NEGATIVE AMORTIZATION – The loan balance increasing over time (often due to monthly payments being less than the interest owned).
PARTY-HAT MORTGAGE – Michael made this up to be funny.
PITI – An acronym for payments to a lender that cover principle, interest, taxes and insurance on a property.
PMI – PRIVATE MORTGAGE INSURANCE – Insurance protecting the bank against foreclosure covering a percentage of property value. This is required on most loans with an LTV of 80% or greater.
POINTS – Up-front charge for making the loan (1 point = 1% of loan amount).
PREPAYMENT PENALTY – A fee paid by the borrower if they pay their loan before it is due.
PRINCIPAL – The balance still owed or the amount of money borrowed on a loan.
PROMISSORY NOTE – This document is signed and given to the lender by the borrower. It will explain what is owed and how it will be paid.
RATE CAP – A limit on how much the variable-interest rate can increase during the life of the loan.
REFINANCING – This process involves getting a new mortgage, usually with a lower rate to pay off your existing loan.
REVERSE MORTGAGE – The lender makes payments to the borrower (a form of negative amortization). Certain restrictions apply.
SECONDARY MARKET – The buying and selling of mortgages after closing.
SONYMA (STATE OF NEW YORK MORTGAGE ASSOCIATION) – This is a state-funded program for first-time home buyers who may be eligible for special mortgage rates. Check with your lender to see if you can qualify.
TITLE – A document showing ownership of property.
TITLE INSURANCE – Insurance against defects in title.
TITLE SEARCH – This report offers the present condition of property and reviews a specific piece of real estate to guarantee there are no liens, encumbrances, ownership concerns, etc.
TRANSFER TAX – City, county, or state taxes imposed when property passes from one person to another.
VA (VETERAN’S ADMINISTRATION) – A government agency that insures loans for those involved in the armed services (service persons/veterans).
VARIABLE RATE MORTGAGE – A mortgage loan in which the interest rate may increase or decrease at specified intervals within certain limits based upon an economic indicator.