| Welcome
To Savannah Mortgage ! |
Savannah
Mortgage Loans
Mortgage Glossary |
| Adjustable Rate Mortgage (ARM): |
Mortgage loans under which the interest rate is periodically
adjusted to more closely coincide are agreed to at the inception
of the loan. |
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| Alternative Documentation: |
The use of pay stubs, W-2 forms, and bank statements in
lieu of Verifications of Employment (VOE) and Verifications
of Deposit (VOD) to qualify a borrower for a mortgage. |
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| Amortization: |
The systematic and continuous payment of an obligation
through installments until the debt has been paid in full. |
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| Annual Percentage Rate (APR): |
A term used in the Truth-in-Lending Act to present the
percentage relationship of the total finance charge to the
amount of the loan. The APR reflects the cost of the mortgage
loan as a yearly rate. It could be higher than the interest
rate stated on the Note because it includes, in addition
to the interest rate, loan discount points, miscellaneous
fees and mortgage insurance. |
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| Appraisal: |
A report made by a qualified person setting forth an opinion
or estimate of property value. (Appraisal also refers to
the process through which a conclusion on property value
is derived.) |
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| Appraisal Amount or Appraised Value: |
The fair market value of a home determined by an independent
appraisal. The appraisal uses local real estate market sales
activity as a major basis for valuation. |
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| Appreciation: |
An increase in the value of a property due to market conditions
or other causes. The opposite is depreciation. |
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| Balloon Mortgage: |
A fixed-rate
mortgage for a set number of years and then must be paid
off in full in a single "balloon" payment.
Balloon loans are popular with borrowers expecting to sell
or refinance their property within a definite period of
time. |
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| Bankruptcy: |
Legal relief from the payment of all debts after the surrender
of all assets to a court-appointed trustee. Assets are distributed
to creditors as full satisfaction of debts, with certain
priorities and exemptions. A person, firm or corporation
may declare bankruptcy under one of several chapters of the
U. S. Bankruptcy Code: Chapter 7 covers liquidation of the
debtor's assets; Chapter 11 covers reorganization of bankrupt
businesses; Chapter 13 covers payment of debts by individuals
through a bankruptcy plan. |
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| Cap: |
The limit placed on adjustments that can be made to the
interest rate or payments such as the annual cap on an adjustable
rate loan (ARM) or the cap on a rate over the life of the
loan. |
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| Cash-out Refinance: |
To refinance the mortgage on a property for more than the
principal owed. This allows the borrower to get cash from
the equity in their home. Loan products may vary on how much
can be borrowed on a cash-out refinance. |
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| Closing: |
Also known as settlement, the finalization of the process
of purchasing or refinancing real estate. The closing includes
the delivery of a Deed, the signing of Notes and the disbursement
of funds |
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| Closing Costs: |
Costs that are due at closing, in addition to the purchase
price of the property. These costs normally include, but
are not limited to, origination fee, discount points, attorney's
fees, costs for title insurance, surveys, recording documents,
and prepayment of real estate taxes and insurance premiums
held by the lender. Sometimes the seller will help the borrower
pay some of these costs. |
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| Closing Statement: |
An accounting of the debits and credits incurred at closing.
