Glossary

Amortized - The time period over which the repayment of a loan is to be completed.

Cap - A provision of an adjustable-rate loan (ARM) that limits how much the interest rate or loan payments may increase or decrease. These can be lifetime payment cap, lifetime interest rate cap, periodic payment cap, and periodic interest rate caps.

Cash-Out - A loan in which the total proceeds of the loan are more than the actual refinanced amount and loan costs. Typically these "extra" proceeds are given to the homeowner to use or paid directly to an account of the homeowner's choice.

Debtor - Any company, partnership, corporation, or individual who extends credit to another and therefore reserves the right to be repaid that credit (Ex. credit card  company).

First Trust - A lien on real property which is recorded as the first or primary lien against that property.

Loan to Value (LTV) - Sum of the total liens on a piece of real property divided by the property's appraised value.

Margin - A predetermined percentage which is added to the current interest rate on any adjustable loan, if and when the loan increases.

Market - Refers to the "Long Bond" or "Thirty Year" treasury bond market. This is the market upon which interest rates are determined.

Mortgage Insurance - Insurance, paid by the borrower, on the loan in question, to protect the lender in case the borrower defaults.

No Income Verification (NIV) - Those loans in which a borrower needs to provide limited or no income documentation.

Subprime - Refers specifically to those mortgage products created using the "prime rate" as a starting interest rate, instead of the "treasury bond market" rate. More generally, refers to those products created for credit types rated less than A+.