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Mortgage Glossary
A
Amenity: a feature of the home or property that serves as a benefit to the
buyer but that is not necessary to its use; may be natural (like location,
Woods, water) or man-made (like a swimming pool or garden).
Amortization: repayment of a mortgage loan through monthly installments of
principal and interest; the monthly payment amount is based on a schedule
that will allow you to own your home at the end of a specific time period (for
example, 15 or 30 years)
Annual Percentage Rate (APR): calculated by using a standard formula,
the APR shows the cost of a loan; expressed as a yearly interest rate, it
includes the interest, points, mortgage insurance, and other fees associated
with the loan.
Application: the first step in the official loan approval process; this form is
used to record important information about the potential borrower necessary
to the underwriting process.
Appraisal: a document that gives an estimate of a property's fair market
value; an appraisal is generally required by a lender before loan approval to
ensure that the mortgage loan amount is not more than the value of the
property.
Appraiser: a qualified individual who uses his or her experience and
knowledge to prepare the appraisal estimate.
ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in
interest rates; when rates change, ARM monthly payments increase or
decrease at intervals determined by the lender; the Change in monthly
-payment amount, however, is usually subject to a Cap.
Assessor: a government official who is responsible for determining the value
of a property for the purpose of taxation.
Assumable mortgage: a mortgage that can be transferred from a seller to
a buyer; once the loan is assumed by the buyer the seller is no longer
responsible for repaying it; there may be a fee and/or a credit package
involved in the transfer of an assumable mortgage.
B
Balloon Mortgage: a mortgage that typically offers low rates for an initial
period of time (usually 5, 7, or 10) years; after that time period elapses, the
balance is due or is refinanced by the borrower.
Bankruptcy: a federal law Whereby a person's assets are turned over to a
trustee and used to pay off outstanding debts; this usually occurs when
someone owes more than they have the ability to repay.
Borrower: a person who has been approved to receive a loan and is then
obligated to repay it and any additional fees according to the loan terms.
Building code: based on agreed upon safety standards within a specific
area, a building code is a regulation that determines the design,
construction, and materials used in building.
Budget: a detailed record of all income earned and spent during a specific
period of time.
C
Cap: a limit, such as that placed on an adjustable rate mortgage, on how
much a monthly payment or interest rate can increase or decrease.
Cash reserves: a cash amount sometimes required to be held in reserve in
addition to the down payment and closing costs; the amount is determined by
the lender.
Certificate of title: a document provided by a qualified source (such as a
title company) that shows the property legally belongs to the current owner;
before the title is transferred at closing, it should be clear and free of all liens
or other claims.
Closing: also known as settlement, this is the time at which the property is
formally sold and transferred from the seller to the buyer; it is at this time that
the borrower takes on the loan obligation, pays all closing costs, and
receives title from the seller.
Closing costs: customary costs above and beyond the sale price of the
property that must be paid to cover the transfer of ownership at closing;
these costs generally vary by geographic location and are typically detailed
to the borrower after submission of a loan application.
Commission: an amount, usually a percentage of the property sales price,
that is collected by a real estate professional as a fee for negotiating the
transaction..
Condominium: a form of ownership in which individuals purchase and own a
unit of housing in a multi-unit complex; the owner also shares financial
responsibility for common areas.
Conventional loan: a private sector loan, one that is not guaranteed or
insured by the U.S. Government.
Cooperative (Co-op): residents purchase stock in a cooperative
corporation that owns a structure; each stockholder is then entitled to live in
a specific unit of the structure and is responsible for paying a portion of the
loan.
Credit history: history of an individual's debt payment; lenders use this
information to gouge a potential borrower's ability to repay a loan.
Credit report: a record that lists all past and present debts and the
timeliness of their repayment; it documents an individual's credit history.
Credit bureau score: a number representing the possibility a borrower may
default; it is based upon credit history and is used to determine ability to
qualify for a mortgage loan.
D
Debt-to-income ratio: a comparison of gross income to housing and
non-housing expenses; With the FHA, the-monthly mortgage payment should
be no more than 29% of monthly gross income (before taxes) and the
mortgage payment combined with non-housing debts should not exceed 41%
of income.
Deed: the document that transfers ownership of a property.
