|
Adjustable Rate Mortgage (ARM)
A mortgage whose interest rate changes over time based on an index and a margin. Rate changes are made at prescribed times and within prescribed limits (caps) as defined in the mortgage contract. |
|
Effective interest rate
The effective interest rate is the mortgage cost on a yearly basis expressed as a percentage includes charges paid when closing the loan including compounded interest. Higher closing costs or more frequent compounding result in a higher effective interest rate. |
|
Jumbo Loan
A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Jumbo loans cannot be funded by these two agencies, and usually carry a higher interest rate. A loan which is larger than $322,700. |
|
Underwriting
Underwriting involves an analysis of the borrower's creditworthiness (debts and assets, employment history, property evaluation, and other factors to determine an appropriate rate, term & loan amount. |
|
