 | Amortization - Aperiodic reduction of a mortgage by making
specific payments over a stated period of time. |
| Annual Percentage Rate - The entire cost of borrowing
funds, regardless of who pays the charge, stated as a percentage rate. There is a
prescribed procedure for this calculation as stated by the Federal Government. |
| ARM - An Adjustable Rate Mortgate where the reate can
change at specific intervalls as stated by the note. The payment is subject to
change throughout the term of the loan. |
| Cash Flow - The amount of cash derived from an
investment. Cash flows can vcome from operation, disposition, or refinancing of an
investment. |
| Closing - sometimes called settlement, this is where
all of the necessary documents are signed and consideration made in order to transfer
title to the property. |
| Conventional Loan - Generally speaking, any loan which is
not a government insured loan, such as a FHA or VA, is considered a conventional loan. |
| Debt Ratio - An allowable percentage of monthly gross
income which includes the proposed mortgage payment and any recurring debt. |
| FRM - A fixed Rate Mortgage where the interest rate stays
constant throughtout the ter of the loan. |
| Income ration - An allowagble percentage of monthly gross
income which the proposed mortgage payment canot exceed. |
| Index - A reference oint used to determine if rates on
ARMs can change. Commonly used indices are the 11th District Cost of Funds and the
One Year Treasury Index. |
| Loan to Value Ration - The ratio between the mortgage loan
and the appraised value of a property. Typical LTVs could be 80% or 90%. |
| Mortgage Insurance Premium - This term specifically refers
to mortgage insurance required by FHA which insures the lender in case the borrower
defaults. |
| Points - a point is equal to one percent of the mortgage
amount. This is a charge by the lender which will increase the yield of the
mortgage. |
| Private Mortgage Insureance - Mortgage insureance
guaranteeing the top portion of a loan in case of foreclosure required by lenders of
conventional loans in excess of usually 80% loan to value. |
| Yield - The rate of return an investment generates over a
period of time. |
Glossary of Financial Terms