Mortgage
Terms Defined N-S
Basic
Terms Used for Mortgages
Terms: A-F
G-M
N-S T-Z
Loans
may involve other terms. In the event you don't
understand some of these terms, ask for help from
your lender or attorney.
N | O
| P | Q | R
| S
Negative Amortization
When monthly payments do not cover
the interest there is an increase in the principal
balance. This is means that the principal balance
will increase.
Non-conforming loan
Loans that do not follow the guidelines
set by Fannie Mae and Freddie Mac.
Note
An instrument that recognizes a debt
and acknowledges the need to pay.
Notary Public
Someone who is duly authorized to
take acknowledgements of deeds, contracts, and mortgages.
Notice of default
A notice sent to the wrongful party
as recognition of a default made.
Open House
Used as a way to show a home to prospective
buyers and those who are interested in making a
purchase. The home is left open and an appointment
is not necessary.
Open End Mortgage
Allowing a mortgagor to obtain more
money under the same mortgage. There may be some
conditions and stipulations to follow however.
Origination Fee
Fee charged in for the service of
originating a mortgage loan.
Oral Contract
An agreement about sale, or conditions
of sale, for property made verbally.
Owner of Record
A person's whose name appears on the
deed which has been noted at the county's office
of record.
Owner Occupant
Property which is inhabited by a resident
who owns the property.
Partial Release
The release of property that may be
used as collateral.
Permanent Loan or Mortgage
A mortgage that is kept for a substantial
amount of time.
Permit
Issued by the government and used
to take a form of consent, e.g. an occupancy permit
grants permission to the owner to occupy or rent
property.
PITI (Principal, Interest,
Taxes, and Insurance)
All of these can be joined into one
monthly mortgage payment.
Planned Unit Development (PUD)
A zoning classification which allows
some flexibility in the design and construction
of the individual units in a development. Units
are individually owned but there are common areas
owned by the group.
Plat
Land area that is mapped or planned.
Plat Book
The public record of divisions of
land showing specific blocks, roads, and other necessary
measurements of the land.
Points
Origination and discount points paid
to a lender, e.g. 2 points = 2% of the total loan.
If a a loan is $200,000 then 2 points is $4,000.
Portfolio Loan
A type of loan that is held by the
bank and is not to sold on the secondary mortgage
market.
Power of Attorney
A document authorizing someone (who
does not need to be an attorney) the authority to
act in the best interest of another.
Prepaid Interest
Prepaid interest is the interest charged
to borrowers at closing to pay for the cost of borrowing
for the remainder of the current month.
Prepayment
The ability to make a principal payment
in full or part before the due date of the loan,
e.g. advance monthly payments, refinance...
Prepayment Penalty
Fees assessed when the borrower pays
of a mortgage before it is due.
Primary Mortgage Market
Companies like banks, savings and
loans, credit union, etc. that originate and service
mortgage loans make up the primary mortgage market.
Prime Rate
Short term loans with very low interest
rates are often offered at the lowest commercial
interest rate available. These loans are normally
only available to the most credit worthy customers.
Principal
Balance owed on a loan.
Private Mortgage Insurance
(PMI)
Some lenders will allow a down payment
smaller then the one normally required if the borrower
purchases private mortgage insurance which guarantees
the repayment of the mortgage under certain terms.
Property Tax
Government tax that is assigned to
a property based on the county's assessment value.
Quit Claim Deed
A deed which transfers the interest
the maker of the deed has in a parcel of land. It
is often used to clear the title when the grantor's
interest in a property is at question. When accepting
a quit claim deed, the buyer assumes all the risks
involved.
Realtor
A property salesmen who follows the
guidelines set by the National Association of Realtors.
Real Estate Broker
An individual, usually owning a company,
who is licensed to act for a property seller or
buyer.
Real Estate Settlement Procedure
Act (RESPA)
Treatment, stated by law, given to
people who file for loans and mortgages on 1-4 units,
e.g. a lender is required by law to give a good
faith estimate of closing costs within 5 days of
someone filing for a loan.
Refinancing
The ability to repay an established
loan with the monies from a new loan on the same
property.
Re conveyance
When a mortgage is fully paid for
the property in full the lender will convey the
property back to the owner.
Recording
Processing information into a database
that would affect the title of property. Lenders
require that a deed of trust or a mortgage be recorded
as evidence of debt.
Rescission
The ending of contract. When refinancing
a mortgage on property, requires the borrower/owner
to cancel the contract within 3 days if they decide
not to proceed with the refinancing.
Regulation Z (Reg Z)
Regulation set by the federal government
requiring creditors to give the full terms and agreements
of a loan and the APR (annual percentage rate) to
a borrower.
Reverse Mortgage
A mortgage used by the elderly in
which they receive an income (payments) as long
as they are alive. The principal of the loan increases
as these payments are made, hence the term reverse.
Rollover Loan
A loan that is long term (e.g. 30
years) were the interest rate is kept lower for
a shorter number of years (e.g. 5). This type of
loan can either be rolled over or extended based
on the terms of the loan at the end of the shorter
period.
Secondary Mortgage Market
The ability to sell mortgages, loans
and savings to investors like Fannie Mae and Freddie
Mac.
Second Mortgage
Used in the addition to the first
mortgage. Second mortgages usually carry higher
interest rates and are known as a higher risk to
investors due to the fact that they are subordinate
to any first mortgages.
Security
In the case of debt property is used
as collateral.
Servicing
The servicing of a mortgage by billing,
managing, filing, and collecting.
Settlement Statement
A closing agent makes a closing document
that states the settlement cost of the loan. Once
the agent finishes the document it is sent to the
buyer at closing.
Special Assessment
An additional tax on property to pay
for improvements in the community.
Sheriff's Deed
A deed given at the sheriff's sale.
Single Family Housing (SFR)
A home with only one dwelling, e.g.
Town houses and detached single family homes.
Spec House
A dwelling built with the confidence
that someone will buy it.
Standard Uniform Loan Application
(Form 1003)
A standard loan application.
Subdivision
An area of land the is divided for
the possibility of a housing development.
Subordination
A loan with a lower priority than
another, e.g. a second mortgage lien is subordinate
to a first mortgage lien.
Survey
A map provided by a licensed surveyor
which shows land boundaries, measurements, and charts
of property.
Sweat Equity
When improvements to the property
are made by the owner, the value of the property
rises by a value know as sweat equity.
