US mortgage terminology
From Wikinvestor
This page aims to explain specific US mortgage terminology to readers.
Mortgage types
- Adjustable rate mortgage or ARM - A mortgage where the interest rate adjusts relative to a specified index + margin. Eg. COFI, LIBOR etc.
- Fixed rate mortgage or FRM - A mortgage where the interest rate and payment are fixed for the term of the loan.
- Negative amortization mortgage - where the payment may be less than the monthly acrued interest, and the outstanding interest is capitalized monthly into the loan balance.
- Balloon payment mortgage
- Interest only mortgage
Terminology
- Yield spread premium
- A par rate is the lowest interest rate a borrower qualifies for, given by the lender.
