A adjustable-rate mortgage (ARM) A mortgage that changes interest rate periodically based upon the changes in a specified index. adjustment date The date on which the interest rate changes for an adjustable-rate mortgage (ARM). adjustment period The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM). amortization The repayment of a mortgage loan by installments with regular payments to cover the principal and interest. amortization term The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months. annual percentage rate (APR) The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points). application A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security. appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser. appraiser  A person qualified by education, training, and experience to estimate the value of real property and personal property. appreciation An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation. asset Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on). assignment The transfer of a mortgage from one person to another. assumable mortgage A mortgage that can be taken over ("assumed") by the buyer when a home is sold. assumption The transfer of the seller's existing mortgage to the buyer. assumption clause A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property. assumption fee The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.   B balance sheet  A financial statement that shows assets, liabilities, and net worth as of a specific date. balloon mortgage A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term. balloon payment The final lump sum payment that is made at the maturity date of a balloon mortgage. bankrupt A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee. bankruptcy A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee. before-tax income Income before taxes are deducted. beneficiary The person designated to receive the income from a trust, estate, or a deed of trust. binder A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate. biweekly payment mortgage A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest. blanket mortgage The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project. bond An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust. breach A violation of any legal obligation. bridge loan A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan." broker A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. buydown mortgage A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.   C call option  A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason. cap A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. capital improvement Any structure or component erected as a permanent improvement to real property that adds to its value and useful life. cash-out refinance A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose. Certificate of Eligibility A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage. Certificate of Reasonable Value (CRV) A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage. certificate of title A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner. chain of title The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent. change frequency The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM). clear title A title that is free of liens or legal questions as to ownership of the property. Closer: Your closer is your legal contact at MortgageSelect.com. Your closer is responsible for reviewing and clearing your title work and any other legal documentation applicable to your mortgage. Once your title is clear and your underwriter has issued a clear to close, your closer will arrange for a closing. Once your closing is scheduled, your closer will be able to provide you or your attorney with a finalized list of settlement costs. Closing A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement." closing cost item  A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement. closing costs Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country. closing statement Also referred to as the HUD1. The final statement of costs incurred to close on a loan or to purchase a home. cloud on title Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action. collateral An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract. collection The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary. co-maker A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. See endorser. commission The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan. commitment letter A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment." common areas Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc. Community Home Improvement Mortgage Loan An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value. community property  In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse. comparables An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location , and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property. condominium A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. condominium conversion Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership. conforming mortgage loan The current conforming loan limit is $240,000 and below. construction loan A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses. consumer reporting agency (or bureau) An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources. contingency A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector. contract An oral or written agreement to do or not to do a certain thing. conventional mortgage A mortgage that is not insured or guaranteed by the federal government. convertibility clause A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination. convertible ARM An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions. cooperative (co-op) A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. corporate relocation Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity. cost of funds index (COFI) An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. covenant A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure. credit An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date. credit history  A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner. credit report A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. See merged credit report. credit repository An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. Credit Officer: A credit officer has the authority to approve or decline a loan on the behalf of MortgageSelect.com. Although you will not have direct contact with a Credit Officer, your underwriter or loan officer will assist you in getting answers to any questions or concerns you have about your loan application. D debt  An amount owed to another. deed The legal document conveying title to a property. deed-in-lieu A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. deed of trust The document used in some states instead of a mortgage; title is conveyed to a trustee. default Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage. delinquency Failure to make mortgage payments when mortgage payments are due. deposit A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. depreciation A decline in the value of property; the opposite of appreciation. down payment The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage. due-on-sale provision  A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.   E Earnest Money Deposit: A deposit made by the potential homebuyer to show that he or she is serious about buying the home.   Employer: Name of the company where you, your spouse, or your co-borrower work. If you are self-employed, enter your own name or the name under which you do business.   F Fax: Your fax number at work or home.   Firm Type: Type of business.   Fixed Loan Fees: Your fixed fees are the hard dollar amounts that you paid at closing, i.e., appraisal, flood, tax, etc.   Foreclosed: Foreclosure is the action that returns the underlying property that secures a mortgage loan back to the mortgage holder.   Former Address: Input your former address if at current address less than two years. G   Gross Base Income/Month: Base monthly salary before withholdings.   Gross Bonuses/Month: Bonus pay before taxes averaged over previous 24 months. Your bonuses must be averaged over two years to be considered monthly income.   