional  cash that can be used for any purpose.

certificate of eligibility A document issued by the federal  government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) California mortgage loan.

certificate of reasonable value (CRV) A document issued by the Department of Veterans Affairs (VA) that establishes the maximum  value and loan amount for a VA California mortgage loan.

certificate of title A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.

chain of title The history of all of the documents that  transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

change frequency The frequency (in months) of payment and/or interest rate changes in an adjustable-rate California mortgage loan (ARM).

clear title A title that is free of liens or legal questions as to ownership of the property. closing A meeting at which a sale of  a property is finalized by the buyer signing the California mortgage loan documents and paying closing costs. Also called "settlement."

closing A meeting at which the buyer finalizes a sale of a property signing the mortgage documents and paying closing costs.

closing costs Expenses (over and above the price of the property)  incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee,  taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country. Closing statement Also referred to as the HUD1. The final  statement of costs incurred to close on a loan or to purchase a home.

closing cost item A fee or amount that a home buyer must  pay at closing for a single service, tax, or product. Closing costs are  made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement.

closing date Lenders need to know when you expect or would like to complete the final procedures your new house, in which documents are executed and the sale is completed. 45-60 days is most common. You can always discuss changing this date with your lending institution.

closing statement The final statement of costs necessary to close on a loan listing both buyer and seller fees, if applicable. This is also referred to as the HUD-1.

cloud on title Any conditions revealed by a title search that  adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.

collateral An asset (such  as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms  of the loan contract. Collection The efforts used to bring a delinquent California mortgage loan current and to file the necessary notices to proceed with foreclosure  when necessary.

co-borrower An individual who enters into an agreement along with the borrower. The co-borrower is responsible if the borrower should default on the loan.

co-maker A person who signs a promissory note along with the  borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. See endorser.

commission The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or  loan.

commitment letter A formal offer by a lender stating the  terms under which it agrees to lend money to a home buyer. Also known  as a "loan commitment."

common areas Those portions of a building, land, and amenities  owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative  corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include  swimming pools, tennis courts, and other recreational facilities, as well  as common corridors of buildings, parking areas, means of ingress and  egress, etc.

community home improvement mortgage loan An alternative financing option that allows low- and  moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can  account for as much as 30 percent of the appraised value.

community property In some western and southwestern states,  a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either  spouse.

comparables An abbreviation for "comparable properties"; used for comparative purposes in the appraisal  process. Comparables are properties like the property under consideration; they have reasonably the same size, location , and amenities and have  recently been sold. Comparables help the appraiser determine the approximate  fair market value of the subject property.

compound interest Interest paid on the original principal balance and on the accrued and unpaid interest.

condominium A real  estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.

condominium conversion Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

conforming loan Generally, a mortgage loan under $240,000. Qualifying ratios and underwriting methods are standardized to a large degree with this type of loan.

construction loan A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

consumer reporting agency (or bureau) An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.

contingency A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency  that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

contract An oral or  written agreement to do or not to do a certain thing. Conventional California mortgage loan A California mortgage loan that is not insured or guaranteed by the federal government.

contract of sale The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.

conventional mortgage A mortgage that is not insured or guaranteed by the federal government.

convertibility clause A provision in some adjustable-rate  California mortgage loans (ARMs) that allows the borrower to change the ARM to a fixed-rate  California mortgage loan at specified timeframes after loan origination.

convertible ARM An adjustable-rate California mortgage loan (ARM) that  can be converted to a fixed-rate California mortgage loan under specified conditions.

cooperative (co-op) A type of multiple ownership in which  the residents of a multiunit housing complex own shares in the cooperative  corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

corporate relocation Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

cost of funds index (COFI) An index that is used to determine  interest rate changes for certain adjustable-rate California mortgage loan (ARM) plans.  It represents the weighted-average cost of savings, borrowings, and advances  of the 11th District members of the Federal Home Loan Bank of San Francisco.

courier fee Cost associated with transporting closing documents to the closing agent. This fee may also include the cost of forwarding and/or obtaining other documents necessary to complete the preparation of your mortgage documents.

covenant A clause in a California mortgage loan that obligates or restricts the borrower and that, if violated,  can result in foreclosure.

credit An agreement  in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

credit history A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential  borrower has a history of repaying debts in a timely manner.

credit life insurance A type of insurance often bought by the borrower because it will pay off the mortgage debt if the borrower dies while the policy is in force.

credit limit The maximum amount that you can borrow.

credit report A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. See merged credit report.

credit repository An organization that gathers, records, updates, and stores financial and public records information about the  payment records of individuals who are being considered for credit.

creditor A person to whom money is owed.

creditor chargeoffs A term generally used in accounting that indicates the creditor does not expect to successfully collect the balance owed on an account

creditor judgements A decision by a court of law relative to an action or suit.

