Office of Thrift Supervision (OTS)
The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board
Origination Fee
The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan.
Permanent Loan
A long term mortgage, usually ten years or more. Also called an "end loan."
PITI
Principal, Interest, Taxes and Insurance. Also called monthly housing expense.
Pledged account Mortgage (PAM):
Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments.
Points (loan discount points)
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).
Power of Attorney
A legal document authorizing one person to act on behalf of another.
Prepaid Expenses
Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.
Prepayment
A privilege in a mortgage permitting the borrower to make payments in advance of their due date.
Prepayment Penalty
Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states.
Primary Mortgage Market
Lenders making mortgage loans directly to borrower's such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc.
Principal
The amount of debt, not counting interest, left on a loan.
Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on you loan's structure.
Saturday, March 18, 2006
R - S Realtor - Sweat Equity
Realtor
A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.
Rescission
The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.
Recording Fees
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.
Refinance Refinancing
Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property.
Renegotiable Rate Mortgage
a loan in which the interest rate is adjusted periodically. See adjustable rate mortgage.
RESPA
short for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only.
Reverse Annuity Mortgage (RAM)
a form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home asSatisfaction of Mortgage: The document issued by the mortgagee when the mortgage loam is paid in full. Also called a "release of mortgage."
Second Mortgage
A mortgage made subsequent to another mortgage and subordinate to the first one.
Secondary Mortgage Market
The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders. security.
Servicing
all the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.
Settlement/Settlement Costs
see closing/closing costs
Shared Appreciation Mortgage (SAM)
a mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.
Simple Interest
Interest which is computed only on the principle balance.
Survey
A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.
Sweat Equity
Equity created by a purchaser performing work on a property being purchased.
A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.
Rescission
The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.
Recording Fees
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.
Refinance Refinancing
Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property.
Renegotiable Rate Mortgage
a loan in which the interest rate is adjusted periodically. See adjustable rate mortgage.
RESPA
short for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only.
Reverse Annuity Mortgage (RAM)
a form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home asSatisfaction of Mortgage: The document issued by the mortgagee when the mortgage loam is paid in full. Also called a "release of mortgage."
Second Mortgage
A mortgage made subsequent to another mortgage and subordinate to the first one.
Secondary Mortgage Market
The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders. security.
Servicing
all the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.
Settlement/Settlement Costs
see closing/closing costs
Shared Appreciation Mortgage (SAM)
a mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.
Simple Interest
Interest which is computed only on the principle balance.
Survey
A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.
Sweat Equity
Equity created by a purchaser performing work on a property being purchased.
T - U Title - Usury
Title
a document that gives evidence of an individual's ownership of property.
Title Insurance
a policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests.
Title Search
an examination of municipal records to determine the legal ownership of property. Usually is performed by a title company.
Truth-In-Lending
a federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.
Two-Step Mortgage
a mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. the lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. also called "Super Seven" or "Premier" mortgage.
Underwriting
the decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.
Usury
Interest charged in excess of the legal rate established by law
a document that gives evidence of an individual's ownership of property.
Title Insurance
a policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests.
Title Search
an examination of municipal records to determine the legal ownership of property. Usually is performed by a title company.
Truth-In-Lending
a federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.
Two-Step Mortgage
a mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. the lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. also called "Super Seven" or "Premier" mortgage.
Underwriting
the decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.
Usury
Interest charged in excess of the legal rate established by law
V - W VA - Wrap Around Mortgage
VA Loan
a long-term, low-or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.
VA Mortgage Funding Fee
a premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed.
Variable Rate Mortgage (VRM)
see adjustable rate mortgage
Verification of Deposit (VOD)
a document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.
Verification of Employment (VOE)
a document signed by the borrower's employer verifying his/her position and salary.
Warehouse Fee
Many mortgage firms must borrow funds on a short term basis in order to originate loans which are to be sold later in the secondary mortgage market (or to investors). When the prime rate of interest is higher on short term loans than on mortgage loans, the mortgage firm has an economic loss which is offset by charging a warehouse fee.
Wraparound Mortgage
results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.
a long-term, low-or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.
VA Mortgage Funding Fee
a premium of up to 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed.
Variable Rate Mortgage (VRM)
see adjustable rate mortgage
Verification of Deposit (VOD)
a document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.
Verification of Employment (VOE)
a document signed by the borrower's employer verifying his/her position and salary.
Warehouse Fee
Many mortgage firms must borrow funds on a short term basis in order to originate loans which are to be sold later in the secondary mortgage market (or to investors). When the prime rate of interest is higher on short term loans than on mortgage loans, the mortgage firm has an economic loss which is offset by charging a warehouse fee.
Wraparound Mortgage
results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.
Thursday, March 16, 2006
What should you look at when deciding where interest rates are headed?
