Letters M-P

Mortgage Glossary

We have assembled these terms to help you to have a better understanding of mortgage financing terminology. Click on a first letter of the word you want to look up.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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Margin: The amount the lender adds to the index to arrive at the adjusted rate so as to provide a satisfactory yield for his investment. Margins vary and can be a key factor in selecting the right loan for you.
Market Value: The price at which a property will sell, assuming a knowledgeable buyer and seller, both operating without undue pressure.
Mortgage: A contract in which a borrower's property is pledged as security for a loan which is to be repaid on an installment basis.
Mortgage Note: A written promise to pay a debt at a stated interest rate during a specified term. The agreement is secured by a mortgage.
Mortgage Broker: The person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. Lightning Mortgage is the premier online Mortgage Broker.
Mortgagee: The lender in a mortgage contract.
Mortgagor: The borrower in a mortgage contract.

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Negative Amortization: A loan in which the outstanding principal balance goes up instead of down because the monthly payments are not large enough to cover the full amount of interest due. Also called deferred interest. See our popular Option ARM loan programs.
No Ratio Mortgage Loan: A No Ratio Mortgage is a useful option if you are carrying more debt than a traditional mortgage will allow. In traditional mortgage banking your debt to income ratio is one of the key factors in determining loan approval. With a No Ratio Mortgage, no income information is included with the application so no ratio calculations are made. I use the program when a client's current income is low relative to their debt or, more frequently, the client has income which is impossible to verify. As all other information on the application is verified, the No Ratio Mortgage is a "middle ground" product between a Stated Income and true No Doc mortgage but may be a good choice for you. Interest only No Ratio Mortgage products are available.
Non-conforming Loan: Loans offered in a range of programs which are tailored to individual circumstances. We know most people are not absolutely perfect (See Conforming Loan) and we have programs to meet their needs. We also have solutions for income documentation issues.

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Non-recourse Loan: A debt instrument wherein the lender can only legally require repayment of a loan from the collateral or funds of the business if the note is not repaid. As opposed to a Recourse Loan where the lender can obtain compensation from personal funds.
Offer to Purchase: A written proposal to buy a piece of real estate that becomes binding when accepted by the seller. Also called a sales contract.
Origination Fee: A fee charged for the work involved in the evaluation preparation and submission of a proposed mortgage loan.
Owner Financing: A purchase in which the seller provides all or part of the financing.
Owner Occupied: The principal residence of the property's owner. How is this further defined? See Realty Times article, What's Your Principal Residence? Tax Experts Not Always Certain

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Periodic Adjustment Cap: See Cap Rates.
PITI: An acronym for monthly payments to lender that include the principal, interest, taxes and insurance on a property. See Impound Account.
Plat: A map of a piece of land showing boundary lines, streets, actual measurements and easements.
Points: A fee paid to the lender on closing day to increase the effective yield of the mortgage. A point is one percent of the amount of the mortgage loan. Also called a discount point. More information about Interest Rate Sweet Spot.
Prepayment Penalty: A charge paid to the lender by the borrower if a mortgage loan is repaid before its term is over. Often abbreviated PPP.
Pre-Approval: A commitment by a lender to extend credit provided that specific conditions are met. This is not a guarantee. See Pre-Approval vs. Pre-Qualification for more information.
Pre-Qualification: A preliminary assessment of a buyer's ability to secure a loan, based on a specific set of lending guidelines and buyer representations made. This is not a guarantee or commitment by a lender to extend credit. See Pre-Approval vs. Pre-Qualification for more information.
Prime Rate: The interest rate charged by banks to their preferred corporate customers, it tends to be an estimator for general trends in short term interest rates.
Principal: The amount of money borrowed or remaining unpaid; also, that part of the monthly payment that reduces the outstanding balance of a mortgage.
PMI (Private Mortgage Insurance): Insurance written by a private company to protect the lender against loss caused by mortgage default. More detail is here.

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