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Balloon Mortgage
When credit is advanced by note or contract and payment is required in regular equal installments and the note or contract will mature before the note or contract is paid in full, a payment which may be larger than the regular payment will fall due. |
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Debt ratio or Debt-to-Income Ratio
The ratio, expressed as a percentage, is calculated by dividing the monthly payment of long-term debts by gross monthly income. |
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Interest-only payments
Mortgage payments that include only interest. No loan amortization occurs and, thus, the homeowner does not accrue any equity (unless the home value increases). |
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Two-Step Mortgage
A mortgage in which the borrower receives a below-market interest rate for a specified number of years (commonly seven or 10 years). At the end of the 10 years for example, the interest rate is 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. |
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