Mortgage Glossary

SECONDARY MORTGAGE MARKET

Where existing mortgages are bought and sold.

SECURITY


The property that will be pledged as collateral for a loan.

SELLER CARRY-BACK


An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See Owner Financing.

SERVICER


An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

STANDARD PAYMENT CALCULATION


The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.

STEP-RATE MORTGAGE


A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.

THIRD-PARTY ORIGINATION


When a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

THIRTY-YEAR FIXED RATE MORTGAGE


The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

TOTAL EXPENSE RATIO


Total obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts.

TREASURY INDEX


An index used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. Based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.

TRUTH-IN-LENDING


A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

TWO-STEP MORTGAGE


An adjustable-rate mortgage (ARM) with one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.

UNDERWRITING


The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

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VA: 6393340000 | FHA: 00392-0000-4

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Copyright Rejoice Mortgage Inc. 2020 This offer is made by Obsidian Financial Services Inc. d/b/a Rejoice Mortgage Inc. NMLS #1425046 1600 Sarno Rd. Suite 215, Melbourne, FL 32935, which is not affiliated with your current lender nor is it an agency of the federal government. Obsidian Financial Services Inc. d/b/a Rejoice Mortgage Inc. is approved by HUD/FHA, Fannie Mae, Freddie Mac and Ginnie Mae. This is not a government form. This is not a credit decision or a commitment to lend.This website is not authorized by the New York State Department of Financial Services. Until this website is authorized, no mortgage loan applications for properties located in New York will be accepted through this site.