All FHA, VA and Conventional financing loans use a Uniform
Closing or Settlement Statement commonly referred to as the
HUD-1. |
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| CMT: |
The Constant Maturity Treasury (CMT) is published by the
Federal Reserve Board based on the average yield of a variety
of Treasury securities adjusted to a one-year maturity. The
CMT is offered as an index for setting rates on adjustable
rate mortgage programs. |
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| Co-Borrower: |
A party who signs the mortgage note along with the primary
borrower, and who also shares title to the subject real estate. |
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| Collateral: |
Property pledged as security for a debt. For example, real
estate that secures a mortgage. Collateral can be repossessed
if the loan is not repaid. |
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| Combined Loan To Value (CLTV): |
The mathematical relationship between the total of all
loan amounts (first mortgage plus subordinate liens) and
the value of the subject property. |
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| Community Reinvestment Act (CRA): |
This act requires financial institutions to meet the credit
needs of their community, including low and moderate-income
sections of the local community. It also requires banks to
make reports concerning their investment in the areas where
they do business. |
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| Condominium: |
A form of property ownership in which the homeowner holds
title to an individual dwelling unit, an undivided interest
in common areas of a multi-unit project, and sometimes the
exclusive use of certain limited common areas. All condominiums
must meet certain investor requirements. |
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| Conforming Loan: |
A loan with a mortgage amount that does not exceed that
which is eligible for purchase by FNMA or FHLMC. All loans
are considered either as conforming or non-conforming, also
known as jumbo. |
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| Conventional Loan: |
A mortgage loan not insured or guaranteed by the federal
government. |
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| Conversion Option: |
Options to convert an adjustable rate mortgage or balloon
loan to a fixed rate mortgage under specified conditions. |
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| Co-Signer: |
A party who signs the mortgage note along with the borrower,
but who does not own or have any interest in the title to
the property. |
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| Creditor: |
A person to
whom debt is owed by another person who is the "debtor". |
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| Credit Rating: |
A rating given a person or company to establish credit-worthiness
based upon present financial condition, experience and past
credit history. |
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| Credit Report: |
A document completed by a credit-reporting agency providing
information about the buyer's credit cards, previous mortgage
history, bank loans and public records dealing with financial
matters. |
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| Deal Structure: |
An Underwriters review of certain aspects of a loan application
that do not meet standard guidelines. |
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| Debt to Income Ratio: |
Compares the amount of monthly income to the amount the
borrower will owe each month in house payment (PITI) plus
other debts. The other debts may include but not limited
to car payment, credit cards, alimony, child support, and
personal loans. This ratio is commonly used to see if the
borrower has the capacity to repay the debt. |
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| Deed of Trust: |
A legal document that conveys title to real estate to a
disinterested third party (trustee) who holds the title until
the owner of the property has repaid the debt. In states
where it is used, a Deed of Trust accomplishes essentially
the same purpose as a Mortgage. |
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| Default: |
Failure to comply with the terms of any agreement. In real
estate, generally used in connection with a mortgage obligation
to refer to the failure to comply with the terms of the Promissory
Note. Most often this default is a failure to make payments,
however, there are other means by which a borrower may default,
such as the failure to pay real estate taxes. |
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| Depreciation: |
A decline in the value of property. The opposite of appreciation. |
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| Discount Points: |
A percentage
of the loan amount which is charged or credited by the
lender upon making a mortgage loan. Loans that are made
at the present market rate, with no points, are considered
to be made at "par." Because
of the lender's ability to charge or credit points on
an individual loan, the lender is able to tailor a loan
program and interest rate to fit the needs of each individual
borrower. Discount points can be negotiated in the Purchase
Contract to be paid by either the seller or the borrower. Each point equals 1% of the mortgage
loan. For example, a charge of
1 point on a $50,000 loan would
result in a charge of $500; 1/2
point would be $250 ($50,000 x
.50%). |
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| Down Payment: |
The part of the purchase price which the buyer
pays in cash and does not finance with a mortgage. |
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| Earnest
Money: |
Deposit made by a purchaser of real estate as evidence
of good faith. |
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| Equal Credit Opportunity Act (ECOA): |
Also known as Regulation B. A federal law that prohibits
a lender from discriminating in mortgage lending on the basis
of race, color, religion, national origin, sex, marital status,
age, income derived from public assistance programs, or previous
exercise of Consumer Credit Protection Act rights. |
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| Equity: |
The difference between the current market value of a property
and the principal balance of all outstanding loans. |
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| Escrow Account: |
An account held by the lending institution to which the
borrower pays monthly installments for property taxes, insurance,
and special assessments, and from which the lender disburses
these sums as they become due. |
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| Fair Credit Reporting Act: |
Regulated the collection and distribution of
information by the consumer credit reporting industry. It
also affects how financial institutions collect and convey
