Common Mortgage Loan Terms
Real estate loan terms that are common for private, hard money loans.
| Term | Definition |
| ACH | ACH is the abbreviation of Automated Clearing House. It is a kind of payments made electronically through the Automated Clearing House wherein money are transferred from one bank account to another via an intermediary that deliver the money to the final destination. – – ACH |
| Amortization | It is paying your debt by making regular periodic payments. – – Amortization |
| Amortized Loan | It is a loan paid by a set of regular and periodic payments of interest and principal, which are equal. – – Amortized Loan |
| Anniversary Date | It is the date immediately upon the 12th payment is to be paid. It usually takes place exactly after the MOP Promissory Note. – – Anniversary Date |
| Annual Percentage Rate (APR) | It is the percentage of the interest paid or earned. – – Annual Percentage Rate (APR) |
| Applicant | This term is utilized to refer to a person or entity who applies for a financial loan. – – Applicant |
| Application Checklist | It’s a list of documents required of the applicant for pre-approval or final loan approval. – – Application Checklist |
| Appraised Value | It is the value of the dollar set to the residence of a single family by a licensed appraiser. – – Appraised Value |
| Automated Clearinghouse (ACH) | It is a network of electronic money transfer that authorizes money to be transferred between bank accounts and lenders. This network provides services to those who are not on active payroll state. – – Automated Clearinghouse (ACH) |
| Balloon Payment | It’s one of the installment payments under a promissory note, considered the very final milestone or payment that is usually the largest payment among the previous payments. – – Balloon Payment |
| Beneficiary | It is a term used to refer to the note that is secured by a deed of trust. – – Beneficiary |
| Borrower | It’s used to refer to a person characterized by being eligible and is capable of repaying debt in a loan program. – – Borrower |
| Bridge Loan | It’s a 12-month long loan given to a borrower immediately upon the net proceeds from a prior dwelling sale aren’t obtainable for the process of buying a new house. It is necessary that the bridge loan is paid off along with the net proceeds from the sale of the prior residence. – – Bridge Loan |
| Certification of Eligibility | It is to certify that an applicant is competent to apply for a participation program and is also eligible to receive the amount of loan agreed upon. – – Certification of Eligibility |
| Close of Escrow | It’s a meeting held between the seller, buyer, and the lender wherein funds and property legally alter hands. – – Close of Escrow |
| Co-Borrower | It is a term utilized to refer to the person who is responsible for the loan, gets a title interest from the property, and resides in the property as though it were theirs. – – Co-Borrower |
| Community Property | It’s a property obtained by a woman and man, or even either, after they get married, conditional upon not being obtained separately. – – Community Property |
| Co-Signer | It’s a term used to refer to the person responsible for the loan, but who doesn’t get a title interest from the property or resides in the it. – – Co-Signer |
| Current MOP Rate | A rate determined by the usage of the university’s short-lived investment average, rounded to the closest 500th of a percent to which an administrative fee of 0.25% is added. – – Current MOP Rate |
| Curtailment | It is an extra payment made to minimize a loan’s principal balance. – – Curtailment |
| Date of Recording | This date is when the deed of trust is formally recorded in the county recording books where the real estate property is situated. – – Date of Recording |
| Deed of Trust | It is a security tool utilized to secure promissory note payments. – – Deed of Trust |
| Default | When a person fails to keep a promise or fulfill a duty as it is assigned in the Promissory Note or Deed of Trust, – – Default |
| Deferred Payment Loan | It’s a loan that authorizes the borrower to postpone all the principal and interest payments until the promissory note due date when the principal loan balance and all accrued interest are due. – – Deferred Payment Loan |
| Down payment | It is the variation between the price of property and the loan amount. – – Down payment |
| Employee | A person appointed to work in their full time job. – – Employee |
| Equity | It is the difference between the current property indebtedness and the property fair market value. – – Equity |
| Escrow | It’s the occasion when the buyer and seller agent follows their instructions and handles all of the funds paperwork and disbursement at the time of settlement and closure. – – Escrow |
