The HSH Mortgage Glossary A-B
To view a linked word list, View the Summary
The Mortgage Glossary Index:
Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically, according to an "index", such as Treasury Bills. Monthly payments can go up or down when the rate is adjusted.
The process of paying off the debt or mortgage, usually by equal monthly payments. Monthly payments are mostly interest at first (because the debt is higher) and almost entirely principal in later years, when the loan balance is small.
A table which shows the distribution of monthly payments - how much will be applied toward principal and how much toward interest over the life of the loan.
Annual Percentage Rate (APR)
A figure which attempts to reflect the total cost of a loan, expressed as a yearly rate. Because the APR takes the total cost of credit into account, it can never be lower, and is almost higher than the stated note rate or advertised rate. Within reason, the APR allows you to compare different types of mortgages based on the total cost.
See Annual Percentage Rate (APR)
See Adjustable Rate Mortgage (ARM)
A fixed rate mortgage with monthly payments which are not large enough to pay off the loan during the term. Balloons end after a specific time, usually one to five years, after which the entire remaining balance must be paid in a lump sum.
Balloon Reset Mortgage
See Two Step Mortgage (Balloon Reset)
1/100th of a point. See Point
A mortgage with payments made every two weeks instead of monthly. Since a bi-weekly has 26 payments per year -- the equivalent of 13 monthly payments -- the loan is paid off much sooner typically in 18 - 20 years as opposed to monthly payments for 30 years. The early payoff saves substantial amounts of interest.
A person or company that, for a specified fee, provides a service. Real estate brokers bring together buyers and sellers and then facilitate the transaction. Note: most real estate brokers represent the seller, NOT the buyer. Mortgage brokers are individuals or companies which arrange financing but do not lend money directly.
A provision where someone, usually the builder or seller, subsides the mortgage, either by paying extra points or by setting up an escrow account with funds to subsidize the loan during the first few years. The effect is to lower the interest rate for some period of time, which in turn allows the borrower to qualify. The reduced monthly payments increase when the subsidy expires.
More help from HSH.com
The salary you must earn to buy a home in 50 metrosHere’s how much salary you would need to earn in order to afford the median-priced home in your metro area.
10 metros where a home costs about $1,000/monthHSH.com identifies 10 metro areas where you can afford the principal, interest, taxes and insurance payments on a median-priced home for only around $1,000 per month.
Why is my lender asking for so much documentation?We're looking to refinance our primary home. We own rental properties and the potential lender wants to know everything...
Should I consider my home an “asset”?The answer is "yes", or even "maybe" or "it can be", usually modified by "but not right away, if ever." When it comes to the financial aspect of homeownership, the answer is rarely simple.
Are there drawbacks to buying a 50-year old house?Compared to newer stock, buying an older home can pose different challenges, but whether or not there are drawbacks depend on your choices and needs... and on those of the people who owned it before you.