|
3/1, 5/1, 7/1 and 10/1 ARMs--Adjustable-rate mortgages in
which rate is fixed for three-year, five-year, seven-year and
10-year periods, respectively, but may adjust annually after
that.
7/23 and 5/25 Mortgages--Mortgages with a onetime rate
adjustment after seven years and five years respectively.
Annual Percentage Rate (APR)--Interest rate reflecting the
first-year rate including certain points and credit costs.
Balloon--Loan in which little, if any, of your monthly payments
go toward paying off the outstanding balance. Rather, one large,
lump-sum payment is due at maturity.
Buydowns--Mortgage in which the rate is offset by paying
more points up front.
Caps--The maximum amount the mortgage rate can change
annually or over the life of the loan on a one-year adjustable.
For example, if the caps are 2% annual and 6% life of loan, a
mortgage whose first-year rate is 10% could rise to no more
than 12% the second year and 16% over the entire loan term.
COFI--Adjustable-rate mortgage with rate that adjusts based
on a cost-of-funds index, often the 11th District Cost of Funds.
Index--A floating index lenders use to calculate the rate on a
one-year adjustable-rate mortgage. The most common indexes
are the one-year Treasury Constant Maturity Yield and the
FHLB 11th District Cost of Funds.
Indexed rate--The sum of the published index plus the margin.
For example if the index were 9% and the margin 2.75%, the
indexed rate would be 11.75%. Often, lenders charge less than
the indexed rate the first year of an adjustable-rate mortgage.
Jumbo Mortgages--Mortgages that go over the $214,300
Fannie Mae and Freddie Mac limit.
Loan-to-Value Ratio--Proportion of a home's value upon
which an institution will issue a loan.
Lock--Lender's guarantee that the mortgage rate quoted will be
good for a specific number of days.
Margin--The number of percentage points added to the index
on a one-year adjustable. For example, if the index rate is 9%
and the margin is 3%, then the fully-indexed rate is 12%.
Negative Amortization--When, on an adjustable-rate
mortgage, interest rates increase faster than monthly payments.
Result: Your balance may grow despite efforts to pay it down.
One-year adjustable--Mortgage whose annual rate changes
yearly. The rate is usually based on movements of a published
index plus a specified margin, chosen by the lender.
Points--A percentage of the loan amount, paid at closing. Each
point is one-hundredth of the loan amount.
|
Back To Homepage
Real Estate - Demographic Information