Mortgage Terminology:MORTGAGING AND REFINANCING HOMES - If you purchase a new home and need to borrow money to help pay for the home, you do so by taking out a "mortgage" from a lender of the money. A mortgage is really an agreement which identifies the property and the terms of repayment. Simultaneously, the borrower signs a note which is the personal guarantee the loan will be repaid. REFINANCING - is nothing more that replacing the old mortgage with a new one with, hopefully, better terms and conditions than the original one. It may, in fact, provide more money (equity withdrawal) than the original mortgage loan.SECOND HOME MORTGAGE - is nothing more than a mortgage in additional to the first or original mortgage (second mortgage). It's called the second mortgage because in terms of filing and repayment it is second to the first mortgage. HOME EQUITY LOAN - is nothing more than a loan secured by a mortgage and note. It too is really a mortgage. It could be in first position (a first mortgage) or behind the original mortgage and therefore would be a second mortgage. CONVENTIONAL LENDING - is a term which refers to mortgaging properties on "normal or "conventional" terms and conditions. A traditional 15 or 30 year fixed loan with twenty percent down payment and equal self liquidating payments of principle and interest is an example of a conventional loan. An FHA, or other Government insured loan or interest only mortgage or one with varying repayment methods or interest adjustments would not be considered "conventional". INVESTMENT PROPERTY LOAN - is nothing more than a mortgage loan on property held for investment or income purposes. The terms and conditions of these loans vary depending upon the exact use and nature of the property. It can be owner occupied and still be deemed and investment property. REVERSE MORTGAGE - is a mortgage placed in first position on a home but instead of the borrower making a payment, the lender pays the borrower. Reverse mortgages are given based upon the age of the borrower (who must be at least 62 years old) and the equity in the home. No monthly payments are made by the borrower until they leave the home on a permanent basis, or sell the home. (Visit www. reversemortgagechoices.com for more specific information). COMMERCIAL MORTGAGE - is really an investment loan made on non-residential properties. Again, the terms and conditions vary depending upon the property type and use. A mortgage and note secures the lender. FHA MORTGAGE LOAN - is a residential mortgage loan guaranteed to be repaid to the lender by the Federal Government. The loan has an insurance premium attached to it and paid by the borrower. Historically these loans were popular because they required less of a down payment than other mortgage loans. Today, however, with so many mortgage products available to borrowers, the FHA is more infrequently used. A Reverse Mortgage is a type of FHA loan because it too is guaranteed by the Government. CONVENTIONAL MORTGAGE LOAN - is one with terms and conditions of a conventional nature without unusual repayment terms and conditions (see conventional lending). |