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The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains
stable over the life of the loan. It is the index which moves up and down.
The date on which the principal balance of a loan, bond, or other financial instrument becomes
due and payable.
Occasionally, a lender will agree to modify the terms of your mortgage without requiring you to refinance.
If any changes are made, it is called a modification.
A legal document that pledges a property to the lender as security for payment of a debt. Instead
of mortgages, some states use First Trust Deeds.
A mortgage banker is generally assumed to originate and fund their own loans, which are then sold
on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae. However,
firms rather loosely apply this term to themselves, whether they are true mortgage bankers
or simply mortgage brokers or correspondents.
A mortgage company that originates loans, then places those loans with a variety of other lending
institutions with which they usually have pre-established relationships.
The lender in a mortgage agreement.
Insurance that covers the lender against some of the losses incurred as a result
of a default on a home loan. Often mistakenly referred to as PMI, which is actually
the name of one of the larger mortgage insurers. Mortgage insurance is usually required
in one form or another on all loans that have a loan-to-value higher than eighty percent.
Mortgages above 80% LTV that call themselves "No MI" are usually a made at
a higher interest rate. Instead of the borrower paying the mortgage insurance premiums
directly, they pay a higher interest rate to the lender, which then pays the mortgage
insurance themselves. Also, FHA loans and certain first-time homebuyer programs require
mortgage insurance regardless of the loan-to-value.
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The amount paid by a mortgagor for mortgage insurance, either to a government
agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance
(MI) company.
A type of term life insurance often bought by borrowers. The
amount of coverage decreases as the principal balance declines. Some policies also cover
the borrower in the event of disability. In the event that the borrower dies while the
policy is in force, the debt is automatically satisfied by insurance proceeds. In the
case of disability insurance, the insurance will make the mortgage payment for a specified
amount of time during the disability. Be careful to read the terms of coverage, however,
because often the coverage does not start immediately upon the disability, but after
a specified period, sometime forty-five days.
The borrower in a mortgage agreement.
Properties that provide separate housing units for more than one family, although they
secure only a single mortgage.
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