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Laura Chang
MBA, REALTOR®
MBA, REALTOR®
Adjustable-Rate Mortgage (ARM)
A loan in which your interest rate and monthly payments may change periodically during the life of the loan, based on the fluctuation of an index. Lenders may charge a lower
interest rate for the initial period of the loan. Most ARMs have a rate cap that limits the amount the interest rate can change, both in an adjustment period, and over the life of
the loan. Also called a variable-rate mortgage.
Amortization
The gradual reduction in the principal amount owed on a debt. During the earlier years, most of each payment is applied toward the interest owed. During the final years of
the loan, payment amounts are applied almost exclusively to the remaining principal, unless there has been negative amortization.
Annual Percentage Rate (APR)
The annual cost of a loan to a borrower. Like an interest rate, the APR is expressed as a percentage of the loan amount. Unlike an interest rate, however, it includes other
charges or fees to reflect the total cost of the loan. The Federal Truth in Lending Act requires that every consumer loan agreement disclose the APR. Since all lenders must
follow the same rules to ensure the accuracy of the APR, borrowers can use the APR as a good basis for comparing certain costs of loans.
Appraisal or Appraised Value
An opinion of the market value of a home expressed by a real estate appraiser.
Balloon Mortgage
A mortgage that is amortized for a longer period than the term of the loan. At the end of the term of the loan, the remaining outstanding principal on the loan is due.
Balloon Payment
The final lump sum paid at the maturity date of a balloon mortgage
Bridge Loan
A second trust for which the borrower‘s present home is collateral, allowing the proceeds to be used to close on a new house before the present home is sold.
Caps
A limit on how much a variable interest rate can increase. Many adjustable rate mortgages have both annual (or semi-annual) rate caps and lifetime caps. They limit the
amount your payments can increase in an adjustment period and over the life of the loan.
Closing Costs
Costs in addition to the price of the home incurred by buyers and sellers when a home is sold. Closing costs may include escrow fees, title insurance fees, document
recording fees, and real estate commissions.
Condominium (Condo)
A building or development with many housing units where each person owns his or her individual unit and has a shared interest in the common areas and facilities of the
entire project. A condo owner has a deed to and a mortgage on his or her particular unit. He or she also pays property taxes on the unit owned.
Conforming Loan
A mortgage loan that has the standard features as defined by and is eligible for sale to Fannie Mae and Freddie Mac.
Contingency
A specified condition that must be satisfied before a home sale can occur.
Conventional Mortgage
A mortgage not guaranteed, insured, or made by the federal or state government.
Credit Report
A report documenting the credit history of a borrower’s credit standing. It helps a lender determine whether or not a potential borrower is a good business risk.
Debt-to-Income (DTI) Ratio
The ratio of monthly debt payments to gross income. Many lenders like to see a borrower’s debt (including mortgage payments) be no more than 36% of the total income.
Default
Failure to make monthly payment on a mortgage. Default can lead to foreclosure.
Delinquency
Failure to make payments on time.
Down Payment
A portion of the home’s purchase price that the buyer pays in cash.
Equity
The difference between the fair market value of a home and the outstanding mortgage balances and other liens.
Escrow
The holding of documents and money by a neutral third party prior to closing.
Exclusive Right to Sell Listing
A contract giving an agent the exclusive right to market a property under a certain period of time.
A loan in which your interest rate and monthly payments may change periodically during the life of the loan, based on the fluctuation of an index. Lenders may charge a lower
interest rate for the initial period of the loan. Most ARMs have a rate cap that limits the amount the interest rate can change, both in an adjustment period, and over the life of
the loan. Also called a variable-rate mortgage.
Amortization
The gradual reduction in the principal amount owed on a debt. During the earlier years, most of each payment is applied toward the interest owed. During the final years of
the loan, payment amounts are applied almost exclusively to the remaining principal, unless there has been negative amortization.
Annual Percentage Rate (APR)
The annual cost of a loan to a borrower. Like an interest rate, the APR is expressed as a percentage of the loan amount. Unlike an interest rate, however, it includes other
charges or fees to reflect the total cost of the loan. The Federal Truth in Lending Act requires that every consumer loan agreement disclose the APR. Since all lenders must
follow the same rules to ensure the accuracy of the APR, borrowers can use the APR as a good basis for comparing certain costs of loans.
Appraisal or Appraised Value
An opinion of the market value of a home expressed by a real estate appraiser.
Balloon Mortgage
A mortgage that is amortized for a longer period than the term of the loan. At the end of the term of the loan, the remaining outstanding principal on the loan is due.
Balloon Payment
The final lump sum paid at the maturity date of a balloon mortgage
Bridge Loan
A second trust for which the borrower‘s present home is collateral, allowing the proceeds to be used to close on a new house before the present home is sold.
Caps
A limit on how much a variable interest rate can increase. Many adjustable rate mortgages have both annual (or semi-annual) rate caps and lifetime caps. They limit the
amount your payments can increase in an adjustment period and over the life of the loan.
Closing Costs
Costs in addition to the price of the home incurred by buyers and sellers when a home is sold. Closing costs may include escrow fees, title insurance fees, document
recording fees, and real estate commissions.
Condominium (Condo)
A building or development with many housing units where each person owns his or her individual unit and has a shared interest in the common areas and facilities of the
entire project. A condo owner has a deed to and a mortgage on his or her particular unit. He or she also pays property taxes on the unit owned.
Conforming Loan
A mortgage loan that has the standard features as defined by and is eligible for sale to Fannie Mae and Freddie Mac.
Contingency
A specified condition that must be satisfied before a home sale can occur.
Conventional Mortgage
A mortgage not guaranteed, insured, or made by the federal or state government.
Credit Report
A report documenting the credit history of a borrower’s credit standing. It helps a lender determine whether or not a potential borrower is a good business risk.
Debt-to-Income (DTI) Ratio
The ratio of monthly debt payments to gross income. Many lenders like to see a borrower’s debt (including mortgage payments) be no more than 36% of the total income.
Default
Failure to make monthly payment on a mortgage. Default can lead to foreclosure.
Delinquency
Failure to make payments on time.
Down Payment
A portion of the home’s purchase price that the buyer pays in cash.
Equity
The difference between the fair market value of a home and the outstanding mortgage balances and other liens.
Escrow
The holding of documents and money by a neutral third party prior to closing.
Exclusive Right to Sell Listing
A contract giving an agent the exclusive right to market a property under a certain period of time.
© 2007 Laura-Chang.com. All Rights Reserved.
Call me today for your
real estate needs!
949.394.4535
real estate needs!
949.394.4535