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Mortgage Dictionary
By Robert Irwin, Global Home Loans & Finance

Select the first letter of the term you wish to find:
[ 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 ]

Package Mortgage
Mortgage covering both real and personal property. 

A mortgage, deed of trust or land contract provided in lieu of cash. 

Partial Release
A provision in a mortgage that allows some of the property secured to be freed from serving as collateral. 

Participation Mortgage
A mortgage that allows the lender to share in part of the income or resale proceeds. 

Pass Through Certificates
Interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates.. 

Permanent Loan or Mortgage
A mortgage for a long period of time. Often referred to as the mortgage that pays off a construction loan on a completed property. 

A document issued by a government regulatory authority that allows the bearer to take some specific action. 
An occupancy permit allows the owner of a building to occupy or rent the building. 

Abbreviation for principal, interest, taxes and insurance, which may be combined in a single monthly mortgage payment. 

Planned Unit Development (PUD)
A zoning classification that allows flexibility in the design of a subdivision. PUDs include individually owned units as well as some common space that is jointly owned. 

A plan or map of a specific land area. 

Plat Book
A public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels. 

Fees paid to lenders. 1 point=1% of the loan amount. On a $100,000 loan 1 point is $1000. Points may be further classified into origination points or discount points. 

Portfolio Loan
A loan that is held as an investment by a bank or savings and loan, and NOT sold on the secondary market to investors. 

Power of Attorney
A written document authorizing a person to act on the behalf of another person. That person does not have to be an attorney. See Attorney-in-fact. 

Prepaid Interest
Prepaid interest is the interest charged to borrowers at closing to pay for the cost of borrowing for a balance of the month. For example, if a loan closes on the 19th of the month and the first payment is due on the 1st of the following month, the lender will charge 12 days of prepaid interest. 

Full or partial payment of the principal before the due date. This might occur if the borrower makes extra payments, sells the property, or refinances the existing loan.

Prepayment Penalty
Fees paid by the borrower if they pay the loan before its due date. 

Primary Mortgage Market
Companies that originate and service mortgage loans (banks, savings & loans, credit union, mortgage bankers, institutional lenders) make up the primary mortgage market. See also secondary mortgage market. 

Prime Rate
The lowest commercial interest rate charge by a bank on short term loans to their most credit worthy customers. View current prime rate. 

The outstanding balance on a loan.

Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 2 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance payments are normally made annual or monthly. An impound account may be required. 

Court process to establish the validity of the will of a deceased person. 

Purchase Money Mortgage
A mortgage used to finance the purchase of a property. 

Property Tax
A government levy based on the market value (as assessed by the county assessor's office) of the property. 

Public Sale
An auction of property with notice to the general public. 

Purchase Agreement
See Agreement of Sale. 

Quiet Title (Action)
A court action to settle a title dispute. 

Quit Claim Deed 
A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has. 

A real estate professional who is a member of the National Association of Realtors. 

Real Estate Broker
An individual who often owns a real estate company or is in a management position, and who is licensed to represent a buyer or a seller in a real estate transaction.

Real Estate Settlement Procedure Act (RESPA)
A law that states how mortgage lenders must treat those who apply for real estate loans on property with 1-4 units. 
Example : A lender is required to provide a good faith estimate of closing costs within 3 days of an application being filed. 

The practice of refusing to provide loans or insurance in a certain neighborhood. 

Repaying an existing loan from the proceeds of a new loan on the same property. 

When a mortgage is paid off in full, the lender conveys the property back to the owner. 

The act of entering into a book of public records instruments affecting title to the real property. A lender requires that a deed of trust or a mortgage be recorded to evidence the debt against the property. 

The cancellation of a contract. When refinancing a mortgage on a principal residence the law gives the homeowner three days to cancel the contract 

The right of the holder of a note secured by a mortgage or deed of trust to claim money from the borrower in default in addition to the property pledged as a collateral. 

