OMC Dictionary

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border="0"></a></td> </tr> </table>   <p>  </p> </td> <td width="498" valign="top" align="left"> <div align="center"> <div align="center"> <div align="center"> <div align="center"> <div align="center"> <div align="center"> <center> <h2><font color="#000000" face="Verdana, Arial, Helvetica, sans-serif, Arial Black, Chicago, Courier, Geneva, Monaco, New York, Times, Times New Roman, TimesTen Bold, TimesTen BoldItalic, TimesTen Italic, TimesTen Roman"><b>Dictionary</b></font></h2> <h2><font color="#663333" face="Verdana, Arial, Helvetica, sans-serif, Arial Black, Chicago, Courier, Geneva, Monaco, New York, Times, Times New Roman, TimesTen Bold, TimesTen BoldItalic, TimesTen Italic, TimesTen Roman">Terms You Should Know</font></h2> </center> </div> </div> </div> </div> <dl> <dt> <div align="left"><b><font face="Times New Roman, Times, serif">Acceleration Clause</font></b></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Allows the lender to speed up the rate at which your loan comes due or even to demand immediate payment of the entire outstanding balance of the loan should you default on your loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Adjustable Rate Mortgage (ARM)"></a><b>Adjustable Rate Mortgage (ARM)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Is a mortgage in which the interest rate typically starts below market then is adjusted periodically based on a preselected financial index. Also sometimes known as the renegotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Adjustment Interval</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Amortization</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Means loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Annual Percentage Rate (APR)"></a><b>Annual Percentage Rate (APR)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points, credit costs and estimated rate uncreases (where applicable) over the full term of the loan. The APR allows homebuyers to compare different types of mortgages based on the annual cost for each loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Appraisal</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> An estimate of the value of property, made by a qualified professional appraiser. An important factor in determining the interest rate and whether or not <a href="#Private Mortgage Insurance (PMI)">Private Mortgage Insurance</a> will be required.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Assumption</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing costs and new, possibly higher, market-rate interest charges will apply.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Balloon (Payment) Mortgage</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Broker</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Buydown</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> When the lender and/or the home builder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Caps (Interest)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Caps (Payment)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Closing"></a><b>Closing</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Closing Costs"></a><b>Closing Costs</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The costs of closing usually are about 3 percent to 6 percent of the mortgage amount.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Commitment</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> An agreement, often in writing, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Construction Loan</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Conventional Loan</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A mortgage not insured by FHA or guaranteed by the VA or Farmers Home Administration (FmHA).</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Credit Ratio</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her net effective income (FHA/VA loans) or gross monthly income (Conventional loans). See <a href="#Housing Expenses-to-Income Ratio">Housing Expenses-to-Income Ratio</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Deed of Trust</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> In many states, this document is used in place of a mortgage to secure the payment of a note.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Default</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Deferred Interest</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Negative Amortization">Negative Amortization</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Delinquency</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Failure to make payments on time. This can lead to foreclosure.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Department of Veterans Affairs (VA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> An independent agency of the federal government which guarantees long-term, low- or no-down payment mortgages to eligible veterans.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Discount Points"></a><b>Discount Points</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Prepaid interest assessed at closing by the lender, in return for a lower rate. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000).</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Down Payment</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Money paid to make up the difference between the purchase price and mortgage amount. Down payments usually are 10 percent to 20 percent of the sales price on Conventional loans, and no money down up to 5 percent on FHA and VA loans.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Due-On-Sale Clause</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Earnest Money</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Equal Credit Opportunity Act (ECOA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Equity</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The difference between the fair market value and current indebtedness, also referred to as the owner's interest.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Escrow</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Refers to a neutral third party who carries out the instructions of both the buyer and seller to handle all the paperwork of settlement or "closing." Escrow may also refer to an account held by the lender into which the homebuyer pays money on a mon thly basis for tax or insurance payments, rather than paying them in lump sums themselves.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Fannie Mae</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Federal National Mortgage Association (FNMA)">Federal National Mortgage Association</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Farmers Home Administration (FmHA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Federal Home Loan Mortgage Corporation (FHLMC)"></a><b>Federal Home Loan Mortgage Corporation (FHLMC)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Also called Freddie Mac, is a quasi-governmental agency that purchases conventional mortgages from insured depository institutions and HUD-approved mortgage bankers.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Federal Housing Administration (FHA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Federal National Mortgage Association (FNMA)"></a><b>Federal National Mortgage Association (FNMA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Also known as Fannie Mae. A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>FHA Loan</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderate-priced homes almost anywhere in the country.