A provision in a loan that gives the lender the right to accelerate the debt and require full payment of the loan immediately at the end of a specified period or for specified reason.
A limit on how much a variable interest rate can increase. Many adjustable-rate mortgages have both annual (or semiannual) rate caps and lifetime caps. They limit the amount your payments can increase in an adjustment period and over the life of the loan.
Cash available for closing
Borrower funds that are available to cover down payment and closing costs. If lending guidelines require the borrower to have cash reserves at the time the loan closes or that the down payment come from specified sources, the borrower’s cash available for closing does not include cash reserves or money from those specified sources.
The amount a homebuyer needs in cash at the closing of the loan. This typically, this includes down payment and closing costs.
A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement or any other purpose.
The maximum interest rate that can accrue on a variable rate loan or adjustable-rate mortgage (ARM).
Certificate of eligibility
A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) loan.
Certificate of reasonable value (CRV)
A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA loan, based on an approved appraisal.
A statement provided by an abstract company, title company or attorney stating who holds title to real estate based on the public record.
The history of all of the documents affecting title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Titles that are marketable and are free of liens or disputed legal questions as to ownership of the property.
The Close step is the date you will sign and execute your new loan documents.
Depending on the location of the property or type of transaction, the three business days right of rescission period may apply before your funds are available to you.
The three business days right of rescission period states that in certain real estate secured transactions that involve the refinance of a primary residence, the Truth in Lending Act allows applicants 3 business days to cancel the transaction and prohibits lenders from disbursing proceeds until after the rescission period has lapsed.
A status of closed indicates that no further action is required on this item.
The time and place, at which all documents for your loan are signed, dated, and notarized.
Closing costs, also known as settlement costs, are the costs incurred when obtaining your loan. For new purchases, these costs also include ownership transfer of any collateral property from the seller to you. Costs may include and are not limited to: attorney's fees, preparation and title search fees, discount points, appraisal fees, title insurance, and credit report charges. They are typically about 3% of your loan amount, and are often paid at closing or just before your loan closes.
Funds often needed to close a loan, such as homeowners insurance, property taxes, and escrow impound account
funds, aren't included in closing costs and are considered separate. You should be prepared to pay these costs before your loan closes.
The date you will sign your new loan documents.
A closing document which provides key information such as interest rate, monthly payments, and costs to close the loan. Consumers are required to receive this form no later than 3 business days before they close on the loan.
An accounting of funds given to both buyer and seller before real estate is sold.
An additional person who assumes equal responsibility for repayment of a loan and is fully obligated under the terms of the loan. This person also has equal rights to the proceeds of the loan.
COBRA (Consolidated Omnibus Budget Reconciliation Act)
Requires employers with more than 20 employees to make group health care coverage available for 18 months, at the employee’s expense, to employees who leave the employer for any reason other than gross misconduct.
A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.
An asset, such as a car or a home, used for securing the repayment of a loan. The borrower risks losing the asset if the loan is not repaid.
The efforts used to bring a delinquent loan current and, if necessary, to file legal papers and notices to proceed with foreclosure.
A combination loan pairs a conforming first mortgage with a home equity second mortgage for up to 80% of the property's value in a single application with 1 down payment. Combination loans may help you avoid the higher rates of a jumbo first mortgage. Combination loans are made up of 3 parts: 70% first mortgage, 10% home equity second mortgage and 20% down payment.
The outstanding balance of all mortgages held on a property. Used to determine the total available equity when considering the appraised value of the property less total combined or outstanding liens.
Combined loan-to-value ratio (CLTV)
The ratio between the unpaid principal amount of your first mortgage, plus your credit limit if you have a home equity line of credit, and the appraised value of your home. Expressed as a percentage.
Properties similar to the property under consideration for a mortgage that have approximately the same size, location and amenities and have recently been sold. Comparables help an appraiser determine the fair market value of a property.
Interest paid on the principal balance and on the accrued and unpaid interest.
A mortgage loan that has the standard features as defined by (and is eligible for sale to) Fannie Mae and Freddie Mac.
A short-term interim loan for financing the cost of home construction. The lender makes payments to the builder at periodic intervals as the work progresses.
A specified condition in a sales contract that must be satisfied before the home sale can occur. When buying a home, the 2 most common contingencies are that the house must pass inspection and that the borrower must be approved for a loan.
Contractual Payment: First Mortgage
For a mortgage, the contractual payment is the required monthly payment amount for your home loan as described and determined by your loan contract. The contractual payment may include principal and interest due and may include a portion of funds due to cover homeowners insurance, mortgage insurance (if applicable), and property taxes associated with your home.
Here's how it works:
Principal + interest + mortgage insurance (if applicable) + homeowners insurance and tax (if applicable) = full contractual payment.
Contractual Payment: Home Equity Line of Credit
For a home equity line of credit, the contractual payment is the amount owed each month, which may fluctuate based on usage of the line and the terms of your loan agreement. At times, your Contractual Payment may consist of interest only or interest and principal payments.
A home loan that is not insured or guaranteed by the federal government. A conventional loan can be for conforming or non-conforming loan amounts.
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate loan at specified times during the life of the loan.
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate loan under specified conditions.
To transfer or deliver title to property from one to another by deed or contract. When an item becomes a part of the transfer of title, it is conveyed with the property.
A second person who signs your loan and assumes equal responsibility for payment of the loan but receives no benefit from the loan proceeds.
Cost of Funds Index (COFI)
An index that is used to determine interest rate changes for certain adjustable-rate mortgages (ARMs). It represents the weighted-average cost of savings, borrowings and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.
A promise in a mortgage or deed that requires or prevents certain uses of the property that, if violated, may result in loss or foreclosure of the property.
An organization that gathers, records, updates and stores financial and public records of individuals who have been granted credit and provides this information to lenders and other authorized users for a fee. The 3 major credit bureaus are Equifax, Experian and TransUnion and you are legally entitled to receive 1 free report each year from each of these agencies.
The maximum amount you can borrow under a line of credit.
Credit monitoring service
A service that offers the benefit of early detection of unauthorized activity in order to limit the amount of financial damage that a person may suffer at the hands of an identity thief.
A record of an individual’s debts and payment habits. It helps a lender determine whether or not a potential borrower is a good business risk. The 3 major credit bureaus that provide credit reports are Equifax, Experian and TransUnion and you are legally entitled to receive 1 free report each year from each of these agencies. Learn how to read a credit report
The likelihood that a borrower will pay their obligations as agreed. Borrowers who pay as agreed pose less credit risk to lenders.
A number that rates the quality of an individual’s credit. The number helps predict the relative likelihood that a person will repay a credit obligation, such as a mortgage loan. In general, the higher your credit score, the more likely you are to be approved for and to pay a lower interest rate on a loan.
A person or business from whom you borrow or to whom you owe money.
The likely ability of a borrower to repay debt.
A payment that reduces the principal balance of a loan.