What should you look at when deciding where interest rates are headed? There are hundreds of different reports, charts and news items released every quarter help economists determine where interest rates are headed. The following are particularly useful for mortgage shoppers:
The core Consumer Price Index -- The federal Bureau of Labor Statistics releases this data every month. The core index measures what consumers are paying for goods and services at malls, grocery stores and other retail locations. Unlike the overall CPI, it excludes food and energy prices, which can bounce around enough each month to distort the overall price trend picture. Buyers should pay attention to the report because it's one of the most important indicators of inflation. High inflation equals high interest rates. Low inflation allows interest rates to fall.
Employment Cost Index/Average Hourly Earnings -- These two data sets are also put together by the BLS. The ECI comes out quarterly while the Employment Situation report containing the earnings figures comes out monthly. The ECI measures changes in employee wages, salaries and benefits, while the AHE number shows how worker wages are changing month to month. Both are important because rapidly rising labor costs can force businesses to raise prices to compensate, spurring inflation. For the most recent ECI data, click here. For the most recent AHE data, click here.
Gross Domestic Product -- This report comes from the Bureau of Economic Analysis, which releases an advance, preliminary and final estimate of each quarter's GDP. GDP is the nation's total economic output for a given 3-month period. When growth is too strong, it can cause demand for goods and services to outstrip supply. That, in turn, allows businesses to charge more, fueling inflation. For the most recent GDP data, click here.
Advance Retail Sales -- This monthly report, which comes from the Bureau of the Census, tallies sales at retail stores. It's important because the Federal Reserve Board doesn't want people spending too much too quickly for fear that could cause the economy to overheat, driving inflation. For the most recent Advance Retail Sales data, click here.
New Home Sales/Existing Home Sales -- These two reports come out monthly. New home data comes from the Census Bureau while existing home sales data comes from the National Association of Realtors. Both reports are important because they measure consumer demand for homes, mortgages and mortgage refinancing loans. They also contain information about home prices.
The core Consumer Price Index -- The federal Bureau of Labor Statistics releases this data every month. The core index measures what consumers are paying for goods and services at malls, grocery stores and other retail locations. Unlike the overall CPI, it excludes food and energy prices, which can bounce around enough each month to distort the overall price trend picture. Buyers should pay attention to the report because it's one of the most important indicators of inflation. High inflation equals high interest rates. Low inflation allows interest rates to fall.
Employment Cost Index/Average Hourly Earnings -- These two data sets are also put together by the BLS. The ECI comes out quarterly while the Employment Situation report containing the earnings figures comes out monthly. The ECI measures changes in employee wages, salaries and benefits, while the AHE number shows how worker wages are changing month to month. Both are important because rapidly rising labor costs can force businesses to raise prices to compensate, spurring inflation. For the most recent ECI data, click here. For the most recent AHE data, click here.
Gross Domestic Product -- This report comes from the Bureau of Economic Analysis, which releases an advance, preliminary and final estimate of each quarter's GDP. GDP is the nation's total economic output for a given 3-month period. When growth is too strong, it can cause demand for goods and services to outstrip supply. That, in turn, allows businesses to charge more, fueling inflation. For the most recent GDP data, click here.
Advance Retail Sales -- This monthly report, which comes from the Bureau of the Census, tallies sales at retail stores. It's important because the Federal Reserve Board doesn't want people spending too much too quickly for fear that could cause the economy to overheat, driving inflation. For the most recent Advance Retail Sales data, click here.
New Home Sales/Existing Home Sales -- These two reports come out monthly. New home data comes from the Census Bureau while existing home sales data comes from the National Association of Realtors. Both reports are important because they measure consumer demand for homes, mortgages and mortgage refinancing loans. They also contain information about home prices.
Tuesday, March 14, 2006
Best Time To Refinance
Todays Topic: Best Time To Refinance
Today's National Averages:
30-yr Fixed 5.81% 6.01% 15-yr Fixed 5.46% 5.79% 5/1 ARM 5.54% 6.8%
Best Time To Refinance Your Home Loan
You bought your home during the housing boom and now after a year or two into your new home you're considering refinancing. The question is, "Is now a good time to refinance your home loan?"
Any lender or broker will likely say sure let's look into it and see how much loan you can afford! But before you even consider talking to a lender you'll want to get some questions answered for yourself.
1. Are you seeking to lower your monthly payments?
2. Do you want to consolidate debt?
3. Do You need cash for large purchases?
4. Are you seeking to adjust your interest deduction expense for tax purposes?
Whether to refinance your home loan depends largely on your immediate and long range financial goals. Once you've answered these questions you'll have a better idea of the actual need you have to refinance. If your needs prove practical you'll then want to start shopping the lowest rates possible. Check local mortgage rates and get three competitive rate quotes. Compare the saving using a mortgage payment calculator. Choose the rate and loan program that's right for you.
