Glossary Excerpts
A Glossary is a dictionary that specializes in words related to a particular topic - in this case, Mortgage Lending.
There is a lot of specialized terminology related to Mortgage Lending and the California Department of Real Estate has very helpfully compiled a glossary for us to use. I've excerpted (copied out) some specific, common terms here.
The full text of the glossary is available via link to the California Department of Real Estate's site below, along with a helpful online guide about using the services of a mortgage broker.
If you would like examples, more information or need help with any definition, please contact me.
| Word/Phrase | Defintion from California DRE Glossary |
| ADJUSTABLE RATE MORTGAGE (ARM) | A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise. |
| ANNUAL PERCENTAGE RATE | The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act. |
| APPRAISAL | An estimate of the value of property resulting from an analysis of facts about the property. An opinion of value. |
| BALLOON PAYMENT | An installment payment on a promissory note - usually the final one for discharging the debt - which is significantly larger than the other installment payments provided under the terms of the promissory note. |
| COMMUNITY PROPERTY | Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse has equal rights of management, alienation and testamentary disposition of community property. |
| ESCROW | The deposit of instruments and/or funds with instructions with a third neutral party to carry out the provisions of an agreement or contract. |
| INTEREST RATE | The percentage of a sum of money charged for its use. Rent or charge paid for use of money, expressed as a percentage per month or year of the sum borrowed. |
| JOINT TENANCY | Undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship, i.e., the right to share equally with other surviving joint tenants in the interest of a deceased joint tenant. |
| LOAN APPLICATION | The loan application is a source of information on which the lender bases a decision to make the loan; defines the terms of the loan contract, gives the name of the borrower, place of employment, salary, bank accounts, and credit references, and describes the real estate that is to be mortgaged. It also stipulates the amount of loan being applied for and repayment terms. |
| LOAN-TO-VALUE RATIO | The percentage of a property’s value that a lender can or may loan to a borrower. For example, if the ratio is 80% this means that a lender may loan 80% of the property’s appraised value to a borrower. |
| NEGATIVE AMORTIZATION | Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due. |
| PREPAYMENT PENALTY | The charge payable to a lender by a borrower under the terms of the loan agreement if the borrower pays off the outstanding principal balance of the loan prior to its maturity. |
| REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) | A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development. |
| TENANCY IN COMMON | Co-ownership of property by two or more persons who each hold an undivided interest, without right of survivorship; interests need not be equal. |
| TITLE INSURANCE | Insurance to protect a real property owner or lender up to a specified amount against certain types of loss, e.g., defective or unmarketable title. |
| TRUTH IN LENDING | The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction. |
| UNDERWRITING | Insuring something against loss; guaranteeing financially. |
California Department of Real Estate Glossary
What you should know - Using the Services of a Mortgage Broker
FAQs aka Frequently Asked Questions
Below I'll do my best to answer questions that are often asked, but if you have specific questions, please contact me via the Contact page.
How long does it take to get a home loan?
This depends on the type of loan selected, and also on how well we organize your information. Lenders want specific information about you and the property before they commit to a loan. First Banker Mortgage Corp. and I have decades of experience with all types of lenders, so we know what is expected by them.
Do you do "Pre-Qualification" letters I can take to a real estate agent?
Of course! First Banker Mortgage Corp. and I would be happy to work with you to see if we can pre-qualify you for one of our loan packages. It's really best to find out how much house you can afford before you go house-shopping. Your goals may be closer than you think.