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Mortgage Loan
Mortgage Terms:
negative amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently
of a required minimum payment. If a borrower makes the minimum payment
it may not cover all of the interest that would normally be due at the
current interest rate. In essence, the borrower is deferring the interest
payment, which is why this is called "deferred interest." The
deferred interest is added to the balance of the loan and the loan balance
grows larger instead of smaller, which is called negative amortization.
no cash-out refinance
A refinance transaction which is not intended to put cash in the hand
of the borrower. Instead, the new balance is caculated to cover the balance
due on the current loan and any costs associated with obtaining the new
mortgage. Often referred to as a "rate and term refinance."
no-cost loan
Many lenders offer loans that you can obtain at "no cost." You
should inquire whether this means there are no "lender" costs
associated with the loan, or if it also covers the other costs you would
normally have in a purchase or refinance transactions, such as title insurance,
escrow fees, settlement fees, appraisal, recording fees, notary fees,
and others. These are fees and costs which may be associated with buying
a home or obtaining a loan, but not charged directly by the lender. Keep
in mind that, like a "no-point" loan, the interest rate will
be higher than if you obtain a loan that has costs associated with it.
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 interest rate stated on a mortgage note.
no-cost loan
Almost all lenders offer loans at "no points." You will find
the interest rate on a "no points" loan is approximately a quarter
percent higher than on a loan where you pay one point.
notice of default
A formal written notice to a borrower that a default has occurred and
that legal action may be taken.
original principal balance
The total amount of principal owed on a mortgage before any payments are
made.
origination fee
On a government loan the loan origination fee is one percent of the loan
amount, but additional points may be charged which are called "discount
points." One point equals one percent of the loan amount. On a conventional
loan, the loan origination fee refers to the total number of points a
borrower pays.
owner financing
A property purchase transaction in which the property seller provides
all or part of the financing.
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