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- Amortization: Repayment
of your loan amount through regular payments
of both principal and interest, calculated
to pay off the loan after a fixed period of
time.
- Annual
percentage rate (APR): Charges
imposed on the borrower to obtain a mortgage,
expressed on an annualized basis as an interest
rate. It includes the interest rate, loan
fees and points.
- Closing The
time at which loan documents and funds are
signed and delivered to finalize the funding
of a loan. Sometimes called a settlement.
- Closing
costs: Expenses
incurred to finance a home loan and/or transfer
ownership of real estate.
- Cosigner: Person
who agrees to make loan payments, if you cannot
fulfill your financial commitment.
- Down
payment: Cash
paid by the home buyer towards the partial
payment of a home's sales price.
- Fannie
Mae Federal
National Mortgage Association: A
government-sponsored private corporation
that buys home loans from lenders and sells
them to investors.
- FHA Federal
Housing Administration: An
agency within the Department of Housing and
Urban Development that provides mortgage
insurance for home loans and sets standards
for construction and underwriting.
- Negative
amortization: Increase
in the unpaid loan balance created when monthly
payments do not cover both principal and
interest and unpaid interest is added to
the principal balance.
- Points: Up
front fee lenders charge to reduce an interest
rate. Each point typically equals 1 percentage
point of the total amount of the loan.
- Prepayment
penalty: Fee
borrowers pay if they pay off a loan during
the early years of its term.
- Principal: The
original amount of money borrowed not including
interest owed.
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