Payment Adjustment Period : the minimum interval between successive adjustments of payments on an ARM or GPM

Payment Cap : a limit on the size of payments on ARMs

PMI : private mortgage insurance; insurance against loss from default on high loan-to-value conventional loans

Points : a point is one percent of a loan amount; also called discount points, they are charged by lenders in order to increase the yield on loans with lower than market interest rates

Promissory Note : written evidence of a debt

Purchase Money Loan : a loan made by a lender or a seller to a buyer, and used to finance a purchase of property

Qualifying : the process of checking to make sure that 1) a borrower is not likely to default, and 2) a property is worth enough to satisfy the debt if the borrower does default

Real Estate Contract : an installment sales contract for the purchase of real estate

Reamortization/ Recast : recalculation of level payments for a loan, necessitated by either a change in the loan term or an increase in the loan balance due to negative amortization

Reserve Requirement : the percentage of a bank's deposits that may not be loaned out by the bank

Secondary Financing: money borrowed from any source to pay a portion of the required down payment or settlement costs of a loan

Securities: instruments, such as mortgages and trust deeds, that pledge assets as security for a debt

Servicing: the process of collecting loan payments, keeping records and handling defaults

Underwriting: the process of evaluating a loan application; the underwriter is the one who approves the loan

Verification of Deposit: a form sent by a lender to a bank requesting verification of a borrower's deposit(s) at the bank

 

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