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The Complete Dictionary of Mortgage & Lending Terms Explained Simply: What Smart Investors Need to Know

The Complete Dictionary of Mortgage & Lending Terms Explained Simply: What Smart Investors Need to Know

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The Complete Dictionary of Mortgage & Lending Terms Explained Simply: What Smart Investors Need to Know

273 pagine
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Apr 27, 2011


The Complete Dictionary of Mortgage & Lending Terms Explained Simply explains all the important financial terms you will encounter as you navigate the mortgage market. With easy-to-understand definitions, this dictionary covers everything from accrued interest to wraparound mortgages. It covers types of mortgages, parts of loan agreements, types of insurance, and even home-inspection terms.

This resource uses simple language to describe the many concepts it covers, ensuring that even those without any financial or real estate experience will understand the definitions. With more than 1,800 terms, this dictionary allows you to under- stand almost every term you come across during your encounter with the lending process, whether you are researching the difference between trusts and liens or examining a prospective home’s features. In addition to outlining terms associated with lending, it also includes information about important legislative acts and federal agencies that affect financing.

The handy A-to-Z organization allows you to quickly find any information you need, even during nerve-racking negotiations. The definitions also include any abbreviated forms of the terms, so you will be able to tell your ARMs (adjustable-rate mort- gages) from your REITs (real estate investment trusts). This guide defines the players, the problems, the process, and the procedures.

Whether you are looking to buy a home, trying to refinance, taking a finance class, or simply curious about the mortgage and lending industry, this dictionary is an indispensable guide to the many terms, tools, and agreements you will encounter at every step of the complex lending process.

Atlantic Publishing is a small, independent publishing company based in Ocala, Florida. Founded over twenty years ago in the company president’s garage, Atlantic Publishing has grown to become a renowned resource for non-fiction books. Today, over 450 titles are in print covering subjects such as small business, healthy living, management, finance, careers, and real estate. Atlantic Publishing prides itself on producing award winning, high-quality manuals that give readers up-to-date, pertinent information, real-world examples, and case studies with expert advice. Every book has resources, contact information, and web sites of the products or companies discussed.

This Atlantic Publishing eBook was professionally written, edited, fact checked, proofed and designed. You receive exactly the same content as the print version of this book. Over the years our books have won dozens of book awards for content, cover design and interior design including the prestigious Benjamin Franklin award for excellence in publishing. We are proud of the high quality of our books and hope you will enjoy this eBook version.

Apr 27, 2011

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The Complete Dictionary of Mortgage & Lending Terms Explained Simply - Atlantic Publishing Group Atlantic Publishing Group

The Complete Dictionary of Mortgage & Lending Terms Explained Simply

What Smart Investors Need to Know

The Complete Dictionary of Mortgage & Lending Terms Explained Simply: What Smart Investors Need to Know

Copyright © 2011 Atlantic Publishing Group, Inc.

1405 SW 6th Avenue • Ocala, Florida 34471

Phone 800-814-1132 • Fax 352-622-1875

Web site: • E-mail:

SAN Number: 268-1250

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the Publisher. Requests to the Publisher for permission should be sent to Atlantic Publishing Group, Inc., 1405 SW 6th Avenue, Ocala, Florida 34471.

The complete dictionary of mortgage & lending terms explained simply : what smart investors need to know / by Atlantic Publishing Group, Inc.

p. cm.

ISBN-13: 978-1-60138-014-2 (alk. paper)

ISBN-10: 1-60138-014-3 (alk. paper)

1. Mortgage banks--Dictionaries. 2. Mortgage loans--Dictionaries. I. Atlantic Publishing Group.

HG2040.C67 2010



LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: The publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This work is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If professional assistance is required, the services of a competent professional should be sought. Neither the publisher nor the author shall be liable for damages arising herefrom. The fact that an organization or website is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or website may provide or recommendations it may make. Further, readers should be aware that Internet websites listed in this work may have changed or disappeared between when this work was written and when it is read.

TRADEMARK DISCLAIMER: All trademarks, trade names, or logos mentioned or used are the property of their respective owners and are used only to directly describe the products being provided. Every effort has been made to properly capitalize, punctuate, identify and attribute trademarks and trade names to their respective owners, including the use of ® and ™ wherever possible and practical. Atlantic Publishing Group, Inc. is not a partner, affiliate, or licensee with the holders of said trademarks.

