Glossary of Terms

Index or Rate Index:
A measure of interest rate changes used to adjust the interest rate of an Adjustable Mortgage
Loan. Example: the change in U.S. Treasury security (T-bills) with a 1-year maturity, based upon their weekly average yield.

Lien:
A legal claim or charge on property as security for payment of a debt or for the discharge of an obligation.

Loan-to-Value Ratio:
The ratio - expressed as a percentage - of the amount of a mortgage loan to the appraised value or selling price of the property.

Lock Box:
A key storage system placed on a home entrance that is accessible only by active, licensed real estate agents who must abide by a strict set of guidelines when showing a seller's home.

Margin:
In Adjustable Mortgage Loans, the number of percentage points the lender add the index rate to determine the new interest rate at each adjustment.

MLS:
MLS stands for Multiple Listing Service, by which member brokers cooperate in sale of each other's listings. Sellers may choose not to allow their property into multiple listing, if they wish.

PITI (Principal, Interest, Taxes, and Insurance):
Used to indicate the four major items included in a monthly mortgage payment.

Points:
A fee charged by a lender as a service charge or as an amount needed to make the yield on a mortgage competitive with other types of investments. Each point represents 1% of the loan amount.

Price Trend Analysis:
A tool developed and used exclusively by Weichert, Realtors to help set a home's listing price by projecting local trends. This is used in conjunction with a CMA, or Competitive Market Analysis. It is not an appraisal.

Principal:
Amount of debt, not including interest; the original amount of a loan.

Private Mortgage Insurance:
Insurance issued by a private company that limits the potential loss by a lender in the event of default. Private mortgage insurance is generally required for conventional financing whenever less than 20% is put down.

Second Mortgage:
A mortgage which ranks after the first mortgage lien in priority.

Seller's Agent:
The licensed real estate salesperson who helps homeowners list and sell their homes. This usually includes help in determining an asking price, attracting buyers, negotiating and closing.

Settlement:
Same definition as closing.

Title Insurance: Insurance that protects against claims that arise from arguments about ownership of the property.

VA Loans:
Loans partially guaranteed by the Veteran's Administration, enabling veterans buy a home with little or no down payment.