credit information about loan applicants or borrowers. |
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| Fair Housing Act: |
Prohibits the denial or variance of the terms of real estate
related transactions based on race, color, religion, sex,
national origin, disability, or familiar status of the credit
applicant. Real estate related transactions include a mortgage,
home improvement, or other loans secured by a dwelling. |
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| Federal Home Loan Mortgage Corporation (FHLMC): |
Also known as Freddie Mac. A publicly owned
corporation created by Congress to support the secondary
mortgage market. It purchases and sells conventional residential
mortgages as well as residential mortgages insured by the
Federal Housing Administration (FHA) or guaranteed by the
Veterans Administration (VA). |
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| Federal National Mortgage Association (FNMA): |
Also known as Fannie Mae. A privately owned corporation
to support the secondary mortgage market. It adds liquidity
to the mortgage market by investing in home loans through
the country. |
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| FICO Score: |
A credit score given to a person that establishes creditworthiness
based on present financial condition, experience and past
credit history. |
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| Finance Charge: |
The cost of credit as a dollar amount (i.e. total amount
of interest and specific other loan charges to be paid over
the term of the loan and other loan charges to be paid by
the borrower at closing). Loan charges include origination
fees, discount points, mortgage insurance, and other applicable
charges. If the seller pays any of these charges, they cannot
be included in the finance charge. |
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| Financial Statement: |
A summary of
facts showing an individual's or company's financial
condition. For individuals, it states their assets and
liabilities as of a given date. For a company it should
include a Profit and Loss Statement (P&L)
for a certain period of time and balance sheet, stating
assets and liabilities as of a given date. |
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| First Mortgage: |
A real estate loan that creates a primary lien
against real property. |
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| First Rate Adjustment -- First rate
adjustment after: |
In association with an Adjustable Rate Mortgage
loan, this is the number of months after which the loan has
closed when the first interest rate adjustment will occur. |
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| First Rate Adjustment -- Maximum rate
decrease: |
In association with an Adjustable Rate Mortgage
loan, this is the most the interest rate can decrease during
the first adjustment period. |
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| First Rate Adjustment -- Maximum rate
increase: |
In association with an Adjustable Rate Mortgage
loan, this is the most the interest rate can increase during
the first adjustment period. |
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| Fixed Rate Mortgage: |
The type of loan where the interest rate will
not change for the entire term of the loan. |
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| Floating: |
The term used when a purchaser elects not to
lock-in an interest rate at the time of application. |
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| Flood Insurance: |
Insurance that compensates for direct physical
damages by or from flood to the insured property subject
to the terms, provisions, conditions and losses not covered
provision of the policy. It is required for mortgages on
properties located in federally designated flood areas. |
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| Good
Faith Estimate (GFE): |
An estimate of settlement charges paid by the
borrower at closing. The Real Estate Settlement Procedures
Act (RESPA) requires a Good Faith Estimate of settlement
charges be provided to the borrower. |
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| Gift Letter: |
A letter or affidavit that indicates that part
of a borrower's down payment is supplied by relatives or
friends in the form of a gift and that the gift does not
have to be repaid. |
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| Gross Income: |
A person's income before deduction for income
taxation. |
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| Hazard Insurance: |
Insurance
against losses caused by perils which are commonly covered
in policies described as a "Homeowner
Policy". |
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| Home Maintenance: |
Costs associated with maintaining a home. This
may include, but not limited to, general repairs, replacement
or repair of furnace, air conditioning, roof, plumbing and
electrical systems. |
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| Home Mortgage Disclosure Act (HMDA): |
Also known as Regulation C. The purpose of
HMDA is to provide disclosure of mortgage lending application
activity (home purchase or improvement) to regulators and
the public. Information is collected on each application,
and is recorded on a log that is compiled to produce a report
on application activity by geographic designation (census
tract). |
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| Homeowners Association (HOA): |
A non-profit corporation or association that
manages common areas and services of a Condominium or Planned
Unit Development (PUD). |
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| Homeowners Insurance: |
Insurance that covers damage to the insureds'
residence and liability claims made against the insured subject
to the policy terms, conditions, provisions, losses not insured
provision and exclusions. |
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| Housing Expense Ratio: |
Ratio used to determine the borrowers capacity
to repay a home loan. The ratio compares monthly income to
the house payment (Principal, Interest, Taxes and Insurance). |
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| Index: |
In connection with ARM loans, the external
measurement used by a Lender to determine future changes
which are to occur to an adjustable loan program. These will
typically be published rates that are independent of the
Lender's control, such as a Treasury Bill. |
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| Initial Interest Rate: |
The
beginning interest rate at the start of an adjustable
rate mortgage (ARM). It may be lower than the fully indexed
rate or "going market rate" and
it will remain constant until it is adjusted up or down
on the adjustment date. |
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| Interest: |
- The amount paid by a borrower to a lender for the use
of the lender's money for a certain period of time.
