Safe Exam

The word mortgage is derived from Mort, meaning death and gauge meaning pledge

Mortgage is to pledge to repay a debt as agreed until the death or termination of repayment contract if the debt is not paid as agreed, the debtor forfeits the collateral securing the debt

Principal

The original amount borrowed or a loan amount the face value of the note (contract)

Principal balance

The current amount due or outstanding debt

Interest

The money paid to the lender for the use of the borrowed money at a particular rate

Interest rate

The percentage of the principal balance paid to the lender as profit for the cost of borrowing money

Term

The length of time given to repay the debt

Mōrtgagōr

The Bōrrōwer ( debtor)

Mortgagēē

The lēndēr (creditor)

Simple interest

The type of interest calculated for a fixed rate closed and loan ( the total amount is borrowed all at once )

periodic interest

The periodic interest is the interest over a specific timeframe

Simple Interest formula (annual interest )

For some reason this loan amount times annual rate of interest equals annual interest

Per diem

Divide by 365

To find daily

Zero point loan

The party is the standard rate offered for the type of loan applied for with no points or credits

Permanent buy down

The lender offers the applicant a rate lower than the power rate for the entirety of the loan term exchange for the borrowers paying discount points to the lender at closing

Lender credit

The lender offers the applicant a rate higher than the power rate for the entirety of the loan term in exchange for the lender, giving the borrower a credit to reduce the total amount of closing cost

Temporary buy down

The applicant chooses to reduce the interest rate for the first few years, using a temporary buy down, typically to reduce monthly payments are subsidized. The lump sum payment deposited into an escrow account and the lender will pull from the account to offset the lower payments.

Fixed rate

The interest rate remains the same entire loan term (Lender assumes all the risk)

Adjustable rate

The interest rate is fixed for a period in the beginning of the loan term the first year, the first three years the first five years of first seven years or the first 10 years then will adjust periodically( Rate is based upon index plus the margin)

Step rate

The interest rate adjust periodically throughout the loan term. The rates and adjustments are set in advance and do not use an index.

Rate locks

If the interest rate has not yet been locked by the applicant, the interest rate is considered floating once the rate is locked by Akin and cannot change unless the rate lock expires or there are changes to the application

Rate lock agreement

The form signed by the Akin authorizing the lender to lock the interest rate for a specified time. There may be a fee charged by the lender to the applicant to lock the rate

Rate lock period

The length of time the interest rate is set rate locks are typically available for 30, 45 or 60 days

Rate lock expiration

The rate lock will expire on a certain date and time once the rate lock expires the rate is no longer set and can adjust with current market rates

Rate lock extension

The extension of the expiration of a rate lock adds additional time extensions are typically offered in 15 day increments in may involve a fee

The mortgage payment

The mortgage payment generally includes two components principle and interest

Amortization

The process of paying off debt and regular installments of principle and interest, the principal balance will decrease with each payment

Property taxes

Taxes levied by and paid to the local county government based on the tax assessed value of the property

Property insurance

Insurance to protect the property from loss or damage caused by known threats of the area

Mortgage insurance (If applicable)

Insurance to protect the lender from loss if the borrower defaults, the lender is forced to sell the property in foreclosure and the amount from the foreclosure sale is less than the balance owed by the Borgh

Association dues (If applicable)

Fees issued by and paid to a homeowners association or a condominium owners association to manage and maintain the common areas of the neighborhood. Association dues are usually never escrowed.

Qualifying payment amount or PITIA

The total of all housing expenses required to be paid by the borrower (Principal interest, taxes, insurances, and association fee fees)

Escrows

Instead of paying property, taxes and insurance premiums in full, when due a borrower usually has the option to escrow. These expenses escrow accounts are established and managed by the lender or third-party known as a servicer and 1/12 of the annual amounts due are collected each month.

Loan origination fee

Is paid by the borrower to the lender as a one time fee at closing to process the mortgage loan application

BPS

One point = 1% = 100 basis points

Annual percentage rate

Is a broader measure of the cost of borrowing money than just the interest rate loan the APR reflects the annual rate of interest in all the other finance charges

Finance charges

A finance charge is the cost of consumer credit as a dollar amount. The total finance charge charges only include charge charges imposed as a result of the extension of credit.

These fees are considered finance charges

I - Interest

M - Mortgage Insurance

G - Government Loan Program Fees

O - origination charges

D - Discount points

Not considered finance charges

T - Title Fees

R - Real estate agent/broker fees

A - Appraisal fee or valuation fee

I - inspection fees

N - notary fees

T - transfer taxes

R - Recording fees

I - Insurance premiums

P - Property taxes

Lone purpose

The most common reason a person applies for a mortgage loan or to purchase a home or to access equity in a home already owned

Sales contract

Purchase contract purchase and sales contract or purchase agreement, the legally binding agreement between the seller and buyer governing the sale of property

Earnest money, deposit or good faith deposit

The amount of money, a buyer set aside in an escrow account, indicating the buyers earnest intent to purchase the home

Convenience

The legal process of transferring property from one owner to another

Deed

The formal written document that transfers ownership/conveyed title, of property from the current owner to another person or persons

Survey

The document drafted by a surveyor used to confirm the boundaries of the property a survey will identify the improvement and any restrictions such as Easements or encroachments

Home inspection report

A home inspector will complete a full inspection of the exterior and interior of the home and will produce a report with any safety issues or defects with the structure with the grading with the plumbing electrical and mechanical systems

Down payment

The amount of money a buyer will bring to closing out-of-pocket towards the purchase price; the difference between the sales price and the amount finance (closing cost and down payment need to be satisfied)

Purchase money, second mortgage piggyback loan or simultaneous second

A mortgage loan that closes simultaneously with a purchase money first mortgage to provide additional financing, financing with two separate loans to cover down payments

Seller financing

Owner financing purchase Money mortgage the seller/owner provides the financing and agrees to privately carry the mortgage loan for the buyer

Seller carry back

The seller/owner provides part of their financing for the purchase as a second mortgage