Deed-in-lieu: to avoid foreclosure ("in lieu" of foreclosure), a deed is given
to the lender to fulfill the obligation to repay the debt; this process doesn't
allow the borrower to remain in the house but helps avoid the costs, time,
and effort associated with foreclosure.
Default: the inability to pay monthly mortgage payments in a timely manner
or to otherwise meet the mortgage terms.
Delinquency: failure of a borrower to make timely mortgage payments
under a loan agreement.
Discount point: normally paid at closing and generally calculated to be
equivalent to 1% of the total loan amount, discount points are paid to reduce
the interest rate on a loan.
Down payment: the portion of a home's purchase price that is paid in cash
and is not part of the mortgage loan.
E
Earnest money: money put down by a potential buyer to show that he or
she is serious about purchasing the home; it becomes part of the down
payment if the offer is accepted, is returned if the offer is rejected, or is
forfeited if the buyer pulls out of the deal.
Equity: an owner's financial interest in a property; calculated by subtracting
the amount still owed on the mortgage loon(s)from the fair market value of
the property.
Escrow account: a separate account into which the lender puts a portion of
each monthly mortgage payment; an escrow account provides the funds
needed for such expenses as property taxes, homeowners insurance,
mortgage insurance, etc.
F
Fair Housing Act: a law that prohibits discrimination in all facets of the
homebuying process on the basis of race, color, national origin, religion, sex,
familial status, or disability.
Fair market value: the hypothetical price that a willing buyer and seller will
agree upon when they are acting freely, carefully, and with complete
knowledge of the situation.
Fannie Mae: Federal National Mortgage Association (FNMA); a
federally-chartered enterprise owned by private stockholders that purchases
residential mortgages and converts them into securities for sale to investors;
by purchasing mortgages, Fannie Mae supplies funds that lenders may loan
to potential homebuyers.
Fixed-rate mortgage: a mortgage with payments that remain the same
throughout the life of the loan because the interest rate and other terms are
fixed and do not change.
Flood insurance: insurance that protects homeowners against losses from
a flood; if a home is located in a flood plain, the lender will require flood
insurance before approving a loan.
Foreclosure: a legal process in which mortgaged property is sold to pay the
loan of the defaulting borrower.
Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a
federally-chartered corporation that purchases residential mortgages,
securitizes them, and sells them to investors; this provides lenders With
funds for new homebuyers.
G
Good faith estimate: an estimate of all closing fees including pre-paid and
escrow items as well as lender charges; must be given to the borrower within
three days after submission of a loan application.
H
Home inspection: an examination of the structure and mechanical systems
to determine a home's safety; makes the potential homebuyer aware of any
repairs that may be needed.
Home warranty: offers protection for mechanical systems and attached
appliances against unexpected repairs not covered by homeowner's
insurance; ,overage extends over a specific time period and does not cover
the home's structure.
Homeowner's insurance: an insurance policy that .combines protection
against damage to a dwelling and Is contents with protection against claims
of negligence )r inappropriate action that result in someone's injury or
)property damage.
HVAC: Heating, Ventilation and Air Conditioning; a home's heating and
cooling system.
I
Index: a measurement used by lenders to determine changes to the Interest
rate charged on an adjustable rate mortgage.
Inflation: the number of dollars in circulation exceeds the amount of goods
and services available for purchase; inflation results in a decrease in the
dollar's value.
Interest: a fee charged for the use of money .
Interest rate: the amount of interest charged on a monthly loan payment;
usually expressed as a percentage.
Insurance: protection against a specific loss over a period of time that is
secured by the payment of a regularly scheduled premium.
J
Judgment: a legal decision; when requiring debt repayment, a judgment
may include a property lien that secures the creditor's claim by providing a
collateral source.
L
Lease purchase: assists low- to moderate-income homebuyers in
purchasing a home by allowing them to lease a home with an option to buy;
the rent payment is made up of the monthly rental payment plus an
additional amount that is credited to an account for use as a down payment.
Lien: a legal claim against property that must be satisfied When the property
is sold
Loan: money borrowed that is usually repaid with interest.
Loan fraud: purposely giving incorrect information on a loan application in
order to better qualify for a loan; may result in civil liability or criminal
penalties.
Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount
borrowed by the price or appraised value of the home to be purchased; the
higher the LTV, the less cash a borrower is required to pay as down payment.
