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Amortization
The gradual repayment of a mortgage by installments. As you pay back the loan, an increasing amount of each payment is applied to principal and a lesser amount is applied to interest. Amortization is also a process of spreading a cost that is incurred upfront over the term of the loan or life of the asset. |
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Debt Consolidation Loan
A type of loan that allows the borrower to payoff all or a portion of existing debt (including the existing mortgage loan) from loan proceeds. |
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Home Equity Loan
A type of loan that allows homeowners to acquire a loan in addition to their original mortgage/lien using a portion or all of the equity in their home (primary residence). A home equity loan is a generally a second mortgage on the subject property and may be used for any personal needs (i.e., college education, debt consolidation, home improvement, etc). |
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Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 3 percent in some cases. With down payments below 20%, borrowers are usually required to carry private mortgage insurance depending on your loan's structure. Private Mortgage Insurance, is paid on all non-government-insured loans and whose equity is less than 20%. When you have accumulated 20% in equity, your lender may waive PMI at your request. FHA and VA loans have different insurance and guidelines; see Mortgage Insurance Premium for FHA loans. |
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