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Cap
A consumer safeguard limiting adjustments to ARM interest rate or mortgage payment's. |
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Equity
In real estate, the interest or value of the real estate over and above the amount of the indebtedness thereon. |
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Interest-only payments
Mortgage payments that include only interest. No loan amortization occurs and, thus, the homeowner does not accrue any equity (unless the home value increases). |
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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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