- The amount paid by a bank on some deposit accounts.
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| Interest Income: |
The potential income from funds which would
have been used for the down payment, closing costs, and any
difference (increase) between monthly rental payment and
monthly mortgage payment. |
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| Interest Rate: |
The percentage of an amount of money that is
paid for its use for a specific time; usually expressed as
an annual percentage. |
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| Judgment: |
Decree of a court declaring that one individual
is indebted to another and fixing the amount of such indebtedness. |
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| Jumbo Loan: |
A loan above the limit set by the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac). Also referred to as a
non-conforming loan. |
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| Late Charge: |
An additional charge a borrower is required
to pay as a penalty for failure to pay a regular mortgage
loan installment when due; a penalty for a delinquent payment. |
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| LIBOR: |
LIBOR
is an abbreviation for the "London
Interbank Offered Rate," and is the interest rate
offered by a specific group of London banks for U.S. dollar
deposits of a stated maturity. LIBOR is used as a base
index for setting rates of some adjustable rate financial
instruments, including Interest only loans and other adjustable
rate mortgage programs. |
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| Lien: |
A legal claim against a property that must
be paid off when the property is sold. A lien is created
when you borrow money and use your home as collateral for
the loan. |
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| Life of Loan -- Maximum rate decrease: |
In association with an Adjustable Rate Mortgage
loan, this is the most the interest can decrease over the
life of the mortgage loan. |
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| Life of Loan -- Maximum rate increase: |
In association with an Adjustable Rate Mortgage
loan, this is the most the interest can increase over the
life of the mortgage loan. |
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| Loan Application: |
A source of information on which the lender
bases a decision to make or not make a loan; defines the
terms of the loan contract, gives the names of the borrower(s),
place of employment, salary, bank accounts, credit references,
real estate owned, and describes the property to be mortgaged. |
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| Loan Balance: |
The amount of remaining unpaid principal balance
owed by the borrower. |
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| Loan Term: |
Number of years a loan is amortized. Mortgage
loan terms are generally 15, 20, or 30 years. |
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| Loan-to-Value (LTV): |
The ratio of the total amount borrowed on a
mortgage against a property, compared to the appraised value
of the property. A LTV ratio of 90 means that the borrower
is borrowing 90% of the value of the property and paying
10% as a down payment. For purchases, the value of the property
is the lesser of the purchase price or the appraised value.
For refinances the value is determined by an appraisal. |
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| Loan-to-Value Ratio: |
The ratio, expressed as a percentage, of the
amount of the loan (numerator) to the value or selling price
of real property (denominator). For example, if you have
an $80,000 1st mortgage on a home with an appraised value
of $100,000, the LTV is 80% ($80,000 / $100,000 = 80%). |
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| Lock-In: |
A written agreement between the lender and
borrower for a specified period of time in which the lender
will hold a specific interest rate, origination and/or discount
point(s). |
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| Margin: |
Under the terms of an adjustable rate mortgage
(ARM), the margin is a set adjustment to the index. The particular
loan product determines the amount of the margin. |
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| Median Income: |
The middle income level. Half of the incomes
would be higher than the median income and half of the incomes
would be below the median income. This is not to be confused
with an average income. |
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| Mortgage: |
The written instrument used to pledge a title
to real estate as security for repayment of a Promissory
Note. |
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| Mortgage Insurance: |
Insurance written in connection with a mortgage
loan that indemnifies the lender in the event of borrower
default. In connection with conventional loan transactions,
this insurance is commonly referred to as Private Mortgage
Insurance (PMI). |
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| Mortgage Note: |
A written promise to pay a sum of money at
a stated interest rate during a specified term. It is typically
secured by a mortgage. |
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| Mortgage Servicing: |
Controlling the necessary duties of a mortgagee,
such as collecting payments, releasing the lien upon payment
in full, foreclosing if in default, and making sure the taxes
are paid, insurance is in force, etc. The lender or a company
acting for the lender, for a servicing fee, may do servicing.