Lock-in: since interest rates can change frequently, many lenders offer an
interest rate lock-in that guarantees a specific interest rate if the loan is
closed within a specific time.
Loss mitigation: a process to avoid foreclosure; the lender tries to help a
borrower who has been unable to make loan payments and is in danger of
defaulting on his or her loan
M
Margin: an amount the lender adds to an index to determine the interest
rate on an adjustable rate mortgage.
Mortgage: a lien on the property that secures the Promise to repay a loan.
Mortgage banker: a company that originates loans and resells them to
secondary mortgage lenders like :Fannie Mae or Freddie Mac.
Mortgage broker: a firm that originates and processes loans for a number
of lenders.
Mortgage insurance: a policy that protects lenders against some or most
of the losses that can occur when a borrower defaults on a mortgage loan;
mortgage insurance is required primarily for borrowers with a down payment
of less than 20% of the home's purchase price.
Mortgage insurance premium (MIP): a monthly payment -usually part of
the mortgage payment - paid by a borrower for mortgage insurance.
Mortgage Modification: a loss mitigation option that allows a borrower to
refinance and/or extend the term of the mortgage loan and thus reduce the
monthly payments.
O
Offer: indication by a potential buyer of a willingness to purchase a home at
a specific price; generally put forth in writing.
Origination: the process of preparing, submitting, and evaluating a loan
application; generally includes a credit check, verification of employment,
and a property appraisal.
Origination fee: the charge for originating a loan; is usually calculated in
the form of points and paid at closing.
P
PITI: Principal, Interest, Taxes, and Insurance - the four elements of a
monthly mortgage payment; payments of principal and interest go directly
towards repaying the loan while the portion that covers taxes and insurance
(homeowner's and mortgage, if applicable) goes into an escrow account to
cover the fees when they are due.
PMI: Private Mortgage Insurance; privately-owned companies that offer
standard and special affordable mortgage insurance programs for qualified
borrowers with down payments of less than 20% of a purchase price.
Pre-approve: lender commits to lend to a potential borrower; commitment
remains as long as the borrower still meets the qualification requirements at
the time of purchase.
Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged
property to satisfy the loan and avoid foreclosure.
Pre-qualify: a lender informally determines the maximum amount an
individual is eligible to borrow.
Premium: an amount paid on a regular schedule by a policyholder that
maintains insurance coverage.
Prepayment: payment of the mortgage loan before the scheduled due date;
may be Subject to a prepayment penalty.
Principal: the amount borrowed from a lender; doesn't include interest or
additional fees.
R
Radon: a radioactive gas found in some homes that, if occurring in strong
enough concentrations, can cause health problems.
Real estate agent: an individual who is licensed to negotiate and arrange
real estate sales; works for a real estate broker.
REALTOR: a real estate agent or broker who is a member of the NATIONAL
ASSOCIATION OF REALTORS, and its local and state associations.
Refinancing: paying off one loan by obtaining another; refinancing is
generally done to secure better loan terms (like a lower interest rate).
RESPA: Real Estate Settlement Procedures Act; a law protecting consumers
from abuses during the residential real estate purchase and loan process by
requiring lenders to disclose all settlement costs, practices, and relationships
S
Settlement: another name for closing .
Special Forbearance: a loss mitigation option where the lender arranges a
revised repayment plan for the borrower that may include a temporary
reduction or suspension of monthly loan payments.
Subordinate: to place in a rank of lesser importance or to make one claim
secondary to another.
Survey: a property diagram that indicates legal boundaries, easements,
encroachments, rights of way, improvement locations, etc.
Sweat equity: using labor to build or improve a property as part of the down
payment
T
Title insurance: insurance that protects the lender against any claims that
arise from arguments about ownership of the property; also available for
homebuyers.
Title search: a check of public records to be sure that the seller is the
recognized owner of the real estate and that there are no unsettled liens or
other claims against the property.
Truth-in-Lending: a federal law obligating a lender to give fuII written
disclosure of aII fees, terms, and conditions associated with the loan initial
period and then adjusts to another rate that lasts for the term of the loan.
Underwriting: the process of analyzing a loan application to determine the
amount of risk involved in making the loan; it includes a review of the
potential borrower's credit history and a judgment of the property value.
