Use the Mortgage Calculator to determine your Principle and Interest monthly payments.
If you need some clarification of terms used for loans,
review our Common Mortgage Terms below.
Mortgage Calculator
Instructions:
Enter the number of years for the loan.
Enter an interest rate.
Enter the amount you plan to borrow, also called the principle.
Click compute.
Your monthly payment will be displayed in the box. This is for principle & Interest only.
Property Tax and Mortgage Insurance will be in addition to this amount.
The
right of the mortgagee (lender) to demand the immediate repayment
of the mortgage loan balance upon the default of the mortgagor
(borrower), or by using the right vested in the Due-on-Sale Clause.
Adjustable
rate mortgage (ARM)
Is
a mortgage in which the interest rate is adjusted periodically
based on a preselected index. Also sometimes known as the re-negotiable
rate mortgage, the variable rate mortgage or the Canadian rollover
mortgage.
Adjustment
interval
On
an adjustable rate mortgage, the time between changes in the interest
rate and/or monthly payment, typically one, three or five years,
depending on the index.
Amortization
Means
loan payment by equal periodic payment calculated to pay off the
debt at the end of a fixed period, including accrued interest
on the outstanding balance.
Annual
percentage rate (A.P.R.)
Is
a interest rate reflecting the cost of a mortgage as a yearly
rate. This rate is likely to be higher than the stated note rate
or advertised rate on the mortgage, because it takes into account
point and other credit cost. The APR allows home buyers to compare
different types of mortgages based on the annual cost for each
loan.
Appraisal
An
estimate of the value of property, made by a qualified professional
called an "appraiser".
Assessment
A
local tax levied against a property for a specific purpose, such
as a sewer or street lights.
Assumption
The
agreement between buyer and seller where the buyer takes over
the payments on an existing mortgage from the seller. Assuming
a loan can usually save the buyer money since this is an existing
mortgage debt, unlike a new mortgage where closing cost and new,
probably higher, market-rate interest charges will apply.
Usually
a short-term fixed-rate loan which involves small payments for
a certain period of time and one large payment for the remaining
amount of the principle at a time specified in the contract.
Blanket
Mortgage
A
mortgage covering at least two pieces of real estate as security
for the same mortgage.
Borrower
(Mortgagor)
One
who applies for and receives a loan in the form of a mortgage
with the intention of repaying the loan in full.
Broker
An
individual in the business of assisting in arranging funding or
negotiating contracts for a client buy who does not loan the money
himself. Brokers usually charge a fee or receive a commission
for their services.
Buy-down
When
the lender and/or the home builder subsidized the mortgage by
lowering the interest rate during the first few years of the loan.
While the payments are initially low, they will increase when
the subsidy expires.
The
amount of cash derived over a certain period of time from an income-producing
property. The cash flow should be large enough to pay the expenses
of the income producing property (mortgage payment, maintenance,
utilities, etc).
Caps
(interest)
Consumer
safeguards which limit the amount the interest rate on an adjustable
rate mortgage may change per year and/or the life of the loan.
Caps
(payment)
Consumer
safeguards which limit the amount monthly payments on an adjustable
rate mortgage may change.
Certificate
of Eligibility
The
document given to qualified veterans which entitles them to VA
guaranteed loans for homes, business, and mobile homes. Certificates
of eligibility may be obtained by sending DD-214 (Separation Paper)
to the local VA office with VA form 1880 (request for Certificate
of Eligibility).
Certificate
of Reasonable Value (CRV)
An appraisal issued by the Veterans Administration showing the
property's current market value
Certificate
of veteran status
The
document given to veterans or reservists who have served 90 days
of continuous active duty (including training time). It may be
obtained by sending DD 214 to the local VA office with form 26-8261a
(request for certificate of veteran status). This document enables
veterans to obtain lower down payments on certain FHA insured
loans.
Closing
The
meeting between the buyer, seller and lender or their agents where
the property and funds legally change hands. Also called settlement.
Closing costs usually include an origination fee, discount points,
appraisal fee, title search and insurance, survey, taxes, deed
recording fee, credit report charge and other costs assessed at
settlement. The costs of closing usually are about 3 percent to
6 percent of the mortgage amount.
Commitment
A
promise by a lender to make a loan on specific terms or conditions
to a borrower or builder. A promise by an investor to purchase
mortgages from a lender with specific terms or conditions. An
agreement, often in writing, between a lender and a borrower to
loan money at a future date subject to the completion of paper work
or compliance with stated conditions.
Construction
loan
A
short term interim loan to pay for the construction of buildings
or homes. These are usually designed to provide periodic disbursements
to the builder as he progresses.