(Also called Loan Servicing.) |
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| Mortgagee: |
The institution, group, or individual that
lends money on the security of pledged real estate; the association,
the lender. |
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| Mortgagee Clause: |
This
is the clause that is typically used for hazard insurance
and flood insurance. For loans originated by the State
Farm Bank® it will
read: State Farm Bank, F.S.B., Its Successor and/or Assigns,
P.O. Box 2583, Ft. Wayne, IN 46801-2583. |
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| Mortgagor: |
The owner of real estate who pledges his property
as security for the repayment of a debt; the borrower. |
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| Net Income: |
The difference between effective gross income
and expense including taxes and insurance. The term is qualified
as net income before depreciation and debt. |
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| Non-Conforming: |
A loan with a mortgage amount that exceeds
that which is eligible for purchase by FNMA or FHLMC. All
other loans above this amount are considered to be non-conforming
or jumbo loans. |
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| Non-Owner-Occupied Property: |
Property purchased by a borrower not for a
primary residence but as an investment with the intent of
generating rental income, tax benefits, and profitable resale. |
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| Note: |
A
written promise by one party to pay a specific sum of
money to a second party under conditions agreed upon
mutually. Also called "promissory
note." |
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| Note Rate: |
The interest rate on the mortgage loan. |
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| Origination Fee: |
A fee paid to a lender for processing a loan
application; it is stated as a percentage of the mortgage
amount. |
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| Origination Process: |
Process in which a lender solicits business,
gathers required information and commits to loan money, for
the purchase of real estate. |
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| Owner-Occupied Property: |
The borrower or a member of the immediate family
lives in the property as a primary residence. |
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| PITI: |
Term commonly used to refer to a mortgage loan
payment. Acronym stands for Principal, Interest, Taxes, and
Insurance. |
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| PITI Ratio: |
Compares
the amount of the monthly income to the amount the borrower
will owe each month in principal, interest, real estate
tax and insurance on a mortgage. Lenders use it in deciding
whether to give the borrower a loan. Also called "income-to-debt" ratio. |
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Planned Unit
Development (PUD): |
A housing project that may consist of any combination
of homes (one-family to four-family), condominiums, and various
other styles. In a PUD, often the individual unit and the
land upon which it sits are owned by the unit/homeowner;
however, the homeowner's association owns common facilities. |
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| Pre-Approval: |
A process in which a customer provides appropriate
information on income, debts and assets that will be used
to make a credit only loan decision. The customer typically
has not identified a property to be purchased, however, a
specific sales price and loan amount are used to make a loan
decision. (The sales price and loan amount are based on customer
assumptions) |
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| Pre-Qualification: |
A process designed to assist a customer in
determining a maximum sales price, loan amount and PITI payment
they are qualified for. A pre-qualification is not considered
a loan approval. A customer would provide basic information
(income, debts, assets) to be used to determine the maximum
sales price, etc. |
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| Prepaid Expenses or Prepaids: |
The term used to describe the funds the Lender
requires to be deposited to establish the escrow account
for taxes and insurance at the time of closing (also refers
to Prepaid Interest). |
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| Prepaid Interest: |
Interest that the borrower pays the lender
before it becomes due. |
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| Prepayment: |
A loan repayment made in advance of its contractual
due date. |
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| Prepayment Penalty: |
A penalty under a Note, Mortgage or Deed of
Trust imposed when the loan is paid before its maturity date. |
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| Principal and Interest: |
Two components of a monthly mortgage payment.
