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A mortgage loan with an interest rate that can change at any time, usually in response to the market or Treasury Bill rates. These types of loans usually start off with a lower interest rate comparable to a fixed-rate mortgage.
Paying off a debt by making regular installment payments over a set period of time, at the end of which the loan balance is zero.
A mortgage loan with initially low interest payments, but that requires one large payment due upon maturity (for example, at the end of five or seven years).
The efforts a mortgage company takes to collect past due payments.
An Adjustable-Rate Mortgage loan that can be converted into a fixed-rate mortgage during a certain time period.
Debt-to-Income (DTI) is a calculation frequently used by mortgage companies when qualifying borrowers for a mortgage or a workout solution to resolve delinquency. It is calculated by comparing how much you pay on your mortgage(s) to your gross monthly income.
A legal document under which ownership of a property is conveyed.
A borrower is in default when they fail to meet the terms of their loan agreement. Usually this is based on failure to make payments on time.
Payments that are authorized to be postponed as part of a workout process to avoid foreclosure.
The difference between what a foreclosed home sold for and the remaining mortgage balance. The mortgage company may require you to pay the amount of the deficiency balance.
Failure to make a payment when it is due. A loan is generally considered delinquent when it is 30 or more days past due.
Ownership interest in a property. This is the difference between the home's market value and the outstanding balance of the mortgage loan (as well as any other liens on the property).
An account (held by the mortgage company) where a homeowner pays money toward taxes and insurance of a home.
The actual account where the escrow funds are held in trust.
A periodic review of escrow accounts to make sure that there are sufficient funds to pay the taxes and insurance on a home when they are due.
A mortgage loan in which the interest rate remains the same for the life of the loan.
An agreement to temporarily suspend or reduce monthly mortgage payments for a specific period of time. The mortgage company will then postpone legal action when a homeowner is delinquent. A forbearance is usually granted when a homeowner makes satisfactory arrangements to bring the overdue mortgage payments up to date.
The legal process by which a property may be sold and the proceeds of the sale applied to the mortgage debt. A foreclosure occurs when the loan becomes delinquent because payments have not been made or when the homeowner is in default for a reason other than the failure to make timely mortgage payments.
Steps by which the mortgage company works with the homeowner to find a permanent solution to resolve an existing or impending loan delinquency.
A hardship is the reason why a homeowner is having trouble making their mortgage payments, such as job loss, medical emergency or illness, divorce, etc. A hardship may be short term (less than 6 months) or long term (more than 6 months). When contacting your mortgage company or a housing counselor for assistance, homeowners may be required to demonstrate/explain any hardship they are experiencing.
Insurance coverage that pays for the loss or damage on a person's home or property (due to fire, natural disasters, etc.).
A way of borrowing money against the equity or assets that the homeowner has in the home to pay for things such as home repairs, college education, or other personal uses.
A mortgage where the homeowner pays only the interest on the loan for a specified amount of time.
The owner of the loan on a property.
Loan to value is a calculation frequently used by mortgage companies when qualifying borrowers for a mortgage. It is calculated by dividing the mortgage balance by the home’s current market value.
When the homeowner and the mortgage company are working together to determine the appropriate option/workout solution to bring the mortgage current and avoid foreclosure.
Any change to the terms of a mortgage loan, including changes to the interest rate, loan balance or loan term.
A legal document that pledges property to the mortgage company as security for the repayment of the loan. The term is also used to refer to the loan itself.
Mortgage companies may originate (i.e., your lender) as well as service the loan. The lender who originated your mortgage may or may not service your loan. When the mortgage company services your mortgage, they do the following: collect the homeowner’s mortgage payments, pay taxes and insurance, generally manage your escrow accounts (i.e., they “service” your loan), and provide customer service and support.
Insurance that protects the mortgage company against losses caused by a homeowner's default on a mortgage loan. Mortgage insurance (or MI) typically is required if the homeowner's down payment is less than 20% of the purchase price.
The amount a lender charges to borrow money to buy or refinance a home.
The transfer of title from a homeowner to the mortgage company to satisfy the mortgage debt and avoid foreclosure, also called a Deed-in-Lieu of Foreclosure or a voluntary conveyance.
The amount a person borrows from a lender (also referred to as "amount financed").
The amount a person pays to their local city/municipality and sometimes county, based on the value of their property.