Contract
sale or deed:
A
contract between purchaser and a seller of real estate to convey
title after certain conditions have been met. It is a form of
installment sale.
Conventional
loan
A
mortgage not insured by FHA or guaranteed by the VA.
Credit
Report
A
report documenting the credit history and current status of a
borrower's credit standing.
The
ratio, expressed as a percentage, which results when a borrower's
monthly payment obligation on long-term debts is divided by his
or her gross monthly income. See housing expenses-to-income ratio.
Deed
of trust
In
many states, this document is used in place of a mortgage to secure
the payment of a note.
Default
Failure
to meet legal obligations in a contract, specifically, failure
to make the monthly payments on a mortgage.
Deferred
interest
When
a mortgage is written with a monthly payment that is less than
required to satisfy the note rate, the unpaid interest is deferred
by adding it to the loan balance.See negative amortization.
Delinquency
Failure
to make payments on time. This can lead to foreclosure.
Department
of Veterans Affairs (VA)
An
independent agency of the federal government which guarantees
long-term, low-or no-down payment mortgages to eligible veterans.
Discount
Point
See
point.
Down
Payment
Money
paid to make up the difference between the purchase price and
the mortgage amount.
Due-on-Sale-Clause
A
provision in a mortgage or deed of trust that allows the lender
to demand immediate payment of the balance of the mortgage if
the mortgage holder sells the home.
Money
given by a buyer to a seller as part of the purchase price to
bind a transaction or assure payment.
Entitlement
The
VA home loan benefit is called entitlement. Entitlement for a
VA guaranteed home loan. This is also known as eligibility.
Equal
Credit Opportunity Act (ECOA)
Is
a federal law that requires lenders and other creditors to make
credit equally available without discrimination based on race,
color, religion, national origin, age, sex, marital status or
receipt of income from public assistance programs.
Equity
The
difference between the fair market value and current indebtedness,
also referred to as the owner's interest. The value an owner has
in real estate over and above the obligation against the property.
Escrow
An
account held by the lender into which the home buyer pays money
for tax or insurance payments. Also earnest deposits held pending
loan closing.
Provides
financing to farmers and other qualified borrowers who are unable
to obtain loans elsewhere.
Federal
Home Loan Bank Board (FHLBB)
The
former name for the regulatory and supervisory agency for federally
chartered savings institutions. Agency is now called the Office
of Thrift Supervision
Federal
Home Loan Mortgage Corporation(FHLMC) also called "Freddie
Mac",
Is
a quasi-governmental agency that purchases conventional mortgage
from insured depository institutions and HUD-approved mortgage
bankers.
Federal
Housing Administration (FHA)
A
division of the Department of Housing and Urban Development. Its
main activity is the insuring of residential mortgage loans made
by private lenders. FHA also sets standards for underwriting mortgages.
Federal
National Mortgage Association (FNMA) also know as "Fannie
Mae"
A tax-paying corporation created by Congress that purchases and
sells conventional residential mortgages as well as those insured
by FHA or guaranteed by VA. This institution, which provides funds
for one in seven mortgages, makes mortgage money more available
and more affordable.
FHA
loan
A
loan insured by the Federal Housing Administration open to all
qualified home purchasers. While there are limits to the size
of FHA loans ($155,250 as of 1/1/96), they are generous enough
to handle moderately-priced homes almost anywhere in the country.
FHA
mortgage insurance
Requires
a fee (up to 2.25 percent of the loan amount) paid at closing
to insure the loan with FHA. In addition, FHA mortgage insurance
requires an annual fee of up to 0.5 percent of the current loan
amount, paid in monthly installments. The lower the down payment,
the more years the fee must be paid.
FHLMC
The
Federal Home Loan Mortgage Corporation provides a secondary market
for savings and loans by purchasing their conventional loans.
Also known as "Freddie Mac."
Firm
Commitment
A
promise by FHA to insure a mortgage loan for a specified property
and borrower. A promise from a lender to make a mortgage loan.
Fixed
Rate Mortgage
The
mortgage interest rate will remain the same on these mortgages
throughout the term of the mortgage for the original borrower.
FNMA
The
Federal National Mortgage Association is a secondary mortgage
institution which is the largest single holder of home mortgages
in the United States. FNMA buys VA, FHA, and conventional mortgages
from primary lenders. Also known as "Fannie Mae."
Foreclosure
A
legal process by which the lender or the seller forces a sale
of a mortgaged property because the borrower has not met the terms
of the mortgage. Also known as a repossession of property.
also known as ginnie mae, provides sources of funds for residential mortgages insured or guaranteed by fha va
Graduated
Payment Mortgage (GPM)
A
type of flexible-payment mortgage where the payments increase
for a specified period of time and then level off. This type of
mortgage has negative amortization built into it.
