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GLOSSARY OF TERMS


GRANTEE: That party in the deed who is the buyer or recipient.

GRANTOR: That party in the deed who is the seller or giver.

GROSS MONTHLY INCOME: The total amount the borrower earns per month, not counting any taxes or expenses. Often used in calculations to determine whether a borrower qualifies for a particular loan.

GROWING EQUITY MORTGAGE: (GEM) A fixed rate, graduated payment mortgage with small initial payments that increase each year so that the loan pays off in a shortened term, usually 15 years.

HAZARD INSURANCE: Insurance to protect the homeowner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards.

HOMEOWNERS INSURANCE: An insurance policy that combines liability coverage and hazard insurance.

HOMEOWNERS WARRANTY: A type of insurance that covers repairs to specified parts of a house for a specific period of time.

HOUSING RATIO: The ratio of the monthly housing payment to total gross monthly income. Also called Payment-to-Income Ratio or Front-End Ratio.

HUD: (Department of Housing and Urban Development). A cabinet department responsible for the implementation and administration of government housing and urban development programs.

INCOME PROPERTY: Real estate developed or improved to produce income.

INDEX: (Also called Rate Index). A regularly published rate, independent of the lending institution, that measures the prevailing cost of funds, and is used periodically with the margin to set AML accrual rates.

INITIAL BORROWER INTEREST RATE: The rate on which the borrowers first payment is calculated.

INITIAL BORROWER PAYMENT RATE: The annual interest rate used to calculate the borrowers initial cash payment.

INFLATION: An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services. Over time, inflation reduces the purchasing power of a dollar, making it worth less.

INITIAL INTEREST RATE: The original interest rate of the mortgage at the time of closing.

INSTALLMENT: The regular periodic payment that a borrower agrees to make to a lender.

INSTALLMENT LOAN: Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan.

INSURABLE TITLE: A property title that a title insurance company agrees to insure against defects and disputes.

INSURANCE: A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.

INSURANCE BINDER: A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

INSURED MORTGAGE: A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount

INTEREST ACCRUAL RATE: The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.

INTEREST RATE: The percentage of an amount of money, which is paid for its use for a specified time.

INTEREST RATE CAP: A provision of an ARM limiting how much interest rates may increase per adjustment period.

INTEREST RATE CEILING: For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.

INTEREST RATE FLOOR: For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

INVESTMENT PROPERTY: A property that is not occupied by the owner.

IRA (INDIVIDUAL RETIREMENTS ACCOUNT): A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund. Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks, bonds, or mutual funds.

JOINT TENANCY: A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of surviorship.

JUDGEMENT: A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtors real property as collateral for the judgments creditor.

JUDGEMENT LIEN: A lien on the property of a debtor resulting from the decree of a court.

JUDICIAL FORECLOSURE: A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court.

JUMBO LOANS: Jumbo, or non-conforming, is a term used to describe a loan that does not conform to Fannie Mae or Freddie Mac guidelines.

LATE CHARGE: The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.

LEASE: A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.