Definitions and explainations of mortgage terminology.
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Mortgage Glossary
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Processing Fee - A processing fee is a fee usually paid at closing that covers the cost of handling the paperwork for your mortgage. Processing fees are non-recurring closing costs and and are included in the calculation of your Annual Percentage Rate.
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Mortgage Glossary
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"Rate and Term" refers to refinancing a mortgage where the borrower does not cash out any of the equity in thier home. Generally, only the interest rate and term (due date) of the loan change and the principal balance remains the same. Some people, though, still consider a loan as rate and term if the closing costs are rolled into the loan balance instead of paying cash at closing. |
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Mortgage Glossary
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RESPA is the the acronym for the Real Estate Settlement Procedures Act, passed in 1974. It is a federal statute enforced by the U.S. Department of Housing and Urban Development (HUD) and mandates full disclusure to borrowers all closing costs, loan servicing and escrow practices, and the business relationships between closing services (usually title companies) and the other parties to the transaction. RESPA covers mortgage loans on 1 to 4 family residential properties. Most purchases, assumption, refinances, home improvement loans, and home equity lines of credit (HELOCs) are covered by RESPA. |
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Mortgage Glossary
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Reverse Mortgage - A loan that enables retired homeowners to use their home’s equity without selling it. A lending institution makes a check out to the homeowner each month. This payment is really a loan against the value of a home. Because the payment is a loan, it’s tax-free when the homeowner receives it. On the other hand, the payments and interest charges are added to the loan each month, so the balance of a reverse mortgage increases over time, which then has to be repaid to the lender when the loan reaches maturity. Reverse mortgages are not for everyone, since outliving the loan, can put a substantial burden on a homeowner with a fixed income. |
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Mortgage Glossary
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A Second Mortgage is a mortgage that has a secondary, or subordinate, lien position to another, first, mortgage. Like your primary or first mortgage, the holder of a second mortgage lien can forclose on your home if you default on your payments, however when this happens, the first lien must still be paid off or assumed by the second lienholder. Examples of second or subordinate liens are the second loan in a "combo" when you purchase your home, most seller financing, most home improvement loans, and Home Equity Lines of Credit (HELOC). |
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Mortgage Glossary 
