Glossary of Mortgage Loan Terms         A - D | E - L | M - P | Q - Z

Margin
The set percentage added to the index rate to determine the interest rate of an ARM.

Mortgage
A legal document that pledges a property to the lender as security for payment.

Mortgage Insurance (Private Mortgage Insurance - PMI)
Money paid to insure the mortgage when the down payment is less than 20 percent. Insurance provided by a non governmental insurer that protects lenders against a loss if a borrower defaults.

Mortgagee
The lender.

Mortgagor
The borrower / homeowner.

Negative Amortization
Occurs when 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.

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.

Owner Financing
A purchase in which the seller provides all or part of the financing.

Payment Cap
A provision of some ARMs limiting how much a borrower's payments may increase regardless of how much the interest rate increases.

PITI
Principal, Interest, Taxes and Insurance. Also called monthly housing expense.

Points (loan discount points)
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount.

Power of Attorney
A legal document authorizing one person to act on behalf of another.

Pre-Payment
A privilege in a mortgage permitting the borrower to make payments in advance of their due date.

Pre-Payment Penalty
Money charged for an early repayment of debt.

Principal
The amount of debt, not counting interest, left on a loan.