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D

debt An amount owed  to another. deed The legal document conveying title to a property.

deed The legal document conveying title to a property.

deed-in-lieu A deed given by a mortgagor to the California mortgage loane  to satisfy a debt and avoid foreclosure.

deed of trust The document used in some states instead of a California mortgage loan; title is conveyed to a trustee.

default Failure to make California mortgage loan payments on a timely basis  or to comply with other requirements of a California mortgage loan.

delinquency Failure to make California mortgage loan payments when California mortgage loan payments are due.

deposit A sum of money  given to bind the sale of real estate, or a sum of money given to ensure  payment or an advance of funds in the processing of a loan.

depreciation A decline in the value of property; the opposite of appreciation.

down payment The part of the purchase price of a property  that the buyer pays in cash and does not finance with a California mortgage loan.

due-on-sale provision A provision in a California mortgage loan that allows the lender to demand repayment in full if the borrower sells the property  that serves as security for the California mortgage loan

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 E

earnest money deposit A deposit made by the potential home buyer to show that he or she is serious about buying the house.

easement A right of  way giving persons other than the owner access to or over a property.

effective age An appraiser's estimate of the physical condition  of a building. The actual age of a building may be shorter or longer than  its effective age.

effective gross income Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source.  Salary is generally the principal source, but other income may qualify if it is significant and stable.

encumbrance Anything  that affects or limits the fee simple title to a property, such as California mortgage loans,  leases, easements, or restrictions.

endorser A person who  signs ownership interest over to another party. Contrast with co-maker.

Equal Credit Opportunity Act (ECOA) A federal law that requires lenders and other creditors to make credit equally available  without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

equity A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its California mortgage loan.

escrow An item of value, money, or documents deposited with a third party to be delivered upon  the fulfillment of a condition. For example, the deposit by a borrower  with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

escrow account The account in which a California mortgage loan servicer  holds the borrower's escrow payments prior to paying property expenses.

escrow analysis The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

escrow collections Funds collected by the servicer and  set aside in an escrow account to pay the borrower's property taxes, California mortgage loan insurance, and hazard insurance.

escrow disbursements The use of escrow funds to pay real estate taxes, hazard insurance, California mortgage loan insurance, and other property expenses as they become due.

escrow payment The portion of a mortgagor's monthly payment  that is held by the servicer to pay for taxes, hazard insurance, California mortgage loan insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.

estate The ownership interest of an individual in real property. The sum total of all the real  property and personal property owned by an individual at time of death.

eviction The lawful  expulsion of an occupant from real property. examination of title The report on the title of a property from the public records or an abstract  of the title.

exclusive listing A written contract between a property owner and a Real Estate broker, whereby the owner promises to pay a fee or commission to the broker if certain real property of the owner is sold during a stated period, regardless of whether the broker is or is not the cause of the sale.

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 F

Fair Credit Reporting Act A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit  reporting agencies and establishes procedures for correcting mistakes on one's credit record.

fair market value The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing  but not compelled to sell, would accept.

Federal Housing Administration (FHA) An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is  the insuring of residential California mortgage loan loans made by private lenders. The  FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

fee simple The greatest possible interest a person can  have in real estate.

