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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. |
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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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Home Owners Association (HOA)
A nonprofit organization that manages the common areas and services of a planned unit development or condominium project. In a condominium project it has no ownership interest in the common areas; in a planned unit development it holds title to common areas. |
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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. |
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