Principal refers to the portion of the monthly payment that
reduces the remaining balance for the mortgage. Interest
is the fee charged for borrowing money. |
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| Principal Balance: |
The outstanding balance of a mortgage, not
counting interest. |
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| Principal, Interest, Real Estate Tax, Insurance
Payment: |
The total mortgage payment which includes principal,
interest, taxes and insurance. |
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| Private Mortgage Insurance (PMI): |
Insurance against a loss by a lender in the
event of default by a borrower (mortgagor). A private insurance
company issues this insurance. The premium is paid by the
borrower and is included in the mortgage payment. |
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| Processing: |
Gathering the loan application and all required
supporting documents (including the property appraisal, credit
report, credit history, and income and expenses) so that
a lender can consider the borrower for a loan. |
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| Promissory Note: |
A document in which the borrower promises to
pay a stated amount on a specific date. The note normally
states the name of the lender, the terms of payment and any
interest rate. |
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| Property Taxes: |
Taxes assessed on real estate. Property taxes
are based on valuations by local and or state governments. |
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| Purchase Agreement: |
A written agreement between a buyer and seller
of real property, that states the price and terms of the
sale. |
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| Purchase Price: |
The total amount paid for a home. |
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| Qualifying Income Ratios: |
Income analysis used by lenders in deciding
whether to offer the borrower a loan. One type of analysis
compares only the amount of the proposed monthly mortgage
payment to the monthly income. Another compares the amount
of the total monthly payments (for example car, credit card
and proposed mortgage payments) to the monthly income. |
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| Rate Index: |
An index used to adjust the interest rate of
an adjustable mortgage loan. |
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| Real Estate Appreciation Rate: |
Percentage increase in the value of real estate,
expressed at an annual rate. |
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| Real Estate Settlement Procedures Act (RESPA): |
A consumer protection law that requires, among
other things, lenders to give borrowers advance notice of
closing costs. |
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| Realtor: |
A person licensed to negotiate and transact
the sale of real estate on behalf of the property owner.
A real estate broker or associate must hold active membership
in a real estate board affiliated with the National Association
of Realtors. |
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| Recording Fee: |
The amount paid to the recorder's office in
order to make a document a matter of public record. |
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| Regulation Z: |
Federal Reserve regulation issued under the
Truth-in-Lending Act, which, among other things, requires
that a credit purchaser be advised in writing of all costs
connected with the credit portion of the loan. |
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| Rental Payment: |
A payment made to use another's property. The
amount of the rent is determined in a contract and is typically
paid monthly. |
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| Renters Insurance: |
Insurance
against perils which are commonly covered in policies
described as a "Renters Policy". |
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| Repayment: |
The payment of a mortgage loan over a period
of time established when the loan is originated. |
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| Rescind: |
To avoid or cancel in such a way as to treat
the contract or other object of the rescission as if it never
existed. |
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| Sales Contract: |
A written agreement between parties stating
all terms and conditions of a sale. |
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| Savings Rate: |
The interest rate a person expects to earn
on a savings account or investment account. |
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| Secondary Market: |
An informal market where existing mortgages
are bought and sold. It is the traditional aftermarket for
mortgage loans that brings together lenders that sell mortgages
with lenders, investors and agencies that buy mortgages. |
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| Seller Contribution: |
The seller may be paying some or all of the
borrower's cost. The amount of the contribution has limitations. |
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| Selling Costs: |
The costs incurred in selling a home. This
could include Realtor expenses and other miscellaneous expenses
such as painting or minor repairs to prepare the home for
sale. |
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| Servicing: |
All the management and operational procedures
that the mortgage company handles for the life of the loan,
up through foreclosure if necessary, including: collecting
the mortgage payments, ensuring that the taxes and insurance
charges are paid promptly, and sending an annual report on
the mortgage and escrow accounts. |
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| Servicing Released: |
A stipulation in the agreement for the sale
of mortgages in which the Lender is not responsible for servicing
the loan. |
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| Servicing Retained: |
A loan sale in which the original lender's
servicing department continues to service the loan after
the sale to a secondary institution or investor. |
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| Settlement Statement: |
Also referred to as a HUD-1 Settlement Statement.
