Mortgage Terms GlossaryMortgage Terms Glossary - O thru QOffice of Thrift Supervision (OTS) The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board One Year Adjustable Rate Mortgage Mortgage where the annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender. 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 the face value of the loan. Owner Financing A property purchase transaction in which the party selling the property provides all or part of the financing. Payment Change Date The date when a new monthly payment amount takes effect on an adjustable rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the adjustment date. Periodic Payment Cap A limit on the amount that payments can increase or decrease during any one adjustment period. Periodic Rate Cap A limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be. Permanent Loan A long term mortgage, usually ten years or more. Also called an "end loan." PITI Principal, interest, taxes and insurance. Also called monthly housing expense. Pledged Account Mortgage (PAM): Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments. Points (Loan Discount Points) Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000). Power of Attorney A legal document authorizing one person to act on behalf of another. Preapproval The process of determining how much money you will be eligible to borrow before you apply for a loan. Prepaid Expenses Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments. Prepayment A privilege in a mortgage permitting the borrower to make payments in advance of their due date. Prepayment Penalty Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states. Primary Mortgage Market Lenders, such as savings and loan associations, commercial banks, and mortgage companies, who make mortgage loans directly to borrowers. These lenders sometimes sell their mortgages to the secondary mortgage markets such as FNMA or GNMA, etc… Principal The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage. Principal Balance The outstanding balance of principal on a mortgage not including interest or any other charges. Principal, Interest, Taxes, and Insurance (PITI) The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the monthly cost of property taxes and homeowners insurance, whether these amounts are paid into an escrow account each month or not. Private Mortgage Insurance (PMI) In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 3 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on your loan's structure. Qualifying Ratios Calculations used to determine if a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio. Quitclaim Deed - A deed that transfers, without warranty, whatever interest or title a grantor may have at the time the conveyance is made. read more about mortgage terms glossary More Mortgage TermsMortgage Term Glossarymortgage-terms-glossary-A-thru-D Mortgage-Terms-Glossary-E-thru-G mortgage-terms-glossary-H-thru-J mortgage-terms-glossary-K-thru-N mortgage-terms-glossary-O-thru-Q mortgage-terms-glossary-R-thru-Z PMI Private Mortgage Insurance Mortgage Interest- How to Calculate
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