Mortgage Glossery

                                                      Mortgage Terms Explained:

• Adjustable-rate Mortgage:  A mortgage loan that adjusts periodically based on the change of a specified index
• Conventional Mortgage: A mortgage not obtained under a government-insured program
• Easement: A right of way given to persons other than the owner for access to or over their property
• Equity: The portion of a property’s value over and above the amount owed against it
• First Mortgage: A real estate loan that has priority over any other subsequently recorder mortgages
• Loan -To-Value Ratio: The ratio between the amount of any mortgage against a property divided by the sales price or appraised value
• Foreclosure: A legal procedure in which the mortgage loan is in default and the property taken from the borrower and sold by the lender to pay off the loan against the property
• Private Mortgage Insurance (PMI): Insurance written by a private company to protect the lender against loss resulting from nonpayment or default
• Rate Lock: A commitment issued by a lender to a borrower guaranteeing a specific interest rate for a specific period of time
• PITI Reserves: A cash amount a borrower must have left over after making a downpayment and paying the closing costs for the purchase of a home
• Escrow: A disinterested third party that handles legal documents and funds on behalf of the seller and buyer
• Origination Fee: A fee paid to the lender for processing a loan application. The origination fee is stated in the form of points. One point is equal to one percent of the mortgage amount