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Industry Terms
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This is a collection of commonly used Mortgage terms,
to help you become a more informed borrower. |
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Mortgage Note
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment. |
Non-conforming Loan
Loans that do not comply with Fannie Mae or Freddie Mac guidelines. |
PITI
Abbreviation for principal, interest, taxes and insurance, which may be combined in a single monthly mortgage payment. |
Prepaid Interest
Prepaid interest is the interest charged to borrowers at closing to pay for the cost of borrowing for a balance of the month. For example, if a loan closes on the 19th of the month and the first payment is due on the 1st of the following month, the lender will charge 12 days of prepaid interest. |
Prepayment Penalty
Fees paid by the borrower if they pay the loan before its due date. |
Real Estate Settlement Procedure Act (RESPA)
A law that states how mortgage lenders must treat those who apply for real estate loans on property with 1-4 units.
Example : A lender is required to provide a good faith estimate of closing costs within 3 days of an application being filed. |
