When a borrower falls behind on their mortgage payments, the lender will send them a notice of default. This notice will inform the borrower that they are in default on their mortgage and must take action to remedy the situation. The borrower will typically have a certain amount of time to bring their payments current … Read more
A self-amortizing loan is a loan where the periodic payments are large enough to cover both the interest and principal over the life of the loan. This type of loan is also known as an “amortizing loan.” What is amortization in simple words? Amortization is the process of spreading out a loan into a series … Read more
A second mortgage is a loan that is secured by the equity in your home. Equity is the portion of your home’s value that you own outright, free and clear of any liens. A second mortgage is also known as a home equity loan or home equity line of credit (HELOC). A second mortgage can … Read more
A power of sale is a legal clause found in some mortgages that gives the lender the right to sell the property if the borrower defaults on the loan. The proceeds from the sale go toward paying off the loan, and any leftover money goes to the borrower. In most cases, the lender will hire … Read more
An offset mortgage is a type of mortgage where your savings are used to offset your mortgage balance, which can save you money on interest. With an offset mortgage, you have a current account and a mortgage with the same lender, and your savings are used to offset your mortgage balance. This means that the … Read more
A purchase-money mortgage is a loan that is used to finance the purchase of a property. The loan is secured by the property itself, which means that if the borrower defaults on the loan, the lender can foreclose on the property. The main advantage of a purchase-money mortgage is that it allows the borrower to … Read more
A nontraditional mortgage is a type of mortgage that does not follow the traditional guidelines set by government-sponsored enterprises (GSEs) such as Freddie Mac and Fannie Mae. These guidelines are designed to ensure that lenders offer loans to borrowers who have the ability to repay their debt. Nontraditional mortgages, also called “non-conforming” or “jumbo” loans, … Read more
A chattel mortgage is a loan arrangement in which an item of personal property is used as collateral to secure the repayment of a debt. The property may be a car, boat, or other item of value. The debtor retains ownership of the property during the term of the loan, but the lender has the … Read more
A “cap” is a limit on the interest rate increase for an adjustable-rate mortgage (ARM). It protects the borrower from drastic increases in the interest rate, but it does not protect against more gradual increases. What certification is cap? The Mortgage Bankers Association (MBA) offers the Certified Mortgage Banker (CMB) designation to mortgage professionals who … Read more
A teaser loan is a type of mortgage loan that offers a low introductory interest rate for a limited period of time, usually five years. After the introductory period expires, the interest rate increases to the fully indexed rate, which is the sum of the index rate plus the margin. What are usury rates? In … Read more
