Acceleration Clause – The clause in a mortgage or fiduciary note that imposes the entire debt is immediately payable if the mortgage fails under the contractual terms. Adjustable Mortgage Rate (ARM) – A mortgage for which the interest rate is adjusted periodically on the basis of an index. Also known as the mortgage variable rate. The interest rate indicated for a mortgage bill. Overall debt ratio: The ratio, expressed as a percentage, occurs when a borrower`s total monthly debt, including proposed mortgage capital, interest, taxes and insurance and all recurring monthly debts (such as credit card payment, student credit, mortgage and auto credit) is divided by gross monthly income. The maximum allowable quota for MOP loans is 48%. FHA Loans – A government-backed mortgage, supported by the U.S. FHA and the Department of Housing and Urban Development (HUD). Mortgage: a lender or creditor who holds a mortgage or letter of trust. Subordinated financing – Any mortgage or other pledge that has a lower priority than the first mortgage or priority loan. See second mortgage. Institutional credit contracts generally include a lead underwriter. The underwriter negotiates all the terms of the credit agreement.
Terms and conditions include interest rates, terms of payment, duration of credit and possible penalties for late payments. Insurers also facilitate the participation of several parties to the loan as well as all structured tranches that may have their own terms individually. Credit-to-value ratio – The ratio between the amount of the mortgage and the assessed value of the property, expressed as a percentage. An LTV rate of 90 means that a borrower lends 90% of the value of the property and pays 10% as a down payment. For purchases, the value of the property is considered to be the purchase price, for refinancings, the value is determined by an valuation. Takeout mortgage – A permanent mortgage obtained by prior agreement between a contractor and a financial institution to pay off the interim mortgage after construction. Balloon Mortgage – Behaves like a fixed rate mortgage for a number of years (usually five or seven) and then has to be paid in a single « balloon » payment. Hot air balloon loans are popular with those who expect to sell or refinance their property within a specified time frame. Balloon payment – The last package paid at the end of the balloon mortgage. Loans – A loan is a mortgage that is issued only on a borrower`s financial capacity, regardless of collateral.
Quitclaim Deed – An act that may have no guarantee, regardless of the interest or title a fellow may have at the time of transmission. Pledge Account Mortgage (PAM) – Combines GPM (a graduated payment mortgage) with a savings account subsidizing to provide the borrower with a low payment plan, the lender with repayments and the cash seller. Loan contracts between commercial banks, savings banks, financial companies, insurance companies and investment banks are very different from each other and all feed for different purposes. « Commercial banks » and « savings banks » because they accept deposits and take advantage of FDIC insurance, generate credits that include concepts of « public trust. » Prior to the intergovernmental banking system, this « public confidence » was easily measured by national banking supervisors, who were able to see how local deposits were used to finance the working capital needs of industry and local businesses and the benefits of the organization`s employment.