FHA mortgage loan A mortgage loan that is insured by the Federal Housing Administration (FHA). Also known as a government California mortgage loan.

finder's fee A fee or commission paid to a California mortgage loan broker  for finding a California mortgage loan loan for a prospective borrower.

first California mortgage loan A California mortgage loan that is the primary lien against a property.

fixed installment The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

fixed-rate mortgage loan (FRM) A mortgage loan in which the interest rate does not change during the entire term of the loan.

flood certification fee This is a fee to obtain documentation that indicates whether or not a property is in a federally-designated flood zone, and whether or not flood insurance is required for that property.

flood insurance Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

foreclosure The legal process by which a borrower in default under a California mortgage loan is deprived of  his or her interest in the California mortgage loan property. This usually involves a forced sale of the property at public auction with the proceeds of the  sale being applied to the California mortgage loan debt.

forfeiture The loss of money, property, rights, or privileges due to a breach of legal obligation.

full disclosure A legal requirement that says a person selling a home must inform a potential buyer of everything they know about the home's physical and economic condition.

fully amortized ARM An adjustable-rate mortgage loan (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.

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 G

gift letter The form stating that a relative is giving you money to help you buy a home, and that they will not ask you to it pay back. The letter also provides proof, by referring to bank statements and other records, that the relative does in fact, have enough money to cover the amount of the gift, and that the money has been transferred to your possession.

good faith estimate An estimate of charges which a borrower is likely to incur in connection with a settlement.

grace period The period of time past the due date for a payment during which time the payment may be made and not considered delinquent.

grantee The person to whom an interest in real property is conveyed, generally the seller.

grantor The person conveying an interest in real property, generally the buyer.

gross income For qualifying purposes, the income of the borrower before taxes or expenses are deducted.

guarantee mortgage A mortgage that is guaranteed by a third party.

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 H

hazard insurance Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending  upon the terms of the policy.

home equity conversion mortgage A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans, a borrower does not qualify based on income, but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property.

home inspection A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

homeowners' association A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

homeowner's insurance An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

homeowner's warranty A type of insurance that covers repairs to specified parts of a house for a specific period. It is provided by the builder or property seller as a condition of the sale.

housing expense ratio The percentage of gross monthly income that goes toward paying housing expenses.

HUD The U.S. Department of Housing and Urban Development.

HUD-1 A standard form, which itemizes the closing costs, associated with the purchase or the refinance of a one-to-four family residential property.

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I 

index A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Some commonly used indexes include the 1-Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI).

in-file credit report An objective account, normally computer-generated, of credit and legal information obtained from a credit repository.

inflation An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less.

initial interest rate The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM).

installment The regular periodic payment that a borrower agrees to make to a lender.

installment loan Borrowed money that is repaid in equal payments, known as installments. An auto loan is often paid for as an installment loan.

insurance A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.

interest The amount of money a lender charges you to borrow money. The interest you pay is a percentage of your total loan, and is paid over time.

interest accrual rate The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.

interest adjustment or prepaid interest An estimated amount of interest due at closing, usually from the date of closing to the end of the month.

interest rate The periodic charge, expressed as a percentage, for use of credit.

interest rate ceiling For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.

interest rate floor For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

investment property A property that is not occupied by the owner.

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J

joint tenancy A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of survivorship.

jumbo loan Also called a nonconforming loan. Terms and underwriting requirements may vary from conforming loans.

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K

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 L

late payment fee A fee charged for failing to submit the minimum monthly payment by its due date.

lender A financial institution, like a bank, that loans you money, and expects you to pay the money back to them in a stated period, usually with interest.

lien An encumbrance  against property for money due, either voluntary or involuntary.

lifetime cap A provision of an ARM that limits the highest rate that can occur over the life of the loan.

loan application The formal document you fill out when you approach a lender to borrow money. It includes your name and personal information, the amount of money and other terms of the loan you need, as well as a detailed description of the purpose of the loan.

loan term The total amount of time you are given by a lender to pay off your loan. Loan terms vary, but are generally set at 15 or 30 years.

loan to value ratio (LTV) The ratio of the amount of your  loan to the appraised value of the home. The LTV will affect programs  available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.

lock-in A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

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 M

margin The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period. A representative margin would be 2.75%.

maturity The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

maturity date The scheduled date for your final payment on a loan. After making the payment on a loan's maturity date, you assume complete ownership of your home from the lender.

maximum financing A mortgage amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product. Thus, maximum financing on a fixed-rate mortgage would be 90 percent or higher, because 95 percent is the maximum allowable LTV percentage for that product.

minimum payment The minimum amount that you must pay (usually monthly) on your account. In some plans, the minimum payment may be 'interest only'. In other plans, the minimum payment may include principal and interest.

monthly housing allowance The percentage of a person's income they can comfortably use each month to pay for where they live-with enough left over to spend on food, clothing, and other luxuries. This percentage is usually 28% of your total income.