Guaranty
A promise
by one party to pay a debt or perform an obligation contracted
by another if the original party fails to pay or perform according
to a contract.
Hazard
Insurance
A
form of insurance in which the insurance company protects the
insured from specified losses, such as fire, windstorm and the
like.
Housing
Expenses-to-Income Ratio
The
ratio, expressed as a percentage, which results when a borrower's
housing expenses are divided by his/her gross monthly income.
See debt-to-income ratio.
That
portion of a borrower's monthly payments held by the lender or
servicer to pay for taxes, hazard insurance, mortgage insurance,
lease payments, and other items as they become due. Also known
as reserves.
Index
A
published interest rate against which lenders measure the difference
between the current interest rate on an adjustable rate mortgage
and that earned by other investments (such as one- three-, and
five-year U.S. Treasury security yields, the monthly average interest
rate on loans closed by savings and loan institutions, and the
monthly average costs-of-funds incurred by savings and loans),
which is then used to adjust the interest rate on an adjustable
mortgage up or down.
Interim
Financing
A
construction loan made during completion of a building or a project.
A permanent loan usually replaces this loan after completion.
Investor
A
money source for a lender.
Jumbo
Loan
A
loan which is larger (more than $214,600 as of 1/1/97) than the
limits set by the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation. Because
jumbo loans cannot be funded by these two agencies, they usually
carry a higher interest rate.
A
claim upon a piece of property for the payment or satisfaction
of a debt or obligation.
Loan-to-Value
Ratio
The
relationship between the amount of the mortgage loan and the appraised
value of the property expressed as a percentage.
Margin
The
amount a lender adds to the index on an adjustable rate mortgage
to establish the adjusted interest rate.
Market
Value
The
highest price that a buyer would pay and the lowest price a seller
would accept on a property. Market value may be different from
the price a property could actually be sold for at a given time.
MIP
(Mortgage Insurance Premium)
It
is insurance from FHA to the lender against incurring a loss on
account of the borrower's default.
Mortgage
Insurance
Money
paid to insure the mortgage when the down payment is less than
20 percent. See private mortgage insurance, FHA mortgage insurance.
Occurs when your monthly payments are not large enough to pay
all the interest due on the loan. This unpaid interest is added
to the unpaid balance of the loan. The danger of negative amortization
is that the home buyer ends up owing more than the original amount
of the loan.
Net
Effective Income
The
borrower's gross income minus federal income tax.
Non
Assumption Clause
A
statement in a mortgage contract forbidding the assumption of
the mortgage without the prior approval of the lender. Note: The
signed obligation to pay a debt, as a mortgage note.
Office
of Thrift Supervision (OTS)
The
regulatory and supervisory agency for federally chartered savings
institutions. Formally known as Federal Home Loan Bank Board.
Origination
Fee
The
fee charged by a lender to prepare loan documents, make credit
checks, inspect and sometimes appraise a property; usually computed
as a percentage of the face value of the loan.
A
long term mortgage, usually ten years or more. Also called an
"end loan."
PITI
principle,
Interest, Taxes and Insurance. Also called monthly housing expense.
Pledged
account Mortgage (PAM):
Money
is placed in a pledged savings account and this fund plus earned
interest is gradually used to reduce mortgage payments.
Points
(loan discount points)
Prepaid
interest assessed at closing by the lender. Each point is equal
to 1 percent of the loan amount (e.g., two points on a $100,000
mortgage would cost $2,000).
Power
of Attorney
A
legal document authorizing one person to act on behalf of another.
Prepaid
Expenses
Necessary
to create an escrow account or to adjust the seller's existing
escrow account. Can include taxes, hazard insurance, private mortgage
insurance and special assessments.
Prepayment
A
privilege in a mortgage permitting the borrower to make payments
in advance of their due date.
Prepayment
Penalty
Money
charged for an early repayment of debt. Prepayment penalties are
allowed in some form (but not necessarily imposed) in many states.
Primary
Mortgage Market
Lenders
making mortgage loans directly to borrower's such as savings and
loan associations, commercial banks, and mortgage companies. These
lenders sometimes sell their mortgages into the secondary mortgage
markets such as to FNMA or GNMA, etc.
Principle
The
amount of debt, not counting interest, left on a loan.
Private
Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders
will allow a smaller down payment - as low as 5 percent in some
cases. With the smaller down payment loans, however, borrowers
are usually required to carry private mortgage insurance. Private
mortgage insurance will usually require an initial premium payment
and may require an additional monthly fee depending on you loan's
structure.
