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

Qualifying Ratios
Guidelines applied by lenders to determine how large a loan to grant the home buyer. The debt-to-income ratio is your current monthly debt on loans and credit cards divided by your gross income. The housing-to-income ratio is your new housing payments divided by your gross income.

Recording Fees
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.

Refinancing
The process of paying off one loan with the proceeds from a new loan secured by the same property. This is most often done to get the better interest rates offered by the new loan.

Second Mortgage
A mortgage made subsequent to another and subordinate to the first one.

Title
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.

Title Search
An examination of municipal records to determine the legal ownership of property. This is usually performed by a title company.

Transfer Tax
State or local tax payable when title passes from one owner to another.

Truth-In-Lending
A federal law that requires lenders to full disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.

Two-Step Mortgage
A mortgage in which the borrower receives a below-market interest rate for a specified number of years, and then receives a new interest rate adjusted (within certain limits) to market conditions at that time.

Underwriting
The decision whether to make a loan based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate, term & loan amount.

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.