|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.
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.
Mortgage payments that include only interest. No loan amortization occurs and, thus, the homeowner does not accrue any equity (unless the home value increases).
|V.A. Mortgage Funding Fee|
A premium assed to the VA borrower in lieu of mortgage insurance. First time VA borrowers have a 3% funding fee included in their loan. When the VA borrower sells their home and uses their VA rights on a new home, the funding fee is 2%. VA borrowers refinancing their home, have a half percent funding fee in their mortgage. Disabled Veterans are not burdened with the funding fee.