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Mortgage Glossary Terms: M-O

May 12th, 2004 · No Comments

Margin – The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

Market Value – The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.

Mortgage Escrow Accounts – The account set by the Lender to pay Taxes and Insurance on behalf of the Borrower.

Mortgage Insurance – Money paid to insure the mortgage when the down payment is less than 20 percent. See Private Mortgage Insurance or FHA Mortgage Insurance.

Mortgagee – The lender.

Mortgagor – The borrower or homeowner.

Negative Amortization – Amortization means that monthly payments are large enough to pay the interest and reduce the principal on a mortgage. Negative amortization occurs when the monthly payments do not cover all of the interest cost. The interest cost that isn’t covered is added to the unpaid principal balance. This means that even after making many payments, a borrower may owe more than was owed at the beginning of the loan.

Net Effective Income – The borrower’s gross income minus federal income tax.

Non-Assumption Clause – Statements in the mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.

Non-Owner Occupied – A property not used as a residence by the owner of the property.

Notary Public – A person, designated by the state, which can certify the identity of a person when signing various documents.

Note – Short for promissory note. This document gives the parameters of the loan and legally obligates the borrower to pay back the debt.

Obligations – Any debt, or recurring payment the borrower is obligated to pay, including mortgage payments.

Origination Fee – The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of face value of the loan.

Owner Occupied – Designation given to property used as the owner’s residence.

Owners Policy – A policy of the title insurance which protects the buyer against problems with the title.

Category: Mortgage