monthly periodic rate The most common interest rate factor used to calculate the interest charges on a monthly basis. The factor is computed by dividing the yearly rate by 12.

mortgage The legal document outlining your responsibilities as a borrower, including the amount of the loan you have taken and the details and schedule of your re-payment. It states that if you do not make payments on your loan in a timely fashion, you may lose your right to ownership of the home.

mortgage banker A company that originates mortgages. They loan you their funds and close the loan in their name, then resell the loan in the secondary mortgage market.

mortgage broker An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. As do mortgage bankers, they take a loan application and process the necessary paperwork. Unlike a mortgage banker, brokers do not fund the loan with their own money, but work on behalf of several investors, such as mortgage bankers, S and L's, banks, or investment bankers.

mortgage insurance premium The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.

mortgage life insurance A type of term life insurance often bought by borrowers. The amount of coverage decreases as the principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds.

mortgage loan A legal document  that pledges a property to the lender as security for payment of a debt.

mortgage loan disability insurance A disability insurance policy which will pay the monthly California mortgage loan payment in the event of a covered disability of an insured borrower for a specified period of time.

mortgage loan insurance (MI) Insurance written by an independent  California mortgage loan insurance company protecting the California mortgage loan lender against loss incurred by a California mortgage loan default. Usually required for loans with an LTV  of 80.01% or higher.

mortgage loan The person  or company who receives the California mortgage loan as a pledge for repayment of the  loan. The California mortgage loan lender.

mortgagor The California mortgage loan  borrower who gives the California mortgage loan as a pledge to repay.

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 N

negative amortization A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The portion of the payment, which should be paid, is added to the remaining balance owed. The balance owed is added to the remaining balance to create "negative" amortization.

new loan escrow A fee charged by the escrow company to carry out the additional procedures necessary when a new loan is created by a lender in connection with a purchase.

no cash-out refinance A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower's use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage).

no doc loan A loan requiring no documentation of income. This type of loan is ideal for self-employed individuals with good credit.

non-conforming loan Also called a jumbo loan. Non-conforming loans usually incur a rate and origination fee premium.

note A written agreement containing a promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand.

notice of default A formal written notice to a borrower that default has occurred and that legal action may be taken.

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 O

obligations The things you have to pay for consistently each month, excluding housing costs. Obligations include things like car loans, credit card bills, student loans, and alimony or child support.

original principal balance The total amount of principal owed on a mortgage before any payments are made.

origination A loan processing fee charged by the lender for originating a new loan (usually 1% of the loan amount, or one "point").

origination fee A fee imposed by a lender to cover certain  processing expenses in connection with making a real estate loan. Usually a percentage of the amount loaned, such as one percent.

owner financing A property purchase transaction in which  the property seller provides all or part of the financing.

owner of record
The actual owner of a property, according to public records.

owner's title policy
An insurance premium charged by the title company to insure the buyer that the title is free from defects up to the date the conveying instrument is recorded. The seller frequently pays this premium.

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 P

parcel A piece of land or property under one ownership. Parcels are created when a single large property is sub-divided into many smaller pieces of property.

payment change date The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date.

payoff penalty (same as prepayment penalty) A charge imposed by a California mortgage loan lender on a borrower who wants to pay off part or all of a California mortgage loan loan in advance of schedule.
A charge imposed by a California mortgage loan lender on a borrower who wants to pay off part or all of a California mortgage loan loan in advance of schedule.

personal property Any property that is not real property.

Planned Unit Developments (PUD) A subdivision of five or  more individually owned lots with one or more other parcels owned in common  or with reciprocal rights in one or more other parcels.

PITI Principal, interest,  taxes and insurance--the components of a monthly California mortgage loan payment.

points Charges levied  by the California mortgage loan lender and usually payable at closing. One point represents 1% of the face value of the California mortgage loan loan.

power of attorney A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods.

pre-approval A way you can establish your ability to get a home loan worth a certain amount of money, even before you have found the home you want to buy.

prepaid interest The amount of interest to cover the period from close of escrow until the beginning of the first payment.

prepaids Those expenses  of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

prepayment penalty A charge imposed by a California mortgage loan lender on a borrower who wants to pay off part or all of a California mortgage loan loan in advance of schedule.

pre-qualification The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

prime interest rate The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

principal Amount of debt, not including interest. The face value of a note or California mortgage loan.

private California mortgage loan insurance (PMI) Insurance provided by nongovernment insurers that protects lenders against loss if a borrower defaults. .
processing fee A fee incurred for the preparation of a mortgage loan application and for the preparation of supporting documents for underwriting.

punch list A written inventory of things that need to be done to a home in order to meet the requirements of a sales contract.

