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GLOSSARY
Mortgage broker
A mortgage company is one that has contacts with many lenders and informs the borrower about different loan options available. The mortgage broker accepts the application and processes the loan for a fee. He does not fund the loan.
Mortgage calculator
A program that potential homebuyers can use to determine what their monthly mortgage payment will be based on principal, interest, and the terms.
Mortgage constant
The mortgage constant is the quotient of the total annual debt payments on a mortgage divided by that mortgage's original balance. The mortgage constant is also known as the mortgage capitalization rate.
Mortgage debt
Mortgage debt is outstanding principal on a loan that's backed by residential real estate collateral.
Mortgage excess servicing
Mortgage excess servicing, on a mortgage-backed security, is the percentage of interest that's left after subtracting the MBS coupon rate and servicing and underwriting fees from the underlying mortgage note rate. The mortgage excess servicing, which would be a fraction of 1 percent, is paid to the loan servicer.
Mortgage forbearance agreement
Mortgage forbearance agreement is a mutually accepted arrangement between a borrower, who has defaulted, and a lender, whereby the lender agrees not to foreclose upon certain conditions. The borrower agrees to a specific repayment plan so that the loan will become current at a certain future date. Forbearance is only appropriate where the borrower fell behind in payments due to a temporary setback.
Mortgage index
A mortgage index is the underlying benchmark that drives the interest rate on an adjustable-rate mortgage (ARM). Rates on ARMS have two components: the index and the margin. The index, which is always a published statistic, is the variable component of the rate; it moves up and down as economic conditions change. Examples of mortgage indices include the prime rate, one-year constant maturity treasury, or LIBOR.
Mortgage insurance
Insurance that protects the lender from incurring losses against non-payment of home loans. This is required for loans that have an LTV in excess of 80%. When the LTV is more than 80%, the borrower pays higher interest rate to the lender who then pays the premium to the mortgage insurance directly. Certain loan programs like first time home loans are covered by MI irrespective of the LTV percentage.
Mortgage insurance premium (MIP)
The amount charged to the borrower for mortgage insurance. Depending on the situation, it may be paid upfront, monthly or annually.
Mortgage interest deduction
A tax savings in which the government allows homeowners to deduct home loan interest from their income before calculating their taxes.
Mortgage interest expense
A tax term for interest paid on a loan secured by your home that is fully deductible, up to certain limits, when you itemize income taxes.
Mortgage lien
A mortgage lien is the claim that a lender places on a property when that property is used to secure a loan. If the property owner defaults on the loan, the lender (or lienholder) has the right to foreclose and sell the property.
Mortgage life insurance
A policy taken out which covers the mortgage of the property if the owner dies.
Mortgage loan
A mortgage loan is a debt instrument that is secured by real estate property. The terms mortgage loan and mortgage are used interchangeably.
Mortgage note
A mortgage note is a document that details the terms of a promise to repay a real estate loan. The note will list the names of all borrowers and lenders, as well the loan amount, rate of interest, and structure and timing of repayments.