Glossary of terms used on this site
There are 105 entries in this glossary.All
| Term | Definition |
|---|---|
| Prepayment Penalty |
An extra cost to the borrower if the loan is repaid before it is due. The prepayment penalty compensates the lender for the loss of interest that would have been earned had the loan remained in effect for its full term. |
| Primary Residence |
A residence which the borrower intends to occupy as the principle residence (where they will live most of the time). |
| Principal |
The amount owed on a loan not including interest. |
| Private Mortgage Insurance (PMI) |
This protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans in which the down payment is less than 20 percent of the sales price or, in a refinancing, when the amount financed is greater than 80 percent of the appraised value. |
| Reassessment |
The process of re-determining the value of property or land for tax purposes. |
| Recasting |
This is a method of refiguring both the interest rate and monthly payment at a specific time in the loan term. The payment becomes the amount necessary to amortize the loan in the time remaining on the term. |
| Recourse |
The ability of the lender to look to the borrower to be personally responsible for the loss suffered if the sale of the mortgaged property from foreclosure does not cover the amount owed. |
| Refinance |
Paying off an existing mortgage loan and replacing it with a new loan. |
| Reverse Mortgage |
A special type of loan used to convert the equity in a home into cash. The money obtained through a reverse mortgage is usually used to provide seniors with financial security in their retirement years. |
| Second Mortgage |
A loan that is in second position behind the first mortgage. Sometimes used as additional down payment or to pull equity from the home. |