Mortgage Terms to Know
Like any field or topic, mortgage is a noun that brings many
words with it. Generally referring to a home loan, a mortgage
is thought of as a way to buy a new home, a payment plan for
homebuyers, and/or house payments.
There are numerous terms and phrases attached to mortgages
and home finance, but knowing even a few of them will help
in your understanding of mortgages and your own home finance.
An acquisition cost is the value of the home, set by the
appraiser, along with the cost it takes to close on the home.
An Adjustable Rate Mortgage is also called a Variable Rate
Mortgage. This means a mortgage is adjustable at certain points
in the loan, such as five or ten years.
An Assumable Mortgage is one that the buyer promises to pay
off the entire loan, regardless or whether the house is sold
to another owner.
Balloon Mortgage is a mortgage with set payments for a certain
amount of years until it must be paid off in full. For example,
a seven year balloon mortgage would require you to pay a certain
percentage each year for seven years, and then pay off the
entire loan at that seven year deadline.
A Blanket Mortgage is one purchased when using the loan for
more than one property. If you have two homes, you may want
to consider a Blanket Mortgage as opposed to separate or inadequate
Collateral is the property which you own that qualifies you
for a loan. If you do not pay back a loan, your house can
be taken from you, even if you have paid some of it off.
Depreciation is a term employed in the home buying and mortgage
review | approval process. It refers to a home’s reduction
in value. As the market changes, so does the market value
of your home, which creates depreciation and can change your
Fannie Mae is the largest supplier of mortgage funds. It
is owned by share holders and chartered by congress. It is
officially known as the Federal National Mortgage Association,
its acronym is FNMA
A Jumbo Loan is a loan that meets or exceeds $333, 701. This
is determined by the FNMA and the Federal Home Loan Mortgage
The Lender is the institution that gives you your mortgage
loan. Some lenders may be responsible for the loans but give
the administration duties to other companies or subsidiaries.