Term
| ARM - Adjustable Rate Mortgage |
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Definition
| mortgage on which the interest rate rises and falls with changes in prevailing interest rates. |
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Term
| how are interest rates for ARMs set? |
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Definition
| tied to an index rate. Usually called a 1-year constant maturity treasury. |
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Term
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Definition
| the % added to the interest rate to account for the lender's costs and fees |
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Term
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Definition
| the amount of time that elapses between adjustments. |
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Term
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Definition
| amount the interest rate can increase for any one adjustment period during the life of the loan. |
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Term
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Definition
| sets a limit on how much the borrower's monthly payment can increase in any one year. |
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Term
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Definition
| accrual of interest on a loan balance so that, as loan payments are made, the loan balance rises. Caused by the the payment cap being lower than the % rate the interest rate rises at. |
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Term
| Teaser Rate adjustable rate loans |
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Definition
| loans with initial rates below market rate, and then are scheduled to increase by a lot. |
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Term
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Definition
| lender can pay homeowner in a lump sum, or through monthly payments as an annuity. Useful for old people who don't have good retirement income. Lender gets repaid when borrower dies and / or house is sold. |
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Term
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Definition
| a short-term loan for new construction or remodeling of an existing structure. Lender pays out money in stages as building is built, as opposed to all at once like regular mortgage lenders. |
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