A
Amenity: a feature of the home or property that serves as a benefit to the
buyer but that is not necessary to its use; may be natural (like location,
Woods, water) or man-made (like a swimming pool or garden).
Amortization: repayment of a mortgage loan through monthly installments of
principal and interest; the monthly payment amount is based on a schedule
that will allow you to own your home at the end of a specific time period (for
example, 15 or 30 years)
Annual Percentage Rate (APR): calculated by using a standard formula,
the APR shows the cost of a loan; expressed as a yearly interest rate, it
includes the interest, points, mortgage insurance, and other fees associated
with the loan.
Application: the first step in the official loan approval process; this form is
used to record important information about the potential borrower necessary
to the underwriting process.
Appraisal: a document that gives an estimate of a property's fair market
value; an appraisal is generally required by a lender before loan approval to
ensure that the mortgage loan amount is not more than the value of the
property.
Appraiser: a qualified individual who uses his or her experience and
knowledge to prepare the appraisal estimate.
ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in
interest rates; when rates change, ARM monthly payments increase or
decrease at intervals determined by the lender; the Change in monthly
-payment amount, however, is usually subject to a Cap.
Assessor: a government official who is responsible for determining the value
of a property for the purpose of taxation.
Assumable mortgage: a mortgage that can be transferred from a seller to
a buyer; once the loan is assumed by the buyer the seller is no longer
responsible for repaying it; there may be a fee and/or a credit package
involved in the transfer of an assumable mortgage.
B
Balloon Mortgage: a mortgage that typically offers low rates for an initial
period of time (usually 5, 7, or 10) years; after that time period elapses, the
balance is due or is refinanced by the borrower.
Bankruptcy: a federal law Whereby a person's assets are turned over to a
trustee and used to pay off outstanding debts; this usually occurs when
someone owes more than they have the ability to repay.
Borrower: a person who has been approved to receive a loan and is then
obligated to repay it and any additional fees according to the loan terms.
Building code: based on agreed upon safety standards within a specific
area, a building code is a regulation that determines the design,
construction, and materials used in building.
Budget: a detailed record of all income earned and spent during a specific
period of time.
C
Cap: a limit, such as that placed on an adjustable rate mortgage, on how
much a monthly payment or interest rate can increase or decrease.
Cash reserves: a cash amount sometimes required to be held in reserve in
addition to the down payment and closing costs; the amount is determined by
the lender.
Certificate of title: a document provided by a qualified source (such as a
title company) that shows the property legally belongs to the current owner;
before the title is transferred at closing, it should be clear and free of all liens
or other claims.
Closing: also known as settlement, this is the time at which the property is
formally sold and transferred from the seller to the buyer; it is at this time that
the borrower takes on the loan obligation, pays all closing costs, and
receives title from the seller.
Closing costs: customary costs above and beyond the sale price of the
property that must be paid to cover the transfer of ownership at closing;
these costs generally vary by geographic location and are typically detailed
to the borrower after submission of a loan application.
Commission: an amount, usually a percentage of the property sales price,
that is collected by a real estate professional as a fee for negotiating the
transaction..
Condominium: a form of ownership in which individuals purchase and own a
unit of housing in a multi-unit complex; the owner also shares financial
responsibility for common areas.
Conventional loan: a private sector loan, one that is not guaranteed or
insured by the U.S. Government.
Cooperative (Co-op): residents purchase stock in a cooperative
corporation that owns a structure; each stockholder is then entitled to live in
a specific unit of the structure and is responsible for paying a portion of the
loan.
Credit history: history of an individual's debt payment; lenders use this
information to gouge a potential borrower's ability to repay a loan.
Credit report: a record that lists all past and present debts and the
timeliness of their repayment; it documents an individual's credit history.
Credit bureau score: a number representing the possibility a borrower may
default; it is based upon credit history and is used to determine ability to
qualify for a mortgage loan.
D
Debt-to-income ratio: a comparison of gross income to housing and
non-housing expenses; With the FHA, the-monthly mortgage payment should
be no more than 29% of monthly gross income (before taxes) and the
mortgage payment combined with non-housing debts should not exceed 41%
of income.
Deed: the document that transfers ownership of a property.
