| N |
| Negative Amortization: Essentially
occurs when a borrower makes a minimum payment that
may not cover the interest that is due. Loan balance
then increases as a result. |
| No Cash-out Refinance: A refinance
transaction that is not intended to put cash in the
hand of the borrower, but instead calculates a new balance
to cover the balance due on a current loan and any costs
with obtaining a new mortgage. |
| No-Cost Loan: A no-cost loan
can either be: 1) a loan that has no "lender costs"
associated with it or, 2) a loan that also covers purchases
or refinancing costs, which may be incurred in buying
a home, obtaining and/or refinancing a loan, but are
not directly charged by the lender. The interest rate
on this type of loan is higher. |
| Note: A legal document that
obligates a borrower to repay a mortgage loan at a stated
interest rate during a specified period of time. |
| Note Rate: The stated interest
rate on a mortgage note. |
| O |
| Origination Fee: The fee imposed
by a lender to cover certain processing expenses in
connection with making a loan. Usually a percentage
of the amount loaned. |
| P |
| PITI: PITI stands for principal,
interest, taxes, and insurance. An "impounded"
loan means that the monthly payment covers all of these,
and perhaps mortgage insurance, if your loan so calls
for it. If one does not have an "impounded"
account, then the lender still calculates these amounts
separately and uses it as part of determining one's
debt-to-income ratio. |
| Points: The site allows lenders
to post rates via point ranges. Points are broken out
on the site for Discount and Origination. The definitions
for each are as follows:
- Discount Points = Interest Charges paid up-front
when a borrower closes a loan. A point is equal to
1 percent of the loan amount (e.g. 1.5 points on a
$100,000 mortgage would cost the borrower $1,500).
Generally, by paying more points at closing, the borrower
reduces the interest rate of his loan and thus future
monthly payments.
- Origination Points = 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.
|
| Pre-Approval: A term used to
mean that a borrower has completed a loan application
and provided debt, income, and savings information that
has been reviewed and pre-approved by an underwriter.
|
| Pre-Paids: Expenses such as
taxes, insurance, and assessments, which are paid in
advance of their due date, and on a prorated basis at
closing. |
| Pre-Payment: Any amount paid
so as to reduce the principal before the due date. |
| Prepayment Penalty: Lenders
who impose prepayment penalties will charge borrowers
a fee if they wish to repay part or all of their loan
in advance of the regular schedule. |
| Pre-Qualification: After a
loan officer has made inquiries about a borrower's debt,
income, and savings, he or she can write a written statement
(pre-qualification) about the borrower's chances for
qualifying for a home loan. |
| Principal: The amount of debt,
not counting interest, left on a loan. |
| Private Mortgage Insurance (PMI):
Paid by a borrower to protect the lender in case of
default. PMI is typically charged to the borrower when
the Loan-to-Value Ratio is greater than 80%. |
| Purchase Agreement: A written
contract signed by the buyer and seller stating the
terms and conditions under which a property will be
sold. |
