The HSH Mortgage Glossary N-P
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The Mortgage Glossary Index:
A condition where the loan balance goes up, rather than down, as payments are made. If a payment is not large enough to cover the interest due the difference is added to the principal. Negative amortization can occur in certain types of adjustable rate mortgages.
Non Conforming Loan
A mortgage which does not conform to credit or other standards, or to the maximum loan limits set by Fannie Mae and Freddie Mac. See Jumbo Loan
In most states, any property that is not real property. (Definitions vary.) See Real Property
Principal, Interest, Taxes and Insurance. The four components that (for most homeowners) make up the monthly mortgage payment. Principal and interest are the portions of the payment assigned to repay the mortgage; the tax and insurance components are accumulated in an escrow account to make payments when they are due.
A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
A point is equal to 1 percent of the mortgage. One point on a $100,000 mortgage would be $1,000, for example. Discount points are simply interest that is paid up-front. Most lenders offer mortgages with several combinations of points and interest rates; generally, more points means a lower interest rate, less points means a higher rate.
An approval for credit issued by a lender before the borrower has selected a property. Usually issued for a stated maximum loan amount and under certain conditions and assumptions regarding interest rates and other factors.
Any amount paid to reduce the principal balance of a loan before the due date. Payment in full when a property is sold. Also where additional or augmented monthly payments to reduce the loan balance prematurely.
Private Mortgage Insurance (PMI)
See Mortgage Insurance (MI)
See Planned Unit Development (PUD)
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