| Do you recognize these mortgage terms? If you don't, | | | | relatively quick default, so that way the lender can |
| you should get to know them now. These terms might | | | | "grab" the borrower's equity. |
| help you recognize risk in your mortgage loan terms | | | | Good faith estimate - The standard form from a |
| and mortgage process. They will also be beneficial in | | | | lender that details any and all anticipated settlement |
| helping you decide if you are getting the right loan for | | | | charges that the borrower should expect to pay at |
| your situation. | | | | closing. The lender is required to provide this document |
| ARM (Adjustable Rate Mortgage) - A mortgage | | | | within three business days of their receipt of a loan |
| containing an interest rate that, after an initial period, | | | | application. Pay close attention to these details and |
| can be changed by the lender. The majority of these | | | | make sure you understand completely all of the |
| contracts handle rate changes by evaluating a | | | | anticipated fees. |
| pre-determined interest rate index over which the | | | | Negative amortization - An increase in the outstanding |
| lender has no control. | | | | loan balance, resulting from multiple monthly payments |
| Due-on-sale clause - A provision of a loan contract | | | | that are less than the interest due. Watch out for this |
| that stipulates when the property is sold any | | | | type of loan. This kind of mortgage loan is very risky. |
| outstanding loan balance must be repaid. This prevents | | | | Rate protection - Protection for a borrower against |
| the seller from transferring responsibility for an existing | | | | the danger that rates will rise between the time the |
| mortgage to the home buyer. | | | | borrower applies for a loan and the time the loan |
| Equity grabbing - An unethical type of predatory | | | | closes. This could help your loan be safer for you and |
| lending where the loan provider purposely attempts to | | | | more secure, long term. |
| put the borrower into a loan that will result in a | | | | |