Mortgage Calculator Refinance

Navigating the refinancing highway isn’t always easy; especially if you are not familiar with the multitude of terms being used during the process.  Now is the perfect time to brush up on your mortgage vocabulary, reviewing some of the most common glossary of mortgage refinancing terms you will likely encounter during your refinancing process:

• AAA Rating:  This rating tells you how secure a mortgage lender is within the banking industry.  Those with an AAA rating  are considered the most stable (and safe) in the lending industry.
• Accrued Interest:  This is the amount of interest which is calculated form the date of your last payment until the present.  It ahs not been paid yet.
• Amortization:   This is the repayment amounts for both the loan’s interest and principle as listed in the payment schedule.
• Application Fees:  Most lenders charge this fee just to review your application for a loan.  IN some cases it may be returned if your loan is denied.
• Appraised Value:  The estimated market value of a property. In order to obtain a mortgage, most lenders now require the property hold an appraised value at least 20% over the loan amount.  That means if you are asking to borrow $200,000, than the appraised value of the home must be at least $240,000 in order for the loan to be approved.
• Assets:  These include any property that you own such as your car; boat; RV; vacation home; jewelry; retirement accounts; investments; etc.
• Basis Point:  A way to measure interest to the one-hundredth degree of a single percentage point.
• Capped Rate Loan:  Although featuring an adjustable interest rate, a capped rate loan only allows interest rates to rise to a certain amount and then stop.
• Certificate of Title:  A legal document that clearly proves that you own the property without any outstanding liens on the property.
• Consumer Credit Code:  A new law which helps to protect borrowers form unscrupulous lenders by making the terms of the loan more understandable and transparent.
• Conveyance: The legal process which transfers the title of a property from one owner to the next.
• Credit Limit:  The maximum amount a lender allows a borrower to borrow.
• Credit Report:  A detailed report that outlines your credit history.
• Debt Services Ratio:  A way to determine how much money you can comfortably borrow which compares your income with your outstanding debt.
• Early Repayment Penalty:  A fee charged by a lender should a loan be paid off early.
• Equity:  the amount of value held on a property.
• Fixed Interest Rate:  An interest rate that stays the same through the life of the loan.
• Interest:  An amount of money (usually a percentage) charged on a loan.
• Lenders Mortgage Insurance:  An insurance policy which protects the lender should the borrower default on the loan.  It is usually paid by the borrower until there is at least 20% equity in the home and does not protect the borrower in any way.
• Loan Valuation Ratio:  A comparison of the loan amount to the value of the property being mortgaged.
• Mortgage:  A formal loan made to purchase a home in which the deed is held as collateral.
• Mortgager: The person borrowing the money for the purchase of a property.
• Principle: The amount borrowed on the loan.
• Refinancing:  Paying off your current mortgage by taking out a new loan (either with the same or a different lender).
• Security:  Property used as collateral on a loan.
• Settlement:  The meeting in which all financial documents are signed the mortgage is finalized.
• Settlement Date:  The date set for settlement proceedings to take place.
• Title Search: A formal report giving all of the details regarding past sales and owners of a property and any outstanding liens which may be placed on it.
• Term: The duration of the loan agreement.
• Underwater Property Amount:  A common term being thrown around in recent years, a mortgage is considered “underwater” when the outstanding mortgage amount is for more than the property is worth. In this circumstance, the odds of obtaining a refinancing loan are minimal.
• Valuation:  a formal report outlining the perceived market value of the property.