| Escrow Holdback | Escrow Holdback is a term utilized to refer to the funds that are kept by the escrow company once the escrow is closed until the time when termite work is complete. – – Escrow Holdback |
| Evidence of Insurance | It is a form written by an insurance company. It is especially the duty of the insurance company to provide a policy for a piece of property at a specific time and an outstanding amount. – – Evidence of Insurance |
| Graduated Payment Mortgage | It is a substitutional loan product by the Mortgage Origination Program that provides a lower rate of interest than the MOP rate recently announced. This low interest rate is provided as a percentage which is less than the standard rate. – – Graduated Payment Mortgage |
| Hazard Insurance | It’s a type of contract wherein the insurer awards compensation to the insured person upon a loss they have witnessed because of a specific danger. – – Hazard Insurance |
| Home Improvement | It is the process of renovating the status of a house structure. – – Home Improvement |
| Home Loan Coordinator | The person who is appointed by the chancellor of every campus. This appointee plays the role of the essential contact at the campus level for those applying for loan. – – Home Loan Coordinator |
| Homeowner’s Insurance Policy | It’s a policy of insurance that provides householders with covers in case of theft, wind damage, or fire. However, this kind of policy doesn’t cover for flood or earthquake incidents. – – Homeowner’s Insurance Policy |
| Homeowners Association | It’s a homeowners association whose main goal is to serve residents and provide them with lots of facilities. – – Homeowners Association |
| HUD-1 Closing Statement | It is a financial report providing information about all money received and paid at a loan closure. – – HUD-1 Closing Statement |
| Impound | It’s a part of the mortgage payments set aside by the lender to pay taxes of property immediately upon becoming due. It is worth mentioning that the University Campus is not actually responsible for impounding for these taxes. – – Impound |
| Inspection Reports | Inspection reports are those reports issued by the lender, enabling the borrower to assess their home quality. These reports assess the whole house including the foundation and roof. – – Inspection Reports |
| Interest | Money paid in exchange for the temporary use of the lender’s money. It’s usually calculated as a percentage of the whole amount. – – Interest |
| Interest-Only Payment Loan | It is a loan type wherein the lender gets their interest during the loan term; the principal is refunded in a lump summation when it is due. – – Interest-Only Payment Loan |
| IRS 1098 Mortgage Interest Statement | It’s a document issued by the lender and given to the borrower, thoroughly explaining the total interest amount paid during a whole calendar year. – – IRS 1098 Mortgage Interest Statement |
| Joint Tenancy | It is a shared ownership by 2 or more individuals paying equal interests and having equal rights to the property. – – Joint Tenancy |
| Lender’s Escrow Instructions | A number of instructions supplied by the Loan Programs Office for a company giving details on the procedures followed before a loan is granted. – – Lender’s Escrow Instructions |
| Loan Commitment | It’s a loan approval released by the Loan Program Office adhering to fund for a program loan to a property or borrower. – – Loan Commitment |
| Loan Denial letter | It’s a letter issued by the Loan Program Office dismissing the loan application to a specific person due to credit history, insufficient income, or lack of liquid assets. – – Loan Denial letter |
| Loan Underwriting | The decision of whether to grant a house buyer a loan or not based on the analysis of risk, assets and credit. – – Loan Underwriting |
| Loan-to-Value (LTV) Ratio | The principal ratio of a loan. It is determined by the appraisal value or the price of the purchase. – – Loan-to-Value (LTV) Ratio |
| MOP-Calculator | It’s a digital calculator utilized to decide whether or not an applicant can fulfil the requirements needed for a Mortgage Origination Program loan. – – MOP-Calculator |
| Mortgage Origination Program (MOP) | Mortgage Origination Program was established in 1984. It supplies loans of 80 to 90 percent of a loan value depending on its size plus the interest rate that equals to the STIP average return rate added to a serving fee of 1/4 * 1%. – – Mortgage Origination Program (MOP) |
| Mortgagee | It is utilized to refer to a lender holding a mortgage or Deed of Trust. – – Mortgagee |
| Mortgagor | It is utilized to refer to borrower eligible and committed to pay for a mortgage or Deed of Trust. – – Mortgagor |