Gross Overtime/Month: Overtime pay before taxes averaged over previous 24 months. Your over time must be averaged over 2 years to be considered monthly income. Overtime earned for less than 2 years will not be considered. H Home Phone: Your home phone. I   Income Type: Primary—where majority of income is earned, Self—self employed, Second Job—secondary source of income, Previous Job—are not currently employed at this job.   Insurance, Taxes and Maintenance Expense: Insurance, taxes and maintenance of this property averaged over previous 24 months. J K L Lawsuit: A claim brought against you in a court of law that has not been settled or reduced to judgment.   Liens: Any type of financial instrument secured by your property.   Life Insurance Face Amount: Life insurance face amount refers to the death benefit paid by a term or whole life policy.   Life Insurance Net Cash Value: Life insurance net cash value refers to the amount that is available to borrow against or is received if a whole, universal life, or variable life policy is cashed in.   Loan Amount: Amounts up to $240,000 are described as conforming or within Agency guidelines of FHLMC (Freddie Mac) or FNMA (Fannie Mae). Amounts over $240,000 are described as Jumbo loans and these loans must meet the guidelines of the financial institution that is buying the loan. Loan Officer: You loan officer will be your contact and advocate at MortgageSelect.com who will help you identify the program that you wish to apply for and get started. Your loan officer will be able to authorize all pricing and product decisions that you make, any changes you wish to make during the process of your loan, and is available to you at all times to ensure the quality of service that you need. Loan Purpose: Select Purchase if you are buying a home. Select No cash out refinance if you are not taking equity out of your present home and are refinancing to get a better rate. Select Cash out refinance if you are taking equity out of your present home. M   Marital Status: Select married, unmarried (single, divorced or widowed), or separated (if divorce isn't final) to describe your current status.   Monthly Mortgage Payments: Mortgage payments of this property.   Monthly Rental Income: Gross rental income if rental, averaged over previous 24 months. Underwriters will generally credit 75% of rental income toward qualifying income.   Mortgage Lien Amount: Amount of existing mortgage. Includes principal, interest, taxes, insurance and any homeowner's dues. N   Name of Company: Company holding earnest money deposit.   Name: Your first, middle and last name.   Net Gross Commissions/Month: Net commissions averaged over previous 24 months for qualifying. Your commissions must be averaged over 2 years to be considered monthly income. Commissions earned for less than two years will not be considered.   Net Rental Income: Rental income less expenses for this property averaged over previous 24 months.   Net Worth of Businesses Owned: Value of businesses you own after liabilities are paid.   Note Rate: This is the rate quoted by the lender, found on the rate screen, on which the principal and interest of your mortgage payment is based. This is not the Annual Percentage Rate (APR).   Number of Dependents: Number of children and other dependents you support. O   Occupancy: Select Owner if it is your primary residence, Second Home if it is a second home and is not your primary residence, or Rental if you rent the property out. Select Primary for your permanent residence. Select Second Home for your vacation home. Select Rental Property if you rent it out.   Origination Fee: Is the fee the lender charges for processing and underwriting the loan.   Other Assets: Include items not asked for in previous sections and describe.   Other Income/Month: Depending on source, is usually averaged over previous 24 months. This does not include spouse/co-borrower income. Spouse/co-borrower information to follow. Input rental income on Other Property page.   Other Lien Amounts on the Property: Amounts of other loans against the property you are applying for.   Other Property: Address of real estate you own that is not being applied for.   Outstanding Judgements: A court-ordered settlement to be paid by you. P Prepaid Finance Charges: Charges made in connection with the loan and which must be paid upon the close of the loan. These charges are defined by the Federal Reserve Board in Regulation Z (Truth in Lending Act). Our pre-paid finance charges are as follows: Points: if paid, which includes origination fee of .5% (a credit is received if a minus sign is in front of a quote). Mortgage Insurance: if required. Tax Service Fee: $50. Flood Certification Fee: $20. Funding Fee: $295. Present Market Value: Estimated market value of this property.   Previous Income/Month: Income from all sources from previous job averaged over previous 24 months.   Previous Title: Your previous job title.   Previous Type of Firm: Type of business of previous employer.   Previous/Secondary Employer: Enter the name of your previous employer if you have been at your current job less than two years.   Principal and Interest (P & I): Principal is the portion of the mortgage payment that goes to reduce the outstanding balance of the loan. Interest is the portion of the mortgage payment that goes to pay the finance charge on the outstanding balance of the loan.   Private Mortgage Insurance An insurance contract written by a private corporation that protects a portion of the loan to the mortgagee against losses that might occur in the event of default and/or foreclosure on conventional loans.   Property Type: Detached Home is a single-family home free-standing detached home. Attached Home/Townhouse is a single family home attached to another where there is not common ownership of grounds. Condominium is a single unit of a multiple unit building. Co-Op or cooperative is a share of ownership in a multiple unit building where your share is represented by the unit you own. Planned Unit Development is a single family home in a development of smaller than usual lots which may have common amenities. 2-4 Unit Multi-Family is a dwelling that consists of up to 4 residences from which the owner receives rental income.   Property Value: Your estimate of what you think your home is worth based on the most recent appraisal, assessed value, and comparable home prices in your neighborhood. In the case of a remodel, take the purchase price or the most recent appraisal and add the receipts for the improvements to arrive at an estimated value.   Purchase Price: Price you are paying for the home. Q R   Retirement Fund Amount: Pension, profit sharing, employee stock ownership plan, 401k or any other type of retirement plan. S   Social Security Income: Monthly Social Security income.   Social Security Number: Your social security number.   Source of Down Payment: Check the box if the deposit account and firm holds the down payment. This information will be verified.   Spouse/Co-Borrower Former Address: Input spouse or co-borrower former address if different from yours and at current address less than two years. T   Title: Your current job title. U Underwriter: Your underwriter will be your primary contact at Stonecreek Funding  once your application has been submitted. Your underwriter is responsible for reviewing and verifying all of the information that you provide to us, including any additional documentation that is required from you as a condition of our commitment letter. Once your underwriter has received and reviewed all the requested documentation, your loan will be cleared to close. V   Variable Loan Fees: Your variable fees are the percentage amounts such as title, escrow, interest, origination, etc. W   Work Phone: Your work phone. X Y   Years at Current Address: How long have you lived at your current address.   Years at Current Job: Number of years at your current job.   Years at Former Address: Number of years you or your spouse/co-borrower owned or rented at that previous address.   Years in Current Profession: Number of years in your current profession.   Years of School: Number of years of schooling you have completed.   Z Zoning Ordinances The acts of any authorized local government establishing building codes, and setting forth regulations for property land useage.