Regulation Z (Reg Z)
A federal regulation requiring creditors to provide full disclosure of the terms of a loan including the terms of the loan and the annual percentage rate (APR). 

Real Estate Investment Trusts (REIT)
A trust that uses investors money to purchase and manage real estate. Investors realize some of the tax advantages in owning real estate. 

Right of survivorship
The right of a surviving joint tenant to acquire the interest of a deceased joint owner. 

Reverse Mortgage
A mortgage used by the elderly that provides income as long as they live in exchange. Payments made cause the loan principal to increase. 

Rollover Loan
A loan that is amortized over a long period of time (e.g. 30 years) but the interest rate is fixed for a short period (e.g. 5 years). The loan may be extended or rolled over, at the end of the shorter term, based on the terms of the loan. 

Restrictive Covenants
Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller and buyer. 

Sales Agreement or Sales Contract
See Agreement of Sale. 

Savings & Loan
Depository institutions that specialize in originating, servicing and holding mortgage loans primarily on owner occupied residential property. 

Secondary Mortgage Market
The market where banks, savings & loans and mortgage bankers can sell mortgages to investors like Fannie Mae or Freddie Mac

Second Home
Also known as a vacation home. This home is different from an investment property as it is not rented, but used occasionally by the owners. 

Second Mortgage
A subordinated lien, created by a mortgage loan, over the amount of a first mortgage. Second mortgages generally carry a higher rate than a first mortgage since they represent a higher risk for an investor. 

Section 8 Housing
Privately owned rental units participating in the low-income rental assistance program. Landlords receive subsidies on behalf of qualified low-income tenants, allowing the tenants to pay a limited proportion of their incomes toward the rent. 

Section 1031
The section of the IRS that deals with tax free exchanges of certain property. General rules for tax free exchanges are :
The properties must be : 

* Exchanged 
* Similar 
* Used for business or as an investment 

Property that serves as collateral for a debt. 

The act of billing, collecting payment, filing reports, managing impound accounts and handling defaults on a mortgage. 

Settlement Cost (HUD guide)
A booklet that provides an overview of the lending process and is required to be given to consumers after the loan application is completed. 

Settlement Statement
See HUD 1 

Special Assessment
A special tax imposed on property, individual lots or all property in the neighborhood to pay for improvements - street lights, sidewalks, etc. 

Special Warranty Deed
The grantor does not warrant against title defects arising from conditions that existed before he/she owned the property. The seller warrants that he/she has done nothing to impair title. 

Shared Appreciation Mortgage
A residential loan with a fixed interest rate that is below market, with the lender entitled to a specified share of appreciation of the property over an agreed upon time interval. 

Sheriff's Deed
A deed given at the sheriff's sale in the foreclosure of a mortgage. 

Single Family Housing (SFR)
A type of residential structure designed to include one dwelling. 
Example : Town houses, detached units. 

Spec House 
A single family dwelling constructed by a builder in anticipation of finding a buyer. 

Specific Performance
A legal action in which the court requires a party to a contract to perform the terms of the contract when the party has refused to fulfill its obligations. 

Standard Uniform Loan Application (Form 1003)
A standard loan application widely used in the mortgage industry.

A tract of land divided into lots suitable for home building purposes. 

A loan in a lower priority, for example a second mortgage is subordinate to a first. 

Subject To (Purchasing subject to a mortgage) 
The buyer agrees to make payments on the existing mortgage, without notifying the lender. The seller remains liable for making payments on the loan if the buyer does not make the mortgage payment. The buyer is not personally liable for mortgage payments, but must make payments to keep the property. See also Assumable Mortgage 

Map made by a licensed surveyor who measures land and charts its boundaries, improvements and relationship to the property surrounding it. 

Sweat Equity
Value added to a property due to improvements made personally by the owner. 

Select the first letter of the term you wish to find:
[ 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 ]

Robert Irwin