Deed-in-lieu: to avoid foreclosure ("in lieu" of foreclosure), a deed is given
to the lender to fulfill the obligation to repay the debt; this process doesn't
allow the borrower to remain in the house but helps avoid the costs, time,
and effort associated with foreclosure.
Default: the inability to pay monthly mortgage payments in a timely manner
or to otherwise meet the mortgage terms.
Delinquency: failure of a borrower to make timely mortgage payments
under a loan agreement.
Discount point: normally paid at closing and generally calculated to be
equivalent to 1% of the total loan amount, discount points are paid to reduce
the interest rate on a loan.
Down payment: the portion of a home's purchase price that is paid in cash
and is not part of the mortgage loan.
E
Earnest money: money put down by a potential buyer to show that he or
she is serious about purchasing the home; it becomes part of the down
payment if the offer is accepted, is returned if the offer is rejected, or is
forfeited if the buyer pulls out of the deal.
Equity: an owner's financial interest in a property; calculated by subtracting
the amount still owed on the mortgage loon(s)from the fair market value of
the property.
Escrow account: a separate account into which the lender puts a portion of
each monthly mortgage payment; an escrow account provides the funds
needed for such expenses as property taxes, homeowners insurance,
mortgage insurance, etc.
F
Fair Housing Act: a law that prohibits discrimination in all facets of the
homebuying process on the basis of race, color, national origin, religion, sex,
familial status, or disability.
Fair market value: the hypothetical price that a willing buyer and seller will
agree upon when they are acting freely, carefully, and with complete
knowledge of the situation.
Fannie Mae: Federal National Mortgage Association (FNMA); a
federally-chartered enterprise owned by private stockholders that purchases
residential mortgages and converts them into securities for sale to investors;
by purchasing mortgages, Fannie Mae supplies funds that lenders may loan
to potential homebuyers.
Fixed-rate mortgage: a mortgage with payments that remain the same
throughout the life of the loan because the interest rate and other terms are
fixed and do not change.
Flood insurance: insurance that protects homeowners against losses from
a flood; if a home is located in a flood plain, the lender will require flood
insurance before approving a loan.
Foreclosure: a legal process in which mortgaged property is sold to pay the
loan of the defaulting borrower.
Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a
federally-chartered corporation that purchases residential mortgages,
securitizes them, and sells them to investors; this provides lenders With
funds for new homebuyers.
G
Good faith estimate: an estimate of all closing fees including pre-paid and
escrow items as well as lender charges; must be given to the borrower within
three days after submission of a loan application.
H
Home inspection: an examination of the structure and mechanical systems
to determine a home's safety; makes the potential homebuyer aware of any
repairs that may be needed.
Home warranty: offers protection for mechanical systems and attached
appliances against unexpected repairs not covered by homeowner's
insurance; ,overage extends over a specific time period and does not cover
the home's structure.
Homeowner's insurance: an insurance policy that .combines protection
against damage to a dwelling and Is contents with protection against claims
of negligence )r inappropriate action that result in someone's injury or
)property damage.
HVAC: Heating, Ventilation and Air Conditioning; a home's heating and
cooling system.
I
Index: a measurement used by lenders to determine changes to the Interest
rate charged on an adjustable rate mortgage.
Inflation: the number of dollars in circulation exceeds the amount of goods
and services available for purchase; inflation results in a decrease in the
dollar's value.
Interest: a fee charged for the use of money .
Interest rate: the amount of interest charged on a monthly loan payment;
usually expressed as a percentage.
Insurance: protection against a specific loss over a period of time that is
secured by the payment of a regularly scheduled premium.
J
Judgment: a legal decision; when requiring debt repayment, a judgment
may include a property lien that secures the creditor's claim by providing a
collateral source.
L
Lease purchase: assists low- to moderate-income homebuyers in
purchasing a home by allowing them to lease a home with an option to buy;
the rent payment is made up of the monthly rental payment plus an
additional amount that is credited to an account for use as a down payment.
Lien: a legal claim against property that must be satisfied When the property
is sold
Loan: money borrowed that is usually repaid with interest.
Loan fraud: purposely giving incorrect information on a loan application in
order to better qualify for a loan; may result in civil liability or criminal
penalties.
Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount
borrowed by the price or appraised value of the home to be purchased; the
higher the LTV, the less cash a borrower is required to pay as down payment.