| Net Income | It is the monthly salary paid to an eligible borrower after deriving all State payroll or Federal taxes. – – Net Income |
| Notice of Completion | It’s a document proclaiming that the due payments are paid off. It refers to the work done by a contractor for non-termite work done on a specific property. – – Notice of Completion |
| Pre-approval | It’s a certificate issued by the Loan Programs Office ensuring that a borrower’s’ assets, credit, and income are verified, and the applicant is eligible for the program with a specific interest rate. It is worth mentioning that the interest rate is changeable according to the loan commitment letter loan. – – Pre-approval |
| Preliminary Disclosures | It refers to the forms of disclosure imposed upon a loan seeker by Federal law. The forms involve a Fair Lending Notice, a Loan Estimate Disclosure, and a Credit Disclosure. – – Preliminary Disclosures |
| Preliminary Title Report | It’s a title search issued in advance to the title insurance commitment issuance required within a loan process. – – Preliminary Title Report |
| Prepaid Interest | It is a mortgage interest paid off in the funding date until the end of the calendar month. – – Prepaid Interest |
| Primary Residence | It is a residence wherein a person dwells and is deemed as the legal dwelling for income tax. – – Primary Residence |
| Principal | It is the amount of debt without the interest. – – Principal |
| Principal and Interest to Income Ratio | The ratio resulting immediately upon a borrower’s proposal to Principal and Interest payment that are divided by a monthly household income. The permissible ratio for such a kind of loan is 40%. – – Principal and Interest to Income Ratio |
| Processing | It is the arrangement for the application of a mortgage loan that provides consideration documents by a lender. – – Processing |
| Program | It refers to loans provided by a University of California Home Loan Program. – – Program |
| Purchase Transaction Documents | A term used to refer to the third party documentation concerning the property. It includes termite inspection report, preliminary title report, property appraisal, real estate transfer disclosure, overall home inspection, foundation, roofing, septic inspections. – – Purchase Transaction Documents |
| Quit Claim Deed | It is a deed giving up all or part of the interest, claim, or title in a property. – – Quit Claim Deed |
| Reconveyance | The conveyance of the property title from a person to the owner. This conveyance tool is utilized to transfer the legal title from the trustee to the trustor after the deed of trust is totally paid. – – Reconveyance |
| Refinancing | paying the current loan and supplying a new loan. – – Refinancing |
| Renovation | Getting back the main dwelling including improvements, repairs, and any additions to the structure of the dwelling. – – Renovation |
| Right of Rescission | It’s the right given to a contractor to annul a contract and return the parties to the previous position they possessed before starting the contract. – – Right of Rescission |
| Servicing | It’s the gathering of payments and the directing of operational procedures concerning a mortgage loan. – – Servicing |
| Short-Term Investment Pool (STIP) | A pool established in 1976. It’s a pool of interest-only cash investment wherein all of the groups of University fund take part. It includes existing funds designated to meet operating expenses, payrolls, and construction in each University Campus. – – Short-Term Investment Pool (STIP) |
| Standard Rate | It is the obtainable average rate of return won by the Short-Term Investment Pool for the 4 quarters prior to the mortgage loan funding to which an administrative fee is added. – – Standard Rate |
| Subordination Agreement | It’s an agreement negotiated by the burden’s holder against the real estate to allow the claim to take a junior position to other burdens against the real estate. The University might refuse to enter into a Subordination Agreement. – – Subordination Agreement |
| Tenants in Common | It is a shared ownership by 2 or more persons that gives each resident the interest and right in the property. These interests are not supposed to be similar in duration or quantity. – – Tenants in Common |
| Title | The evidence of the prerogative to ownership of a piece of property. – – Title |
| Title Insurance | It’s a policy developed by a title insurance company to insure the house buyer and the lender against mistakes in the title search. The cost of the policy of the owner is a percentage of the price of sales and the policy of the lender is also a percentage of the loan net amount. – – Title Insurance |
| Trustee | A person holding a property legal title for the purpose of securing any duty performance. – – Trustee |