Mortgage Term Glossary

The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

The date on which the principal balance of a loan becomes due and payable.

That portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction and doesn’t cover all of the interest. The loan balance therefore increases instead of decreasing.

A legal document that pledges a property to the lender as security for payment of a debt.

A company that originates mortgages exclusively for resale in the secondary mortgage market.

An individual or company that brings borrowers and lenders together for the purpose of loan origination.

A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency.

The amount paid by a mortgagor for mortgage insurance.

A type of term life insurance In the event that the borrower dies while the policy is in force, the debt is automatically paid by insurance proceeds.

The borrower in a mortgage agreement.