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A provision often included in adjustable rate mortgages (ARMs) that limits how much the interest rate can increase over a predetermined period of time. Some ARMs have a lifetime cap as well as a cap for certain periods of adjustment ...
Private Mortgage Insurance (PMI)
Private mortgage insurance is designed to mitigate a lender’s risk on a loan. Borrowers with lower credit scores, lower down payments, and other potentially problematic issues with their loan could be required to purchase and pay PMI on their property until a certain equity threshold or payment history is established ...
A non-institutional lending entity that may be an individual or a company. Private lenders may also be called “non-bank lenders” and tend to lend based not only on conventional creditworthiness but also on the value of the collateral and other more custom considerations. Find out more about private lenders (and ...
The market where borrowers and mortgage originators (usually banks, mortgage brokers, or credit unions) come together to negotiate terms for loans and conduct mortgage transactions ...
When a borrower is making payments on time, the note on a loan is considered to be performing. A loan on which the borrower is making payments on time and in full ...
In real estate, the term note is shorthand for mortgage note, and refers to the promissory note secured by a specific mortgage loan with a piece of property as collateral ...
When a borrower falls behind on payments on a loan, the note is considered to be non-performing. A loan on which the borrower has stopped making payments. These note may also be called distressed notes ...
A lender whose business includes making mortgage loans ...
Mortgage Interest Deduction (MID)
This IRS policy allows homeowners who meet certain requirements to deduct the cost of the interest on their mortgage loans from their taxable income. This can lower the amount of taxes an individual owes on their income and, indirectly, make owning a home more affordable since the home loan diminishes ...
An insurance policy designed to protect lenders from losses due to default on a mortgage loan. Borrowers who put less than 20% down on a property are more likely to have to obtain mortgage insurance, which can be public or private. Mortgage insurance requirements often lapse when a property reaches ...
An intermediary party who brokers mortgage loans on behalf of individuals and businesses. Usually a mortgage broker is paid when the loan closes, and the lender or the borrower may be responsible for that fee ...
A legal agreement between a lender and a homebuyer wherein the lender loans money for the purchase of the property and the property serves as collateral until the debt is paid ...
A financial term used mainly by lenders to express the ratio of a loan to the value of the asset purchased using the loaned money or to the value of the asset serving as collateral on the loan. A borrower taking out a $65,000 loan to purchase a $100,000 property ...
An agreement between a lender and a delinquent borrower to either bring a loan back on track or resolve the delinquency in some other way. Workouts often include extensions of the payback period to lower monthly payments and other adjustments to the loan terms ...
The process of creating a new loan, from application to evaluation to disbursal of funds ...
A debt. In real estate, if a property has a lien against it, that property is serving as collateral for the debt in some form or fashion ...
The world’s most widely used benchmark for short-term interest rates. LIBOR stands for London Interbank Offered Rate. It is based on the US dollar, the euro, the pound sterling, the Japanese yen, and the Swiss franc. When LIBOR rises, interest rates also tend to rise ...
Using borrowed capital for an investment and expecting the profits made to be greater than the cost of the loan ...
A traditional rental agreement may include a first-refusal option for the tenant under certain circumstances. A lease-purchase may define a set time period within which the purchase may be made, pricing, and how the down payment will be obtained, since often tenants planning to exercise a lease-purchase will set a ...
Money paid regularly at a predetermined rate as payment for use of funds lent. Interest may also be paid as a fee for delaying repayment on a debt, as in an “interest only” loan ...
A loan made based on the value of the collateral securing the loan rather than the borrower’s predicted likelihood or ability to repay the loan. In hard money, the value of the collateral is the most important factor in the lending decision although many hard money lenders will check credit, ...
A loan made based on the value of the collateral securing the loan rather than the borrower’s predicted likelihood or ability to repay the loan. In hard money, the value of the collateral is the most important factor in the lending decision although many hard money lenders will check credit, ...
A lender who makes loans based on the value of the collateral securing the loan rather than the borrower’s predicted likelihood or ability to repay the loan. Find out more about hard money loans (and find a reputable lender) with the American Association of Private Lenders ...
Also referred to as a GFE, this document includes the breakdown of estimated payments due when a mortgage loan is closed. Lenders are required to provide these documents in order to help borrowers make good decisions and comparisons between loan offerings ...
The receivership process typically begins when a property owner stops making payments on a property. The receiver is responsible for controlling the property and maintaining its value. These can happen in commercial and residential properties ...
