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Common
Home Loan Terms
Adjustable Rate Mortgage
- An adjustable rate mortgate gives the option to make
low payments for the first few years of the loan after
which the rates and hence payments can be
raised to any high level depending upon the index associated
with your mortgage.
Alternate
Doc: Alternate documentation allows documentation
to be obtained
directly from the borrower.rather than from the borrower's
employer, bank, or
mortgage servicer, i.e. bank statements instead of Verification
of Deposits
(VOD), Paystubs and W-2's instead of Verification of
Employment (VOE), etc.
Pay Option ARM - Also known as Option ARM, Pick a Payment,
Cash Flow
Loan, Negative Amortization Loan. This loan product
allows the borrower to pick
between at least three payment options each month (Minimum
Payment,
Interest Only Payment or Fully Amortized Payment). If
the borrower chooses to
pay the minimum payment in any given month, then the
difference between the
fully indexed pay rate and the minimum pay rate is added
to the principal
balance of the loan resulting in negative amortization
(or deferred interest).
Reverse Mortgage - A special type of home equity
loan for persons 62 and
older. Reverse mortgages allow owners to convert some
of the equity in their
homes to cash. The loan does not usually have to be
repaid during the
homeowner's lifetime. Loan advances are not taxable
and do not affect
the homeowner's Social Security or Medicare benefits.
Interest Only Loan - This loan product allows
the borrower to make monthly
mortgage payments in an amount equal to that which will
cover the interest
payment on the principal amount ofthe loan. Therefore,
the loan balance
stays the same for the term of the interest only period
of the loan. If
the interest only period expires prior to the expiration
of the loan then
the loan will begin to amortize at a schedule tied to
the remaining term
of the loan.
HELOC:
Home Equity Line of Credit. This loan product allows
borrowers to
tap into and borrow against the equity in their home.
This loan product is
typically priced off of and floats with the PRIME rate.
Full Doc: Full documentation refers to standard
Fannie MaelFreddie Mac
documentation. It is in the form of fully completed
documents that are sent
directly to the borrowers employer or depository and
upon completion,must
be returned directly from the employer or depository.
SlVA: Stated Income Verified Assets. This documentation
type requires
that the primary source of income be verified while
the amount of income,
although disclosed, is not verified. Unearned or passive
sources of income,
if used to qualify, must be verified in the standard
manner.
SISA: Stated Income/Stated Assets: The borrower's
employment is stated
and verbally verified. The borrower's income and assets
are stated and not
verified.
NINA:No
Income/No Asset. The borrower's employment, income,
or assets
are not disclosed or verified.
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