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 Q

qualifying ratios The ratio of your fixed monthly expenses  to your gross monthly income, used to determine how much you can afford  to borrow. The fixed monthly expenses would include PITI along with other obligations such as student loans, car loans, or credit card payments.

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 R

rate cap A limit on how much the interest rate can change,  either at each adjustment period or over the life of the loan.

rate improvement mortgage A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.

rate lock-in A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

rebate Compensation  received from a wholesale lender which can be used to cover closing costs or as a refund to the borrower. Loans with rebates often carry higher  interest rates than loans with "points" (see above).

real estate agent A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

real property Land and property, including anything of a permanent nature such as structures, trees, minerals.

recording fees Fees charged by the County Recorder's Office for recordation of Deed, Mortgage or Deed of Trust, and, at times, additional documents requiring public notice.

refinancing The process of paying off one loan with the proceeds from a new loan using the same  property as security.

remaining balance The amount of principal that has not yet been repaid.

remaining term The original amortization term minus the number of payments that have been applied.

residential mortgage loan credit report (RMCR) A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.

right of first refusal A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

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 S

second mortgage A mortgage that has a position subordinate to the first mortgage.

secured loan A loan that is backed by collateral.

security The property that will be pledged as collateral for a loan.

security interest An interest that a lender takes in the borrower's property to assure repayment of a debt.

seller carry back An agreement in which the owner of a  property provides financing, often in combination with an assumed California mortgage loan.

subdivision A housing development that is created by dividing a tract of land into individual lots for sale or lease.

survey A print showing the measurements of the boundaries of a parcel of land, together with  the location of all improvements on the land and sometimes its area and  topography.

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 T

tax liens A lien against real estate for unpaid taxes.

tax search A part of a title search which determines if there are any unpaid taxes or assessments which may be a lien against the property being searched

tenants-in-common An undivided interest in property taken by two or more persons. The interest need not be equal. Upon death of  one or more persons, there is no right of survivorship.

term The period of time between the beginning date of the legal documents and the date the entire balance of the loan is due.

title The evidence  one has of right to possession of land.

title company A company that specializes in examining and insuring titles to real estate.

title insurance Insurance against loss resulting from defects  of title to a specifically described parcel of real property.

title search An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

Total Debt Ratio Monthly debt and housing payments divided by gross monthly income.

Trade Equity Equity that results from a purchaser giving his or her existing property (or an asset other than real estate) as trade as all or part of the down payment for the property that is being purchased.

Transaction Fee A fee charged each time you draw on your credit line.

Transfer of Ownership Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

Truth-in-Lending Act A federal law requiring a disclosure  of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms of different financial institutions.

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 U

underwriting The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

underwriting fee The cost to cover the evaluation of a loan application to determine the risk involved for the lender.

unsecured loan A loan that is not backed by collateral.

up-front costs The total amount of cash you need to pay when you buy a home, minus the amount of your loan. Up front costs include your down payment, any closing fees you must pay-like broker's commissions or insurance charges-and the discount points you can use to lower your overall interest rate.

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 V

variable rate An interest rate that changes periodically in relation to a specific financial index. Payments may increase or decrease accordingly due to changes in the index. Adjustments are usually made on a quarterly basis.

Veterans Administration (VA) A government agency guaranteeing California mortgage loan loans with no down payment to qualified veterans.

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 W

wage garnishments A notice to an employer that a portion of an employee's wages must be applied to a debt owed by said employee.

warehouse A fee charged by the lender to cover the expense incurred between funding and the sale of the loan to the ultimate investor.

wraparound mortgage A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the borrower. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

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X - Y

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Z

Zoning The way cities and towns define how areas within their borders are to be used as real property. Zoning determines which areas of a city or town can contain stores and other businesses, which should be used as residential areas, and which can mix both types of property.

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