Learning Center Glossary

In a promissory note, the party who is entitled to be paid; the creditor or lender.

A limit on the amount an adjustable-rate mortgage (ARM) payment can be increased, either during a given year, or over the entire life of the loan.

Private property that is moveable, as opposed to real property or real estate.

An estimate of the time a building will remain structurally sound and capable of being used.

Principal, interest, taxes and insurance.

Arrangement where money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments.

Private mortgage insurance, used to insure high loan-to-value (LTV) conventional loans which is supplied by a private insurance company instead of a government agency.

One point is one percent of the loan amount.

The collection of mortgages and other loans that a lender holds until they are repaid, rather than selling them on the secondary market.

A legal document authorizing one person to act on behalf of another.

Indication by the lender of willingness to grant a loan based on an in-depth assessment of the loan applicant's financial standing.

Determining the maximum mortgage payment and loan amount that prospective buyers are likely to qualify for, based on information provided by the buyer.

Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.

Paying off part or all of a loan before payment is due.

A penalty some lenders charge a borrower who prepays a loan, to compensate for the lost interest that the lender would have received if the borrower had continued paying off the loan over its entire term.

Primary residence is a property that the borrower physically occupies and is considered to be his or her home.

The interest rate a bank charges its largest and most desirable customers.

The amount of debt, not counting interest, left on a loan.

The process of dividing or allocating something (especially a sum of money or an expense) proportionately, according to time, interest or benefit.

A contract in which a seller promises to convey title of real property to a buyer, in exchange for the purchase price. Also called an earnest money agreement, deposit receipt, sales contract, purchase contract or contract of sale.