Match rates with the more desirable loan program. Many incline toward a 15-year Fixed Cash Out Refinance program. This gives them cash they can pocket to grow their income with a view to refinancing again upon reaching desired income level and the option of choosing a longer or shorter-term loan.
Today's National Averages:
30-yr Fixed 5.81% 6.01% 15-yr Fixed 5.46% 5.79% 5/1 ARM 5.54% 6.8%
Best Time To Refinance Your Home Loan
You bought your home during the housing boom and now after a year or two into your new home you're considering refinancing. The question is, "Is now a good time to refinance your home loan?"
Any lender or broker will likely say sure let's look into it and see how much loan you can afford! But before you even consider talking to a lender you'll want to get some questions answered for yourself.
1. Are you seeking to lower your monthly payments?
2. Do you want to consolidate debt?
3. Do You need cash for large purchases?
4. Are you seeking to adjust your interest deduction expense for tax purposes?
Whether to refinance your home loan depends largely on your immediate and long range financial goals. Once you've answered these questions you'll have a better idea of the actual need you have to refinance. If your needs prove practical you'll then want to start shopping the lowest rates possible. Check local mortgage rates and get three competitive rate quotes. Compare the saving using a mortgage payment calculator. Choose the rate and loan program that's right for you.
Match rates with the more desirable loan program. Many incline toward a 15-year Fixed Cash Out Refinance program. This gives them cash they can pocket to grow their income with a view to refinancing again upon reaching desired income level and the option of choosing a longer or shorter-term loan.
Friday, March 10, 2006
Beating The Energy Crisis
While British families deal with rising oil prices and bankruptcy reaches a new peak, American families gasp at high-energy bills and cringe over foreign security at American ports. The Bush administration promises a new energy resource as China makes oil deals with Iran. Where is the world heading? For the moment, nowhere it hasn’t already been.
What does this spell for the future? Andrew McKillop author of "ENERGY TRANSITION AND FINAL ENERGY CRISIS" predicted a continued rise in energy prices saying that after the 2004 short-term ‘price crisis’, which can only intensify in the 2005-2008 period, and within at most 10 years, both oil supply and natural gas supply will enter into constant and terminal decline, due to physical depletion.
Policy makers in late 2004 now admit that ‘oil prices will remain high’ because of fast demand growth and slow growth of supply. Solution? Mckillop explains, "Participation in faster development and construction of non-oil, non-gas renewable energy alternatives to fossil fuels, and especially substitutes for oil, will therefore reduce invasion risks for oil and gas exporter countries. The same effort will also reduce ‘threats to economic security’ of the large oil importer nations and groups of nations."
Conserve Energy
Until then each household should take it upon itself to conserve energy in the form of oil and gas while sparing our electric power supply as well. In addition home weatherization and the use of bikes and scooters for short transport will go a long way in staving off the energy crises and extended price wars.
Spend Thrift
With energy bill doubling this spring homeowners would do well to consider ways to reduce spending costs and save money. Home refinancing can cut over 50% off monthly mortgage payments. These funds can then be used to offset high-energy bills.
Save Hard Earned Dollars
Keep your hard earned dollars from going out the window literally. During cold winter months and hot summer days Americans spend more on air conditioning than anything else accept the mortgage and food. That said, investing in weatherization and keeping the temperature at a modest 68 degrees in the winter and 75 in the summer can save hundreds of dollars per month.
What does this spell for the future? Andrew McKillop author of "ENERGY TRANSITION AND FINAL ENERGY CRISIS" predicted a continued rise in energy prices saying that after the 2004 short-term ‘price crisis’, which can only intensify in the 2005-2008 period, and within at most 10 years, both oil supply and natural gas supply will enter into constant and terminal decline, due to physical depletion.
Policy makers in late 2004 now admit that ‘oil prices will remain high’ because of fast demand growth and slow growth of supply. Solution? Mckillop explains, "Participation in faster development and construction of non-oil, non-gas renewable energy alternatives to fossil fuels, and especially substitutes for oil, will therefore reduce invasion risks for oil and gas exporter countries. The same effort will also reduce ‘threats to economic security’ of the large oil importer nations and groups of nations."
Conserve Energy
Until then each household should take it upon itself to conserve energy in the form of oil and gas while sparing our electric power supply as well. In addition home weatherization and the use of bikes and scooters for short transport will go a long way in staving off the energy crises and extended price wars.
Spend Thrift
With energy bill doubling this spring homeowners would do well to consider ways to reduce spending costs and save money. Home refinancing can cut over 50% off monthly mortgage payments. These funds can then be used to offset high-energy bills.
Save Hard Earned Dollars
Keep your hard earned dollars from going out the window literally. During cold winter months and hot summer days Americans spend more on air conditioning than anything else accept the mortgage and food. That said, investing in weatherization and keeping the temperature at a modest 68 degrees in the winter and 75 in the summer can save hundreds of dollars per month.
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