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M
margin
For an adjustable-rate mortgage (ARM), the amount that is added
to the index to establish the interest rate on each adjustment date,
subject to any limitations on the interest rate change. top
of page
market value
The price that a property will bring under normal conditions on
the open market. The amount that an owner, under no obligation or
compulsion to sell, is willing to sell for and the amount a buyer
is freely willing to pay.top of page
master association
A homeowners' association in a large condominium or planned unit
development project that is made up of representatives from associations
covering specific areas within the project. In effect, it is a "second-level"
association that handles matters affecting the entire development,
while the "first-level" associations handle matters affecting
their particular portions of the project. top
of page
maturity
The date on which the principal balance of a loan, bond, or other
financial instrument becomes due and payable. top
of page
maximum financing
A mortgage amount that is within 5 percent of the highest loan-to-value
(LTV) percentage allowed for a specific product. Thus, maximum financing
on a fixed-rate mortgage would be 90 percent or higher, because
95 percent is the maximum allowable LTV percentage for that product.
top of page
merged credit report
A credit report that contains information from three credit repositories.
When the report is created, the information is compared for duplicate
entries. Any duplicates are combined to provide a summary of a your
credit. top of page
monthly fixed installment
That portion of the total monthly payment that is applied toward
principal and interest. When a mortgage negatively amortizes, the
monthly fixed installment does not include any amount for principal
reduction. top of page
monthly payment mortgage
A mortgage that requires payments to reduce the debt once a month.
top of page
mortgage
A legal document that pledges a property to the lender as security
for payment of a debt.top of page
mortgage banker
A company that originates mortgages exclusively for resale in the
secondary mortgage market.
top of page
mortgage broker
An individual or company that brings borrowers and lenders together
for the purpose of loan origination. Mortgage brokers typically
require a fee or a commission for their services.top
of page
mortgage insurance
A contract that insures the lender against loss caused by a mortgagor's
default on a government mortgage or conventional mortgage. Mortgage
insurance can be issued by a private company or by a government
agency such as the Federal Housing Administration (FHA). Depending
on the type of mortgage insurance, the insurance may cover a percentage
of or virtually all of the mortgage loan. See private mortgage insurance.top
of page
mortgage insurance premium (MIP)
The amount paid by a mortgagor for mortgage insurance, either to
a government agency such as the Federal Housing Administration (FHA)
or to a private mortgage insurance (MI) company. top
of page
mortgage life insurance
A type of term life insurance often bought by mortgagors. The amount
of coverage decreases as the principal balance declines. In the
event that the borrower dies while the policy is in force, the debt
is automatically satisfied by insurance proceeds. top
of page
N
negative amortization
A gradual increase in mortgage debt that occurs when the monthly
payment is not large enough to cover the entire principal and interest
due. The amount of the shortfall is added to the remaining balance
to create "negative" amortization. top
of page
net cash flow
The income that remains for an investment property after the monthly
operating income is reduced by the monthly housing expense, which
includes principal, interest, taxes, and insurance (PITI) for the
mortgage, homeowners' association dues, leasehold payments, and
subordinate financing payments. top
of page
net worth
The value of all of a person's assets, including cash, minus all
liabilities. top of page
no cash-out refinance
A refinance transaction in which the new mortgage amount is limited
to the sum of the remaining balance of the existing first mortgage,
closing costs (including prepaid items), points, the amount required
to satisfy any mortgage liens that are more than one year old (if
the borrower chooses to satisfy them), and other funds for the borrower's
use (as long as the amount does not exceed 1 percent of the principal
amount of the new mortgage). top of
page
nonliquid asset
An asset that cannot easily be converted into cash. top
of page
note
A legal document that obligates a borrower to repay a mortgage loan
at a stated interest rate during a specified period of time. top
of page
note rate
The interest rate stated on a mortgage note. top
of page
notice of default
A formal written notice to a borrower that a default has occurred
and that legal action may be taken.top
of page
O
original principal balance
The total amount of principal owed on a mortgage before any payments
are made. top of page
origination fee
A fee paid to a lender for processing a loan application. The origination
fee is stated in the form of points. One point is 1 percent of the
mortgage amount.top of page
owner financing
A property purchase transaction in which the property seller provides
all or part of the financing. top
of page
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