Historical Scenario
The assumption that the index value to which the interest rate on an ARM is tied follows the same pattern as in some prior historical period. In meeting their disclosure obligations in connection with ARMs, some lenders show how the mortgage payment would have changed on a mortgage originated some time in the past. That is not very useful. Showing how a mortgage originated now would change if the index followed a historical pattern would be useful, but nobody does it.
Popular Mortgage Terms
A payment made by the borrower over and above the scheduled mortgage payment. If the additional payment pays off the entire balance it is a prepayment in full; otherwise, it is a partial ...
A charge imposed by the lender if the borrower pays off the loan early. The charge is usually expressed as a percent of the loan balance at the time of prepayment or a specified number of ...
The ratio of housing expense to borrower income. This ratio is one factor used in qualifying borrowers. ...
A reverse mortgage program administered by FHA. ...
Assuming responsibility for someone else's payment obligation in the event that that party defaults. ...
A payment made after the grace period stipulated in the note, usually 10-15 days. ...
A documentation requirement where the applicant's assets are not disclosed. ...
A fee that some lenders charge to accept an application. It may or may not cover other costs such as a property appraisal or credit report, and it may or may not be refundable if the lender ...
The lowest interest rate possible under an ARM contract. Floors are less common than ceilings. ...
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