An agreement or list that is added to a contract, agreement, or other document such as a letter of intent.

The monthly loan payment calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.

A timetable for repayment of a mortgage. The amortization schedule shows the portion of each payment that is applied to interest and principal, and the principal balance after each payment is applied.

The cost of a mortgage expressed as a yearly interest rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage because it takes into account points and other credit costs. The APR allows homebuyers to compare different types of mortgages based on the total cost for each loan.

A written estimate of a property’s market value, ordered by the lender. A qualified appraiser who has training, experience and insight into the marketplace prepares the home appraisal report based on recent sales in the property’s neighborhood. Lenders require an appraisal before granting a mortgage to purchase or refinance a home or property.

An entity through which mortgage lenders order residential real estate appraisal services for properties on which they are considering extending loans to homebuyers. AMCs fulfill an administrative function in the appraisal process, including selecting an appraiser and delivering the appraisal report to the lender. Individual appraisers who work for AMCs provide the property valuation services.

The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. The assumption of a loan can usually save the buyer money as compared to a new mortgage, which carries closing costs and possibly a higher interest rate.

This period begins after the buyer and seller sign a real estate contract completed by a Realtor® or a real estate agent. During this review period the buyer and seller can ask their attorney to make changes to the contract. Also, during this period the buyer or seller may cancel the contract. This period usually lasts from a few days to two weeks, depending on how quickly the attorneys work.

A computer-driven process for informing the loan applicant very quickly, sometimes within a few minutes, whether the applicant will be approved, or whether the application will be forwarded to an underwriter. The quick decision is based on information provided by the applicant, subject to later verification, and other information retrieved electronically, including information about the borrower's credit history and the subject property.

A particular computerized system for doing automated underwriting. Mortgage insurers and some large lenders have developed such systems, but the most widely used are Fannie Mae’s “Desktop Underwriter” and Freddie Mac’s “Loan Prospector.”

A person named to receive a benefit from a trust. A contingent beneficiary has conditions attached to his rights; usually the primary beneficiary must die before the contingent beneficiary receives a benefit.

When the lender and/or the homebuilder subsidize the mortgage by lowering the interest rate during the first few years of the loan. Rates do rise during the term, however the initial lower rate helps the borrower qualify for an amount for which they may not otherwise qualify. This is an excellent instrument for those who anticipate the ability to pay slightly increasing payments in subsequent years.

Refinancing for an amount in excess of the balance on the old loan plus settlement costs. The borrower takes "cash out" of the transaction, usually as an alternative to taking out a home equity loan.

A technique to reduce the mortgage tax. A mortgage note is modified to become an extension of the note on which mortgage tax was previously paid. After a CEMA is completed, the homebuyer pays the mortgage tax on the difference between the previous mortgage and the new mortgage, not the tax on the entire amount of the new loan.

A certificate issued by a local government body stating that the building is in a condition to be occupied.

Usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge, and other costs assessed at settlement.

The new disclosure, provided to borrowers prior to closing, combines the TIL and HUD-1 Settlement Statement

A co-borrower accepts responsibility, along with the primary borrower, for repaying the mortgage. Often, adding a co-borrower to a mortgage increases the likelihood of approval and improves the financing options for primary borrowers with no credit history, poor credit history, or insufficient income. Also known as a co-borrower or co-applicant.

Assets pledged as security for the repayment of a loan.

An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

A real estate project in which every owner holds 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. The condominium may be attached or detached. The homeowners’ association dues are included in the total monthly mortgage payment for qualifying purposes.

A report from a credit bureau containing detailed information about an individual’s creditworthiness including the individual's credit history.

The written document conveying title to real property. The deed must be executed (signed), acknowledged, and delivered to the property’s buyer. Once recorded at the courthouse, the original piece of paper is not needed to convey title in the future.

A document conveying a property’s title over to the lender. An alternative to the lender foreclosing on the property.

Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage, which can lead to foreclosure.

Failure to make payments on time. This can lead to foreclosure.

Prepaid interest paid at closing to the lender and used to lower the loan’s interest rate. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000). Although discount points lower the monthly payment, they increase the closing costs.

Money paid to make up the difference between the purchase price and mortgage amount, usually 10 to 20 percent of the sales price on conventional loans, and 0 to 5 percent of FHA and VA loans.

See Federal National Mortgage Association.

Also called Freddie Mac, a quasi-government agency that purchases conventional mortgages from insured depository institutions and HUDapproved mortgage bankers.

Also known as Fannie Mae, a taxpaying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.

A mortgage on which the interest rate is set for the term of the loan.

Allowing the rate and points to vary with changes in market conditions. Allowing the rate to float exposes the borrower to market risk, and also to the risk of being taken advantage of by the loan provider. See Lock or Lock-in Period.