The complete breakdown of costs involved in the real estate
transaction for both the seller and buyer. |
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| Single-Family Attached Home: |
A single-family dwelling that is attached to
other single-family dwellings. |
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| Single-Family Detached Home: |
A freestanding dwelling for a single family |
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| Survey: |
A measurement of land, prepared by a registered
land surveyor, showing the location of the land with reference
to known points, its dimensions and the location and dimensions
of any improvements. |
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| Subordinate Financing: |
An additional lien against the real estate
securing borrowers first mortgage. This lien takes second
priority to the first mortgage. |
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| Subsequent Rate Adjustment -- Maximum
rate decrease: |
In association with an Adjustable Rate Mortgage
loan, this is the most the interest rate can decrease when
it is scheduled for reevaluation and possible adjustment. |
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| Subsequent Rate Adjustment -- Maximum
rate increase: |
In association with an Adjustable Rate Mortgage
loan, this is the most the interest rate can increase when
it is scheduled for reevaluation and possible adjustment. |
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| Subsequent Rate Adjustment -- Next
ARM Adjustment Date: |
In association with an Adjustable Rate Mortgage
loan, this is the date scheduled for the next possible payment
adjustment. |
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| Subsequent Rate Adjustment -- Rate
Change Frequency: |
In association with an Adjustable Rate Mortgage
loan, this is the frequency in which possible adjustments
may be made to the interest rate amount for Adjustable Rate
Mortgages after the initial adjustment. |
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| Tax Rates: |
Tax levied by the federal government and some
states based on a person's income. Federal income tax rates
vary depending on a person's adjusted gross income. |
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| Tax Savings: |
The amount saved on taxes by itemizing deductions
on income tax returns. |
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| Title: |
The evidence to the right to or ownership in
property. In the case of real estate, the documentary evidence
of ownership is the title deed, which specifies in whom the
legal state is vested and the history of ownership and transfers.
Title may be acquired through purchase, inheritance, devise,
gift or through the foreclosure of a mortgage. |
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| Title Insurance Policy: |
A contract by which the insurer, usually a
title company, indicates who has legal title and agrees to
pay the insured a specific amount of any loss caused by clouds,
claims or defects of title to real estate, which the insured
has an interest as owner, mortgagee or otherwise.
(a) Owner's Title Policy: Usually issued to the landowner himself. The owner's
title insurance policy is bought and paid for only once and then continues
in force without any further payment. Owner's Title Insurance policies are
not assignable.
(b) Mortgagee's Title Policy: Issued to the mortgagee and terminates when
the mortgage debt is paid. In the event of foreclosure, or if the mortgagee
acquires title from the mortgagor in lieu of foreclosure, the policy continues
in force, giving continued protection against any defects of title which
existed at, or prior to, the date of the policy. |
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| Treasury Bills: |
Interest bearing U.S. Government obligations
sold at a weekly sale. The change in interest rates paid
on these obligations is frequently used as the Rate Index
for Adjustable Mortgage Loans. |
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| Truth in Lending (TIL): |
The name given to the federal statues and regulations
(Regulation Z) which are designed primarily to insure that
prospective Borrowers of credit received credit and cost
information before concluding a loan transaction. |
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| Underwriting (Mortgage Loans): |
The process of evaluating a loan application
to determine the risk involved for the lender. It involves
an analysis of the borrower's creditworthiness and the quality
of the property itself. |
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| Verification of Deposit (VOD): |
Form used in mortgage lending to verify the
deposits or assets of a prospective borrower when monthly
statements are unavailable or unusable. |
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| Verification of Employment (VOE): |
Form used in mortgage lending to verify the
employment and income of a prospective borrower when pay
stubs and W2 forms are unavailable or unusable. |
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| Verification of Mortgage (VOM): |
Form used in mortgage lending to verify the
existing mortgage balance, monthly payments and late payments,
if any. |
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| Verification of Rent: |
Form used in mortgage lending to verify monthly
rents paid and late payments, if any |
