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Annual Percentage Rate (A.P.R.)
The actual cost of a mortgage loan expressed as a yearly rate. The APR will be higher than the interest rate stated on the application and note because it includes fees such as: interest, discount points, origination fee, mortgage insurance and other related fees. The truth in lending act requires lenders to disclose an APR to assist the borrower in measuring the actual cost of a loan. |
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Deferred Interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. |
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Monthly Housing Payment
Typically the total amount of principal, interest, taxes, and insurance (PITI) paid each month on a mortgage loan. Many lenders and investors limit the monthly housing payment to 28% of the gross monthly income. |
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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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