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="FHA Mortgage Insurance"></a><b>FHA Mortgage Insurance</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Requires a small fee (up to 3 percent of the loan amount) paid at closing or a portion of this fee added to each monthly payment of an FHA loan to insure the loan with FHA. On a 9.5 percent $75,000 30-year fixed-rate FHA loan, this fee would amount to either $2,250 at closing or an extra $31 a month for the life of the loan. In addition, FHA mortgage insurance requires an annual fee of 0.5 percent of the current loan amount, the more years the fee must be paid.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="fixedrate"></a><b>Fixed-Rate Mortgage</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A mortgage on which the interest rate is set for the term of the loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Foreclosure</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A legal procedure in which property securing debt is sold by the lender to pay a defaulting borrower's debt .</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Freddie Mac</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Federal Home Loan Mortgage Corporation (FHLMC)">Federal Home Loan Mortgage Corporation</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Ginnie Mae</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Government National Mortgage Association (GNMA)">Government National Mortgage Association</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Government National Mortgage Association (GNMA)"></a><b>Government National Mortgage Association (GNMA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Also known as Ginnie Mae, provides sources of funds for residential mortgages, insured or guaranteed by FHA or VA.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Graduated Payment Mortgage (GPM)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Gross Monthly Income</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The total amount the borrower earns per month, before any expenses are deducted.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Guarantee</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Hazard Insurance</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Housing Expenses-to-Income Ratio"></a><b>Housing Expenses-to-Income Ratio</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her net effective income (FHA/VA loans) or gross monthly income (Conventional loans).</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Impound</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Index</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one- three-, and five-year U.S. Treasury Security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average Costs-of-Funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Investor</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Money source for a lender.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Jumbo Loan</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A loan which is larger (more than $227,150) than the limits set by the <a href="#Federal National Mortgage Association (FNMA)">Federal National Mortgage Association</a> and the <a href="#Federal Home Loan Mortgage Corporation (FHLMC)">Federal Home Loan Mortgage Corporation</a>. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Lien</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A claim upon a piece of property for the payment or satisfaction of a debt or obligation.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Loan-To-Value Ratio</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Margin</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Market Value</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Mortgage Insurance</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Money paid to insure the mortgage when the down payment is less than 20 percent. See <a href="#Private Mortgage Insurance (PMI)">Private Mortgage Insurance</a> or <a href="#FHA Mortgage Insurance">FHA Mortgage Insurance</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Mortgagee</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The lender.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Mortgagor</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The borrower or homeowner.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Negative Amortization"></a><b>Negative Amortization</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amortization is that the homebuyer ends up owing more than the orig inal amount of the loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Net Effective Income</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The borrower's gross income minus federal income tax.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Non-Assumption Clause</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Origination Fee</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of face value of the loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>PITI</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Principal, interest, taxes, and insurance. Also called monthly housing expense.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Points</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Discount Points">Discount Points</a></font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Power of Attorney</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A legal document authorizing one person to act on behalf of another.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Pre-Paids</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Expenses necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Prepayment</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A privilege in a mortgage permitting the borrower to make payments in advance of their due date.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Prepayment Penalty</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in 36 states and the District of Columbia.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Principal</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The amount of debt, not counting interest, left on a loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><a name="Private Mortgage Insurance (PMI)"></a><b>Private Mortgage Insurance (PMI)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment-as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will require an initial premium payment of 1.0 percent to 5.0 percent of your mortgage amount and may require an additional monthly fee depending on your loan's structure. On a $75,000 house with a 10 percent down payments, this would mean either an initial premium payment of $2,025 to $3,375, or an initial premium of $675 to $1,130 combined with a monthly payment of $25 to $30.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Realtor®</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Recision</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Recording Fees</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Renegotiable Rate Mortgage (RRM)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A loan in which the interest rate is adjusted periodically. See <a href="#Adjustable Rate Mortgage (ARM)">Adjustable Rate Mortgage</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Real Estate Settlement Procedures Act (RESPA)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> RESPA is a federal law that allows consumers to review information on known or estimated settlement costs once after application and once prior to or at settlement. The law requires lenders to furnish information after application only.