A few years back we lost our beloved pet dog Bear, who was not only our best and dearest friend but also the Vice President of Sunshine here at Atlantic Publishing. He did not receive a salary but worked tirelessly 24 hours a day to please his parents.

Bear was a rescue dog who turned around and showered myself, my wife, Sherri, his grandparents Jean, Bob, and Nancy, and every person and animal he met (well, maybe not rabbits) with friendship and love. He made a lot of people smile every day.

We wanted you to know a portion of the profits of this book will be donated in Bear’s memory to local animal shelters, parks, conservation organizations, and other individuals and nonprofit organizations in need of assistance.

– Douglas and Sherri Brown

PS: We have since adopted two more rescue dogs: first Scout, and the following year, Ginger. They were both mixed golden retrievers who needed a home.

Want to help animals and the world? Here are a dozen easy suggestions you and your family can implement today:

•  Adopt and rescue a pet from a local shelter.

•  Support local and no-kill animal shelters.

•  Plant a tree to honor someone you love.

•  Be a developer — put up some birdhouses.

•  Buy live, potted Christmas trees and replant them.

•  Make sure you spend time with your animals each day.

•  Save natural resources by recycling and buying recycled products.

•  Drink tap water, or filter your own water at home.

•  Whenever possible, limit your use of or do not use pesticides.

•  If you eat seafood, make sustainable choices.

•  Support your local farmers market.

•  Get outside. Visit a park, volunteer, walk your dog, or ride your bike.

Five years ago, Atlantic Publishing signed the Green Press Initiative. These guidelines promote environmentally friendly practices, such as using recycled stock and vegetable-based inks, avoiding waste, choosing energy-efficient resources, and promoting a no-pulping policy. We now use 100-percent recycled stock on all our books. The results: in one year, switching to post-consumer recycled stock saved 24 mature trees, 5,000 gallons of water, the equivalent of the total energy used for one home in a year, and the equivalent of the greenhouse gases from one car driven for a year.

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The American educational system has always served as a model and a worldwide leader in its ability to teach fundamentals in mathematics and reading. Despite the results of our standardized tests suggesting weaknesses in certain geographic communities, our schools continue to produce professionals in all walks of life who lead the world in producing innovative solutions and new technologies.

Unfortunately, most observers would agree about the need for more financial training, as this sphere of learning is generally acquired through on-the-job experience. We have shown glaring weaknesses in the ability to manage a budget and make sound investment decisions, and in the government, handle our national debt.

That is one reason why The Complete Dictionary of Mortgage & Lending Terms Explained Simply fills a vital need for financial novices and professionals alike. Both graduates and self-made executives need tools to support them in their current careers, as the days since school, for many of us, have long past.

As the president of a national residential mortgage firm, Guaranteed Home Mortgage Company, I interact with branch managers across the nation who are looking to our corporate headquarters to provide tangible support for their operations. In the process, many of them have shown a high degree of financial sophistication, but from time to time, evidence reveals major gaps in their knowledge.

In order to effectively converse with them, we need to share a common language — a need filled by this book. When our department heads in underwriting, compliance, branch development, operations, and quality assurance distribute company-wide memos, they often use technical terms unfamiliar to some of our employees. This book helps to bridge the gap in our financial backgrounds.

Secondly, American citizens outside of the financial industry have learned all too well the dangers of poor education in this field. The amount of consumer debt we have compiled as a society shows an inability to make even the most elementary budget decisions. And, government budgetary matters also demonstrate the danger of a poor financial background.

In my field, we have seen outright fraud perpetuated through the promotion of adjustable-rate mortgages to homeowners unable to meet future obligations. Established companies such as Guaranteed suffer from these outliers who took advantage of the system, and our entire industry gets painted with a broad uncomplimentary brush as a result.

The public has suffered from a lack of financial literacy in its investment decisions in other arenas as well. Derivatives and other complicated financial products have become so esoteric only those with intimate knowledge of their workings are even able to understand the associated problems. As our societies become increasingly interconnected, it is essential to avoid misunderstandings and to be able to communicate in a clear and effective manner.

