A principal reduction is a type of mortgage modification that results in a reduction of the principal balance of the loan. The principal is the amount of money that the borrower owes on the loan, and the interest is the amount of money that the borrower pays to the lender in exchange for the use … Read more
A reperforming loan is defined as a loan that was previously delinquent, but is now current on payments. In order to qualify as a reperforming loan, the borrower must have made at least three consecutive monthly payments on time. This status is often given to loans that have been modified or restructured in some way, … Read more
A trust deed is a type of mortgage in which the title to the property is held by a trustee on behalf of the borrower. The trustee is usually a bank or other financial institution. The trust deed gives the lender certain rights in the event that the borrower defaults on the loan, including the … Read more
The yield spread premium (YSP) is the difference between the interest rate a lender charges on a loan and the rate at which the loan is actually being sold in the secondary market. The YSP is paid by the lender to the mortgage broker as compensation for bringing in the business. What can YSP be … Read more
A silent second mortgage is a second mortgage that is not disclosed to the first mortgage lender. The borrower usually uses the proceeds from the silent second mortgage for a down payment on the property. The main reason borrowers take out silent second mortgages is to avoid paying private mortgage insurance (PMI). Borrowers who put … Read more
A floating interest rate is an interest rate that moves up and down in response to changes in the market interest rate. The most common benchmark for a floating interest rate is the prime rate, which is the interest rate that banks charge their best customers. Should I lock interest rate or float? There is … Read more
A deed of reconveyance is a legal document that conveys title of real property back to the original owner, following the satisfaction of a debt secured by that property. A deed of reconveyance is typically used in the context of a mortgage loan, where the property is used as collateral for the loan. If the … Read more
A defeasance clause is a provision in a mortgage contract that allows the borrower to repay the loan early, without penalty. The clause typically stipulates that the borrower must provide the lender with written notice of their intent to repay the loan, as well as proof that the funds are available to do so. Once … Read more
A mortgagee is the lender in a mortgage loan. The mortgagee provides the funds for the loan and holds the title to the property as collateral until the loan is repaid. If the borrower defaults on the loan, the mortgagee can foreclose on the property to recoup the loan funds. What is the difference between … Read more
Mortgage Interest Statement (Form 1098) Is a 1098 a deduction or credit? A 1098 is a mortgage interest statement that shows the amount of interest you paid on your mortgage during the year. This information is used to calculate the mortgage interest deduction, which is a deduction you can take on your federal income tax … Read more