Lock-in: since interest rates can change frequently, many lenders offer an
interest rate lock-in that guarantees a specific interest rate if the loan is
closed within a specific time.
Loss mitigation: a process to avoid foreclosure; the lender tries to help a
borrower who has been unable to make loan payments and is in danger of
defaulting on his or her loan
M
Margin: an amount the lender adds to an index to determine the interest
rate on an adjustable rate mortgage.
Mortgage: a lien on the property that secures the Promise to repay a loan.
Mortgage banker: a company that originates loans and resells them to
secondary mortgage lenders like :Fannie Mae or Freddie Mac.
Mortgage broker: a firm that originates and processes loans for a number
of lenders.
Mortgage insurance: a policy that protects lenders against some or most
of the losses that can occur when a borrower defaults on a mortgage loan;
mortgage insurance is required primarily for borrowers with a down payment
of less than 20% of the home's purchase price.
Mortgage insurance premium (MIP): a monthly payment -usually part of
the mortgage payment - paid by a borrower for mortgage insurance.
Mortgage Modification: a loss mitigation option that allows a borrower to
refinance and/or extend the term of the mortgage loan and thus reduce the
monthly payments.
O
Offer: indication by a potential buyer of a willingness to purchase a home at
a specific price; generally put forth in writing.
Origination: the process of preparing, submitting, and evaluating a loan
application; generally includes a credit check, verification of employment,
and a property appraisal.
Origination fee: the charge for originating a loan; is usually calculated in
the form of points and paid at closing.
P
PITI: Principal, Interest, Taxes, and Insurance - the four elements of a
monthly mortgage payment; payments of principal and interest go directly
towards repaying the loan while the portion that covers taxes and insurance
(homeowner's and mortgage, if applicable) goes into an escrow account to
cover the fees when they are due.
PMI: Private Mortgage Insurance; privately-owned companies that offer
standard and special affordable mortgage insurance programs for qualified
borrowers with down payments of less than 20% of a purchase price.
Pre-approve: lender commits to lend to a potential borrower; commitment
remains as long as the borrower still meets the qualification requirements at
the time of purchase.
Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged
property to satisfy the loan and avoid foreclosure.
Pre-qualify: a lender informally determines the maximum amount an
individual is eligible to borrow.
Premium: an amount paid on a regular schedule by a policyholder that
maintains insurance coverage.
Prepayment: payment of the mortgage loan before the scheduled due date;
may be Subject to a prepayment penalty.
Principal: the amount borrowed from a lender; doesn't include interest or
additional fees.
R
Radon: a radioactive gas found in some homes that, if occurring in strong
enough concentrations, can cause health problems.
Real estate agent: an individual who is licensed to negotiate and arrange
real estate sales; works for a real estate broker.
REALTOR: a real estate agent or broker who is a member of the NATIONAL
ASSOCIATION OF REALTORS, and its local and state associations.
Refinancing: paying off one loan by obtaining another; refinancing is
generally done to secure better loan terms (like a lower interest rate).
RESPA: Real Estate Settlement Procedures Act; a law protecting consumers
from abuses during the residential real estate purchase and loan process by
requiring lenders to disclose all settlement costs, practices, and relationships
S
Settlement: another name for closing .
Special Forbearance: a loss mitigation option where the lender arranges a
revised repayment plan for the borrower that may include a temporary
reduction or suspension of monthly loan payments.
Subordinate: to place in a rank of lesser importance or to make one claim
secondary to another.
Survey: a property diagram that indicates legal boundaries, easements,
encroachments, rights of way, improvement locations, etc.
Sweat equity: using labor to build or improve a property as part of the down
payment
T
Title insurance: insurance that protects the lender against any claims that
arise from arguments about ownership of the property; also available for
homebuyers.
Title search: a check of public records to be sure that the seller is the
recognized owner of the real estate and that there are no unsettled liens or
other claims against the property.
Truth-in-Lending: a federal law obligating a lender to give fuII written
disclosure of aII fees, terms, and conditions associated with the loan initial
period and then adjusts to another rate that lasts for the term of the loan.
Underwriting: the process of analyzing a loan application to determine the
amount of risk involved in making the loan; it includes a review of the
potential borrower's credit history and a judgment of the property value.