Glossary of Terms
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Click on any letter above for a complete description of any
financial term - or -
use our quick lookup below for the most
commonly used terms.
Amortization
Repayment of your
loan amount through regular payments of both principal and interest,
calculated to pay off the loan after a fixed period of time.
Annual Percentage
Rate (APR)
Charges imposed on
the borrower to obtain a mortgage, expressed on an annualized basis
as an interest rate. It includes the interest rate, loan fees and
points.
Closing
The time at which
loan documents and funds are signed and delivered to finalize the
funding of a loan. Sometimes called a settlement.
Closing Costs
Expenses incurred to
finance a home loan and/or transfer ownership of real estate.
Co-Signer
Person who agrees to
make loan payments, if you cannot fulfill your financial commitment.
Down Payment
Cash paid by the
home buyer towards the partial payment of a home's sales price.
Fannie Mae
Federal National
Mortgage Association. A government-sponsored private corporation
that buys home loans from lenders and sells them to investors.
FHA
Federal Housing
Administration. An agency within the Department of Housing and Urban
Development that provides mortgage insurance for home loans and sets
standards for construction and underwriting.
Negative
Amortization
Increase in the
unpaid loan balance created when monthly payments do not cover both
principal and interest and unpaid interest is added to the principal
balance.
Points
Upfront fee lenders
charge to reduce an interest rate. Each point typically equals 1
percentage point of the total amount of the loan.
Prepayment Penalty
Fee borrowers pay if
they pay off a loan during the early years of its term.
Principal
The original amount of money borrowed, not including interest owed.
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