Loan Services: Mortgage Loans
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Margin
This is the interest rate on an adjustable rate mortgage (ARM) minus the index
Unlike the index, the margin on a loan never changes. If you are comparing two loans with the same index, choose the loan with the lower margin. To find out the margin on a loan, simply ask the lender.
See: Index, Initial interest rate, Adjustable rate mortgage (ARM)
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Maturity
When a loan completes its term
A 30-year loan reaches maturity in 30 years. A balloon mortgage usually matures in 5 to 7 years, and when it does, the full amount is due.
See: Amortization
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Mechanic's lien
A claim placed on a home by someone to insure payment for construction services completed on the home
Most states allow workers who make improvements on a property to put a lien against your home in the event that payment is not provided. This lien will appear on a preliminary title report and prevent you from selling the property until the debt is paid. A mechanic’s lien can lead to a foreclosure, but foreclosure is not common.
See: Lien, Cloud on title
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Mortgage
An arrangement whereby a property acts as security for the repayment of a loan
A mortgage gives the lender the right to foreclose on the property in the event that the loan is not repaid. The lender will then sell the property to regain money lost on the loan. A deed of trust acts the same as a mortgage. With a mortgage, the lender must go to court to foreclose on a property.
See: Judicial foreclosure
Compare: Deed of trust
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Mortgage banker
A company (or person) that lends money to home buyers
Mortgage bankers take on all the tasks related to lending money, such as gathering the funds for the loan, approving the borrower and closing the loan. A mortgage company can be both a mortgage banker and a mortgage broker.
See: Non-institutional lender
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Mortgage broker
A company or person that helps obtain a loan for a buyer in return for a fee
Mortgage brokers are not lenders, but they help you shop for a loan from a selection of lenders. Once you apply for the loan, the mortgage broker handles all the documents and works with the lender.
Compare: Mortgage banker
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Mortgagee
The lender in a mortgage deal
Compare: Mortgagor
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Mortgage insurance (MI)
Insurance protecting the lender in the event the borrower is unable to repay the loan
MI is normally required if your down payment is less than 20% of the purchase price. In case of foreclosure, the lender will use the money collected from MI to help offset any losses. How much you need to pay each month in insurance depends on the loan amount, the term, the type of loan and the down payment. You might also have to pay one or two months worth of payments up front when you close on your home.
See: Down payment, Equity
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Mortgage Insurance Premium (MIP)
A one-time fee required for insurance on an FHA mortgage
If you apply for a FHA mortgage, you have to pay MIP, which is about 1.5% of the loan amount, on the closing date. Since this is a chunk of money to be paid at one time, you do have the option to add this cost to your loan.
See: Mutual Mortgage Insurance (MMI)
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Mortgage life insurance
An insurance policy to repay your home loan in case of death
The lender is the beneficiary of the policy. The premiums for mortgage life insurance are based on your age and the mortgage balance.
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Mortgagor
The borrower in a mortgage deal
Compare: Mortgagee
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Mutual Mortgage Insurance (MMI)
A contract that protects a lender in case a borrower defaults on a FHA mortgage
Federal Housing Administration (FHA) loans require monthly payments for MMI. In addition to MMI, there is a one-time fee, about 2.25% of the loan amount, on the closing date. You can also choose to tack this fee onto the loan amount.
See: Mortgage Insurance Premium (MIP), FHA mortgage
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