Of course, many of these issues require more targeted publications — books and trade publications, business journals, and white papers — to serve as an explanatory medium. But what happens when you are in the middle of a crucial section, and you stumble upon a word you do not understand?

Learning and reading a foreign language requires a French/English dictionary, so when you read a financial treatise, you should have the same support. When I was undergoing legal training, I could not have survived without Blackstone’s Legal Dictionary. This book provides the same essential service for the financial field.

David A. Wind, J.D., M.S.

President and chief executive officer

Guaranteed Home Mortgage Company, Inc.

David Wind, an attorney, is principal and president of Guaranteed Home Mortgage Company (Guaranteed, Previously, he served as a financial analyst of mortgage-backed securities at Citicorp Investment Bank and clerked in the real estate finance department of the New York State Attorney General’s Office.

Founded in 1992, Guaranteed, a licensed mortgage investment and banking firm, comprises more than 300 mortgage professionals lending in 27 states. The company, previously named in the Inc. 500 list of the fastest growing companies in the United States, provides residential mortgage financing to a wide variety of consumers and real estate professionals.

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Nikki Roberts had accomplished a lot of things in her life. She received her bachelor’s degree from a prestigious university and even graduated Summa Cum Laude. She also managed to score that primo public relations job with the firm she always admired while studying the field in college. Nikki had a wonderful husband, Desmond, who was quite successful himself. Most importantly, they made each other happy.

Even though there were some important milestones left to check off in their lives — always something new to accomplish — above all others, there was one Nikki could not get out of her head: Nikki wanted to own a home.

That dream was planted at an early age while spending so much time with her father and Uncle Joey, who was many things in life, but above all, he was someone who loved to invest in real estate. In fact, he did quite well with it. So with many of her other major goals in life checked off, Nikki decided it was time to find a house she could call her own.

Uncle Joey was getting older and, for the most part, had retired from real estate investing, but Nikki trusted his opinion in these matters above anyone else’s. She went to talk to him about it because she could not find a mortgage deal that would not completely strip her of all of the luxuries. Unfortunately, due to Nikki’s love for extra luxuries, her credit score was low and banks were hesitant about giving her a loan.

But never fear; Uncle Joey always had a plan. He told her the real estate market was one in which you could make a few mistakes but still end up on top because housing prices were always going up. History never lies, he said. This gave her the confidence to take out a somewhat pricey mortgage loan — something she was a little hesitant to do. When she took those first steps into her new home, she figured it was all worth it. She knew as housing prices continued to rise, she would be able to refinance, and her monthly mortgage payment would decrease. She just had to get through the growing pains that came with taking that next big step in life.

Unfortunately, Uncle Joey’s time away from the real estate market had left him a little rusty at calling his usual spot-on real estate shots. It is doubtful even he would have been able to predict the crash of the housing market in 2007. Not many people did. As the economy started to teeter and eventually fall flat on its face, Nikki and Desmond had to take pay cuts to keep their jobs. In fact, they were lucky to have jobs. Many of their friends did not. Where they were not lucky, though, was in their standing with the mortgage.

Nikki never really understood all that nonsense Stu, her mortgage broker, was spewing at her when she signed her name on the dotted line. So, when Stu told her there was no way she would ever refinance her loan, she was devastated.

Nikki and Desmond had to surrender the house just to survive. They rented a small apartment and did not get a good night sleep for quite a while after seeing the For Sale sign in their front yard. Nikki vowed never again to go into a deal without knowing more than her adversary sitting across the table. If things work out for her the way they did once upon a time, she might get that chance again.

Many people who were crushed in the 2007 housing market crash did not fully understand what they were getting themselves into when they signed their name to the mortgage documents. But you do not have to be one of those people. With The Complete Dictionary of Mortgage & Lending Terms Explained Simply in hand, you can easily translate every phrase that comes flying off your real estate agent and broker’s tongue.

With easy-to-understand definitions, this dictionary covers everything from accrued interest to wraparound mortgages. It covers types of mortgages, parts of loan agreements, types of insurance, and even home-inspection terms. This

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