A legal proceeding in which property securing debt is sold by the lender to pay a defaulting borrower's debt.

See Federal Home Loan Mortgage Corporation

The period after the payment due date in which the borrower can pay without accruing a late fee. A grace period applies only to mortgages on which interest is calculated monthly. Simpleinterest mortgages do not have a grace period because interest accrues daily.

The total amount the borrower earns per month, before any expenses are deducted.

The portion of a borrower's monthly payment held by the lender or loan servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as escrows.

A loan that is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. These loans usually carry a slightly higher interest rate.

A claim upon a piece of property for the payment or satisfaction of a debt or obligation.

The source of information on which the lender bases a decision to make the loan; defines the term of the loan, gives the name(s) of the borrower(s), place of employment, salary, bank accounts and credit references, and describes the real estate that is to be mortgaged. It also stipulates the amount of the loan being applied for and the repayment terms.

A new initial disclosure which combines the GFE and TIL

An individual in the business of assisting in arranging, funding, or negotiating contracts for a client but who does not loan the money himself. You, the consumer, typically pay no additional costs for this service.

The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.

An option exercised by the borrower, at the time of the loan application or later, to "lock in" the rates and points prevailing in the market at that time for a specified time period, usually between 15 and 60 days, during which the borrower must close on the loan. This lock-in protects the borrower against market increases during that period.

The highest price that a buyer would pay and the lowest price a seller would accept on a property. The market value of a property may differ from its purchase price at a given time.

The Lender.

The borrower or homeowner.

A voluntary lien filed against property to secure a debt, usually a loan. To foreclose, the lender must often institute a court action and the borrower may have the right to reclaim the property after foreclosure.

Money paid to insure the mortgage when the down payment is less than 20 percent of the value of the property. See Private Mortgage Insurance.

A non-occupant co-borrower is a person who may be added to a mortgage loan, but does not plan to live in the home. A non-occupying co-borrower is beneficial from an income or credit perspective.

A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage, deed of trust or other security instrument.

A person authorized by law to acknowledge and certify documents and signatures.

The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property, usually computed as a percentage of the loan’s face value.

Interest from the day of closing to the first day of the following month. In some cases, however, the borrower can get a credit at closing by making the first payment a month earlier.

Principal, interest, taxes, and insurance. Also called monthly housing expenses.

The amount of debt, not counting interest, left on a loan.

See Discount Points.

A legal document authorizing one person to act on behalf of another in specified legal and/or financial matters.

In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment – as low as 5 percent in some cases. With these loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment and additional monthly fees of 0.3 to 0.5 percent, depending on your loan's structure.

A legal instrument that transfers ownership interest in a property from one person to another.

The cancellation of a loan application. With respect to mortgage refinancing, the law gives the homeowner three days to cancel a loan application in some cases once it is signed, if the transaction uses equity in the home as security.

Living with a relative or friend without paying rent.

The borrower’s remaining assets after a loan closing. Reserves may be required as part of the loan process to ensure the borrower has financial flexibility after the transaction.

A loan allowing a homeowner to receive money from the equity in the home without having to make monthly payments. While you are still required to pay your real estate taxes and homeowners insurance, you are not required to make a monthly mortgage payment. As time goes on, the borrower’s debt will increase and the equity will decrease. The amount received with a reverse mortgage depends on the borrower's age and the value of the home. These materials are not from HUD or FHA and were not approved by HUD or a government agency.

An additional mortgage placed on a property with rights that are subordinate to the first mortgage. This is a lien in which you are given a lump sum amount that you pay off in installments over a specified period of time. In the case of a foreclosure, the lender who holds the second mortgage gets paid only after the lender holding the first mortgage is paid.

All the steps and operations a lender performs to keep a loan in good standing, such as collecting mortgage payments, paying taxes, paying homeowners insurance, and the like.

A discount or other incentive given by a seller to a prospective buyer to induce them to purchase a property.

A second mortgage on a property that is not paid off when a new loan is taken out. The secondmortgage lender must allow subordination of the second mortgage to the new first mortgage.

A document that gives evidence of an individual's ownership of property.

A policy, usually issued by a title insurance company, that insures a home buyer against defects in the title search. The cost of the policy is usually a function of the property’s value, and is paid by the purchaser or seller.

An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company.

A right or title to a property held for another’s benefit.

The decision whether to make a loan to a potential homebuyer based on his/her creditworthiness, employment, assets, and other factors. Also the process of matching this risk to an appropriate rate, term, and/or loan amount.

A long-term, low- or no-down-payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.

See Adjustable Rate Mortgage.

A document signed by the borrower's employer verifying the borrower’s employment status.

The regulation of the development and use of property by local government.