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Reverse Annuity Mortgage (RAM)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as security.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Servicing</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> All the steps and operations a lender perform to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Settlement</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Closing">Closing</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Settlement Costs</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See <a href="#Closing Costs">Closing Costs</a>.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Shared Appreciation Mortgage (SAM)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A mortgage in which a borrower receives a below-market interest rate in return for which a lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgages where the borrower shares the monthly principal and interest payments with another party in exchange for a part of the appreciation.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Survey</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and the location and dimensions of any building.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Term Mortgage</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See Balloon Payment Mortgage.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Title</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A document that gives evidence of an individual's ownership of property.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Title Insurance</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A policy, usually issued by a Title Insurance company, which insures a homebuyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Title Search</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Truth-in-Lending</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A federal law requiring disclosure of the <a href="#Annual Percentage Rate (APR)">Annual Percentage Rate</a> to homebuyers shortly after they apply for the loan.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Two-Step Mortgage</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10 years), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan, due within 30 days notice at the end of seven or 10 years. Also called "Super Seven" or "Premier" mortgage.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Underwriting</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> The decision whether to make a loan to a potential homebuyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>VA Loan</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A long-term, low-or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>VA Mortgage Funding Fee</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A premium of up to 2 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 30-year fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Variable Rate Mortgage (VRM)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> See Adjustable Rate Mortgage. Under line Adjustable Rate Mortgage.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Verification of Deposit (VOD)</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Verification of Employment</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> A document signed by the borrower's employer verifying his/her postion and salary.</font></div> </dd> <dt> <div align="left"><font face="Times New Roman, Times, serif"><b>Wraparound</b></font></div> </dt> <dd> <div align="left"><font face="Times New Roman, Times, serif"> Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.</font></div> </dd> </dl> <blockquote> <div align="center"> <div align="center"> <div align="center"> <div align="center"> <form name="myForm"> <script language="JavaScript">  </script> <center> <p center="<center></center>">  <select name="directory" size="1"> <option selected>S H O R T cuts. . .</option> <option value="xsearch.shtml">Search</option> <option value="xrefinance.shtml">REFINANCES</option> <option value="xrinquiry.shtml">___Inquiry</option> <option value="xrates.shtml">___Rates</option> <option value="xreqinfo.shtml">___Info</option> <option value="xpurchases.shtml">PURCHASES</option> <option value="xpurquiry.shtml">___Inquiry</option> <option value="xrates.shtml">___Rates</option> <option value="xreqinfo.shtml">___Info</option> <option value="xrates.shtml">RATES</option> <option value="xfixedrate.shtml">___Fixed Rates</option> <option value="xcurrentadjrate.shtml">___Adjustable Rates</option> <option value="xadjrateindices.shtml">___Adjustable Rates Indices</option> <option value="xoffices.shtml">OFFICES</option> <option value="xariz.shtml">___Arizona</option> <option value="xdenver.shtml">___Colorado</option> <option value="xchicago.shtml">___Illinois</option> <option value="xportland.shtml">___Oregon</option> <option value="xseattle.shtml">___Washington</option> <option value="xflorida.shtml">___Florida</option> <option value="xpenn.shtml">___Pennsylvania</option> <option value="xlibrary.shtml">LIBRARY</option> <option value="xdict.shtml">___Dictionary</option> <option value="xfaq.shtml">___Faq</option> <option value="xloanprog.shtml">___Loans</option> <option value="xloanprog.shtml">____Loan Programs</option> <option value="xloanp101.shtml">____Loan Process 101</option> <option value="xloanpdet.shtml">____Loan Process, Detailed</option> <option value="xarmexpl.shtml">___ARM's</option> <option value="xarmexpl.shtml">____ARMs Explained</option> <option value="xadjrateindices.shtml">____Current ARM Indices</option> <option value="xarmhist.shtml">____History of Arm Indices</option> <option value="xtoolchest.shtml">TOOL Chest</option> <option value="xmpaymnt.shtml">___Calculate Monthly Payment</option> <option value="xloanamt.shtml">___Calculate Loan Amount</option> <option value="xflexloan.shtml">___Calculate Option ARM</option> <option value="http://www.genesis2000.com/OL1003/175180/175180.html">APPLY NOW</option> <option value="xabout.shtml">ABOUT OMC</option> <option value="xcomments.shtml">FEEDBACK</option> <option value="http://www.mortgagecommentary.com/commentary.cfm?id=619981202">COMMENTARY</option> <option value="index1.shtml">Home</option> </select> <input type="button" value="Go" onClick="loadPage(this.form.elements[0])" name="button"> <font size="2"><br> </font></p> </center> </form> <hr width="400" size="5" align="center"> <div align="center"><font size="-1">copyright</font> <font color="#FF3333"><b>�</b></font><font size="-1"> 1997-99<br> </font><font color="#330066" face="Verdana, Arial, Helvetica, sans-serif, Arial Black, Chicago, Courier, Geneva, Monaco, New York, Times, Times New Roman, TimesTen Bold, TimesTen BoldItalic, TimesTen Italic, TimesTen Roman"><b>Overlake Mortgage Company</b></font><font size="-1"><br> All rights reserved.<br> Any other trademarks and copyrights used are the property<br> of their respective owners</font> </div> </div> </div> </div> </div> </blockquote> </div> <blockquote> <p align="center"><font size="-1">[an error occurred while processing this directive]</font></p> </blockquote> </div> </table> </table>