What Is an Annual ARM Cap?

An annual ARM cap is a limit on the amount that your interest rate can increase or decrease from one year to the next. For example, if you have a 5/1 ARM with a 2% annual ARM cap, your interest rate can increase or decrease by up to 2% each year, but it can never … Read more

Growing-Equity Mortgage Definition.

A growing equity mortgage is a type of mortgage where the borrower’s payments are applied first to the interest owed on the loan, and the remainder is applied to the principal of the loan. As the principal is reduced, the borrower’s equity in the property increases. This type of mortgage is typically used to help … Read more

Mortgage Servicing Rights (MSR) Can Improve Cash Flow for Lenders.

Mortgage servicing rights (MSR) are the rights to service a mortgage loan, which includes collecting and processing payments from the borrower, and managing the borrower’s account. MSR can be sold by the lender to another party, such as a mortgage servicing company. MSR can improve cash flow for lenders because they can receive payments for … Read more

What Is a Nondisturbance Clause?

A nondisturbance clause is a clause in a contract that states that one party will not be disturbed or interrupted by the other party. This clause is often used in leases and other contracts where one party has a vested interest in the property or situation and does not want to be disrupted by the … Read more

What Is a Combination Loan?

A combination loan is a type of mortgage that allows you to combine two different types of financing into one loan. This can be helpful if you want to get the best terms on both loans, or if you want to save money on interest by consolidating two loans into one. There are a few … Read more

What Is a Shared Equity Mortgage?

A shared equity mortgage is a type of mortgage in which the borrower shares the equity in the property with the lender. The equity is typically divided between the borrower and the lender according to a predetermined percentage, and the borrower makes monthly payments to the lender as well as to the borrower’s own equity … Read more

What Is a Mortgage Par Rate?

A mortgage par rate is the standard rate used for adjustable rate mortgages (ARMs). It is the most common type of interest rate for this type of loan. The interest rate is determined by the lender and is based on a number of factors, including the borrower’s credit history, the type of loan, and the … Read more

Mortgagor Definition.

A mortgagor is the person who pledges property to a creditor as security for a debt. The mortgagor has the right to live in and use the property until the debt is repaid. If the debt is not repaid, the creditor may foreclose on the property and sell it to repay the debt. Is the … Read more

What Is a Tax Service Fee?

A tax service fee is a one-time fee charged by the lender to cover the cost of tax-related services. The fee is typically paid at closing, and it is typically charged as a percentage of the loan amount. How do you explain a service fee? A service fee is a charge assessed by a lender … Read more

Loan-to-Value (LTV) Ratio.

The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The LTV ratio is one of the key risk factors that lenders assess when qualifying borrowers for a mortgage. A higher LTV ratio suggests more risk because the loan amount … Read more