Scheduled mortgage payment - The monthly mortgage payments which includes payments to be made towards the principal and the interest for the duration of the mortgage contract. If the borrower pays less than the schedule amount, it is considered as a delinquency.

Second mortgage - The mortgage that stands second in making claims when a borrower defaults on mortgage payments. So the lender who gives out a second mortgage gets paid only after the lender of the first mortgage is paid off.

Secure option ARM - In such an ARM, the initial rate of interest stands the same for a period of five years, rather than just for one month.

Secondary markets - This is a market in which mortgages or mortgage-backed securities are purchased and sold.

Seller contribution - The contribution provided by a home seller towards a borrower's down payment or settlement costs. This is seen as an alternative to price reduction.

Seller financing - A loan made by a seller to help finance the home. Usually done as a second mortgage.

Servicing - Servicing loans is a set of activities that include collecting monthly payments, keeping records of loan progress, assuring payments of taxes and insurance and so on.

Servicing agent - A party who helps to carry out loan process activities. This agent may or may not be the lender.

Settlement costs - Costs incurred by the borrowers at the time of loan closing. This does not include the down payment that has to be paid for the loan.

Short sale - A sale carried out because the borrower is unable to complete making loan payments that are due on their property. The sale proceeds are remitted to the lender to pay off debts and this type of a sale is seen as an alternative to foreclosure, or a deed in lieu of foreclosure.

Silent second - A second mortgage, given at preferential rates to a borrower.

Stated income - The sources of income stated or put forth by a borrower when taking a home mortgage. The lender just verifies this document requirement, but will not inspect the amount from these sources.

Sub-prime borrower - A borrower who does not have a good credit score. Different companies have different measures however generally speaking the characteristics are:

• a FICO score of 660 or less

• delinquencies in the past two years

• a foreclosure in the past two years

• any bankruptcy in the last five years

• qualifying debt-to-income ratios of 50 percent or higher

• limited ability to cover monthly living expenses

Sub-prime lender - This is a lender who specializes in providing mortgages to sub-prime borrowers. Ameriquest is one of the largest in the United States.

Tangible net benefit - The net gain that a borrowers gets through refinancing.

Tax service fee - Fees that some lender charge at the time of closing, for payment towards taxes on the borrower’s property.

Teaser rate - Incredibly low interest rates, that are put forth to attract people to taking a loan. Also used by some to qualify people for mortgages they would not otherwise afford.

Temporary buydown - A process by which the mortgage payments are reduced through an upfront cash payment during the initial loan period. This amount can be provided either by the home buyer or the seller, or both.

Term - The duration (length) of the loan period.

Title insurance - This type of insurance helps to protect the lender’s as well as the buyer’s interest against losses which may arise from disputes over title, outstanding liens or ownership of a property.

Total interest payments - The total amount of interest to be paid over the loan period. It however isn’t a true reflect of the loan cost for a borrower as it does not take into consideration the time value of money and any up-front cash payments.

Truth in Lending (TIL) - This is a law according to which all information for different loan types must be provided to borrowers.

Underwriting - A process in which all details provided for a loan approval are examined to determine if the loan can be approved. This process is performed by an underwriter.

Underwriting requirements - The standards set for loan underwriting or approval of a borrower for a loan.

Upfront Mortgage Broker (UMB) - This is a mortgage broker, who acts in the best interests of the borrower to get them the best home loan deal and whose charges are to be paid upfront or at the outset of the transaction. Their terms are specified in writing and they apply set fees for their services.

Upfront Mortgage Lender - A lender who offer home mortgage through the internet. They provide all the information on their site to help the prospective borrower make an informed decision before applying for a mortgage.

VA mortgage - A mortgage guaranteed by the Veterans Administration, which is available to veterans of the armed forces.

Waive escrows - In a waive escrow, the lender authorizes the borrower to pay taxes and insurance directly instead of paying them into an escrow account.

Warrantable condos - This is a condominium project that includes features which protect lenders against hazards that threaten to reduce their value. Examples of such features could be most units would be sold than rented or insurance coverage for common structures and so on.

Wholesale lender - A lender who offers loans through mortgage brokers .

Workout assumption - The assumption of an existing mortgage by a qualified, third-party borrower from a financially distressed borrower. By having someone else assume the mortgage, the financially distressed borrower is relieved of its obligation of repaying the mortgage. The assumption must be approved by the lender (mortgage holder). This avoids a foreclosure on the property which is something the borrower and lender want to avoid.

Wrap-around mortgage - A mortgage taken on a property which already has a outstanding debts. Here the new lender takes on the responsibility of making payments due on the old mortgage.

Yield-Spread premium - This is a term which refers to the negative points retained by a mortgage broker. This is one of the common ways mortgage brokers get paid – it is often not revealed to you.

Yield Curve - This is a graph that shows the relationship between the interest rate and term of the loan. The usual shape of the yield curve is a rising which means that loans with longer terms have a higher interest rate. Thus, a 15 year product usually has a lower interest rate associated with it than a 30 year product.

100% loan - In a 100% loan there is no need to make a down payment.

125% loan - In this loan a borrower can take a loan amount for up to 125% of the loan.

40-Year Mortgage - This is a mortgage in which the loan term is 40 years. The payments are lower than for a 30 year mortgage, but over the life of the loan you will make considerably more in interest payments:

Consider the example of a $400,000 mortgage with a 6.5% fixed rate

15 Year 30 Year 40 Year

Monthly Payment $3484 $2528 $2342

Total Interest Payments over Life of Loan $227,197 $510,178 $649,299