A
real estate broker or an associate holding active membership in
a local real estate board affiliated with the National Association
of Realtors.
Recision
The
cancellation of a contract. With respect to mortgage refinancing,
the law that gives the homeowner three days to cancel a contract
in some cases once it is signed if the transaction uses equity
in the home as security.
Recording
Fees
Money
paid to the lender for recording a home sale with the local authorities,
thereby making it part of the public records.
Refinance
Obtaining
a new mortgage loan on a property already owned. Often to replace
existing loans on the property.
Renegotiable
Rate Mortgage
A
loan in which the interest rate is adjusted periodically. See
adjustable rate mortgage.
RESPA
Short
for the Real Estate Settlement Procedures Act. RESPA is a federal
law that allows consumers to review information on known or estimated
settlement cost once after application and once prior to or at
a settlement. The law requires lenders to furnish the information
after application only.
Reverse
Annuity Mortgage (RAM)
A form of mortgage in which the lender makes periodic payments
to the borrower using the borrower's equity in the home as Satisfaction
of Mortgage: The document issued by the mortgagee when the mortgage
loan is paid in full. Also called a "release of mortgage."
A
mortgage made subsequent to another mortgage and subordinate to
the first one.
Secondary
Mortgage Market
The place where primary mortgage lenders sell the mortgages they
make to obtain more funds to originate more new loans. It provides
liquidity for the lenders. Security.
Servicing
All
the steps and operations a lender performs to keep a loan in good
standing, such as collection of payments, payment of taxes, insurance,
property inspections and the like.
Settlement/Settlement
Costs
See closing/closing costs.
Shared
Appreciation Mortgage (SAM)
A
mortgage in which a borrower receives a below-market interest
rate in return for which the lender (or another investor such
as a family member or other partner) receives a portion of the
future appreciation in the value of the property. May also apply
to mortgage where the borrowers share the monthly principle and
interest payments with another party in exchange for part of the
appreciation.
Simple
Interest
Interest which is computed only on the principle balance.
Survey
A
measurement of land, prepared by a registered land surveyor, showing
the location of the land with reference to know points, its dimensions,
and the location and dimensions of any buildings.
Sweat
Equity
Equity
created by a purchaser performing work on a property being purchased.
A
document that gives evidence of an individual's ownership of property.
Title
Insurance
A
policy, usually issued by a title insurance company, which insures
a home buyer against errors in the title search. The cost of the
policy is usually a function of the value of the property, and
is often borne by the purchaser and/or seller. Policies are also
available to protect the lender's interests.
Title
Search
An
examination of municipal records to determine the legal ownership
of property. Usually is performed by a title company.
Truth-In-Lending
A
federal law requiring disclosure of the Annual Percentage Rate
to home buyers shortly after they apply for the loan. Also known
as Regulation Z.
Two-Step
Mortgage
A
mortgage in which the borrower receives a below-market interest
rate for a specified number of years (most often seven or 10),
and then receives a new interest rate adjusted (within certain
limits) to market conditions at that time. The lender sometimes
has the option to call the loan due with 30 days notice at the
end of seven or 10 years. Also called "Super Seven" or "Premier"
mortgage.
Underwriting
The
decision whether to make a loan to a potential home buyer based
on credit, employment, assets, and other factors and the matching
of this risk to an appropriate rate and term or loan amount.
USURY
Interest charged in excess of the legal rate established by law.
A
long-term, low-or no-down payment loan guaranteed by the Department
of Veterans Affairs. Restricted to individuals qualified by military
service or other entitlements.
VA
Mortgage Funding Fee
A
premium of up to 1-7/8 percent (depending on the size of the down
payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage
with no down payment, this would amount to $1,406 either paid
at closing or added to the amount financed.
Variable
Rate Mortgage (VRM)
See
adjustable rate mortgage.
Verification
of Deposit (VOD)
A
document signed by the borrower's financial institution verifying
the status and balance of his/her financial accounts.
Verification
of Employment (VOE)
A
document signed by the borrower's employer verifying his/her position
and salary.
Many
mortgage firms must borrow funds on a short term basis in order
to originate loans which are to be sold later in the secondary
mortgage market (or to investors). When the prime rate of interest
is higher on short term loans than on mortgage loans, the mortgage
firm has an economic loss which is offset by charging a warehouse
fee.
Wraparound
mortgage
Results
when an existing assumable loan is combined with a new loan, resulting
in an interest rate somewhere between the old rate and the current
market rate. The payments are made to a second lender or the previous
homeowner, who then forwards the payments to the first lender
after taking the additional amount off the top.
Use the Mortgage Calculator to determine your Principle and Interest monthly payments. 