Glossary
margin
The difference between the interest rate and the index
on an adjustable rate mortgage. The margin remains
stable over the life of the loan. It is the index
which moves up and down.
maturity
The date on which the principal balance of a loan,
bond, or other financial instrument becomes due and
payable.
mortgage
A legal document that pledges a property to the lender
as security for payment of a debt. Instead of mortgages,
some states use First Trust Deeds.
mortgage
banker
For a more complete discussion of mortgage banker,
see "Types of Lenders." A mortgage banker
is generally assumed to originate and fund their own
loans, which are then sold on the secondary market,
usually to Fannie Mae, Freddie Mac, or Ginnie Mae.
However, firms rather loosely apply this term to themselves,
whether they are true mortgage bankers or simply mortgage
brokers or correspondents.
mortgage
broker
A mortgage company that originates loans, then places
those loans with a variety of other lending institutions
with whom they usually have pre-established relationships.
mortgagee
The lender in a mortgage agreement.
mortgage
insurance (MI)
Insurance that covers the lender against some of the
losses incurred as a result of a default on a home
loan. Often mistakenly referred to as PMI, which is
actually the name of one of the larger mortgage insurers.
Mortgage insurance is usually required in one form
or another on all loans that have a loan-to-value
higher than eighty percent. Mortgages above 80% LTV
that call themselves "No MI" are usually
a made at a higher interest rate. Instead of the borrower
paying the mortgage insurance premiums directly, they
pay a higher interest rate to the lender, which then
pays the mortgage insurance themselves. Also, FHA
loans and certain first-time homebuyer programs require
mortgage insurance regardless of the loan-to-value.
mortgage
insurance premium (MIP)
The amount paid by a mortgagor for mortgage insurance,
either to a government agency such as the Federal
Housing Administration (FHA) or to a private mortgage
insurance (MI) company.
mortgagor
The borrower in a mortgage agreement.
©1996 By Leonard
Leonard & Associates, Inc. All rights reserved.
Duplication in whole or in part without permission
is prohibited.
