Glossary
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Financing
The supplying of funds or capital. In the case of a mortgage, the lender provides all or a portion of the financing to the borrower to purchase real estate.
First Mortgage
The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions.
Fixed Rate Mortgage
A mortgage in which the interest rate does not change during the entire term of the loan.
Foreclosure
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Interest
A sum paid or charged for the use of money or for borrowing money. Such a sum expressed as a percentage of money borrowed to be paid over a given period.
Mortgage
A legal document that pledges a property to the lender as security for payment of a debt.
Mortgagee
The lender in a mortgage agreement.
Mortgagor
The borrower in a mortgage agreement.
Negative Amortization
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.
Principal
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
 
 
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