Mortgage Loans Terms For Home Mortgages And Lending | A - C
Debt-to-Income Ratio - A borrower's monthly payment on outstanding long-term debts divided by his/her gross monthly income. This fraction is expressed as a percentage.
Deed of Trust - In some states, a deed of trust replaces a mortgage in order to secure the payment of notes.
Default - This is the borrower's failure to oblige to the legal contract between him/her and the lender. Usually, it is the borrower's inability to make the monthly mortgage payments.
Deferred Interest - If the monthly mortgage payments are less than what is required to cover the note rate, then the interest that goes unpaid is added to the total balance of the loan.
Delinquency - This is the borrower's inability to make his/her payments on time, which often leads to foreclosure.
Department of Veterans Affairs - The Department of Veterans Affairs, or VA, is an independent agency of the government that guarantees long-term mortgages with little or no down payment to veterans who qualify.
Discount Point - This refers to cash that is paid so that the difference between the purchase price of the property and the amount of the mortgage becomes zero.
Due-on-Sale Clause - This provision of a mortgage or deed of trust enables the lender to be paid the balance of the mortgage immediately upon the mortgage holder selling the home.
Earnest Money - The homebuyer gives money to the seller as part of the home's purchase price usually with hopes of sealing the transaction.
Entitlement - This refers to the VA home loan benefit, also known as eligibility.
Equal Credit Opportunity Act - The Equal Credit Opportunity Act, or ECOA, is a federal law requiring lenders to make credit available to everybody on an equal scale, regardless of race, color, sex, age, religion, marital status, etc.
Equity - This is also known as the owner's interest, entailing the value of the real estate above the owner's obligation against the property.
Escrow - This is an account held by a lender. The homebuyers pays money into the account to cover taxes and insurance payments.
Fannie Mae - See Federal National Mortgage Association, FNMA.
Farmers Home Administration - The Farmers Home Administration, or FmHA, lends a financial hand to farmers who are denied by other loan institutions.
Federal Home Loan Bank Board - The Federal Home Loan Bank Board, or FHLBB, is the former name of the Office of Thrift Supervision.
Federal Home Loan Mortgage Corporation (FHLMC) - The FHLMC, or more commonly referred to as “Freddie Mac,” is an agency that purchases conventional mortgage loans from banks and HUD-approved lenders.
Federal Housing Administration - The FHA, a division of the Department of Housing and Urban Development, works to insure home mortgage loans that are granted by private lenders. It also sets guidelines for the underwriting of mortgages.
Federal National Mortgage Association (FNMA) - The FNMA, also known as “Fannie Mae,” is a tax-paying entity established by Congress that buys and sells conventional home mortgage loans, along with those insured by the FHA or guaranteed by the VA. Fannie Mae provides funding for one out of every seven mortgage loans, making mortgage money more available and more affordable for borrowers.
FHA Loan - These types of loans are insured by the Federal Housing Administration and are available to all homebuyers who are qualified. Although there is a price cap on FHA loans, they are still large enough to purchase homes that are within a borrower’s moderate price range.
FHA Mortgage Insurance - This fee can be as high as 2.25% of the principal loan amount, and is paid as part of the closing costs to insure the loan under the FHA. On top of that, the FHA requires an additional annual fee of up to 0.5% of the remaining loan amount, which is paid in monthly installments as part of your monthly repayment dues. If you have a lower down payment, expect to pay this fee for a longer amount of time.
Firm Commitment - This is a promise made by the FHA to insure a specified borrower’s mortgage loan for a particular piece of property.
Fixed-Rate Mortgage - Fixed-Rate Mortgages, or FRMs, are mortgage loans that carry a consistent interest rate for the duration of the loan’s term.
Foreclosure - This is a legal process that features the lender (or seller) forcing the sale of a mortgaged piece of property because the borrower could not meet the terms of the loan (usually repayment terms). This action is also known as repossession.
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