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Home Loans and Home Mortgage Resources
Below are some commonly used terms for Home Loans as well as other important information you need to know to get the best home loan for your needs.
Home LoanTransaction wherein a Lender allows a Borrower the use of a sum of money for a specified period of time at a specified rate of interest.
Home Loan AmountThe amount of a home loan is determined by how much the Borrower needs to complete the project and the Lender’s assessment of the Borrower’s ability to repay. Some Lenders may have minimum and maximum home loan amounts.
Loan-to-Value Ratio (LTV)The ratio of money a Lender is willing to loan relative to the appraised value of the property or other security.
MortgageSecurity instrument by which the Borrower (mortgagor) gives the Lender (mortgagee) a lien on property as security for the repayment of a loan.
PointsAn up front fee a Lender may charge for a loan, expressed as a percentage of the loan amount. “One point” equals one percentage of the loan amount. Thus, one point on a $10,000 loan is $100 ($10,000 X .01).
Prime RateThe rate, as announced from time to time by commercial banks, as the prime rate. (See Interest Rate).
Principal of LoanThe original amount of money borrowed, and the amount that the Borrower must pay back, not including interest.
Terms of LoanThe agreed upon period of time for which a loan is made. A loan provided for 10 years has “a 10 year term.”
Note: Definitions provided by the Low Income Investment Fund and the Nonprofit Finance Fund are used in this glossary.
Additional Home Loan and Mortgage Resources: