Must Know Mortgage Terminology

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Escrow
An independent agent, who holds all the funds and acts as a go between in bringing the transaction to a close.

Fixed Rate Mortgage
A mortgage loan in which the rate remains fixed for the entire term of the loan

Loan-to-Value Ratio
is a ration in percentage terms obtained by dividing the desired loan amount by the value of the property.

Market Value
Otherwise known as Fair Market Value, is the price that a willing buyer will be prepared to pay a willing seller under normal circumstances. Calculated using comparative analysis with existing sales in the area.

Mortgage Insurance
Insurance obtained by the lender and paid for by the borrower that protects the lender against possible loss due to foreclosure. Normally required if the loan to value ration is higher than 80%.

Origination Fee
The fee charged by the lender as a cost. Normally expressed as a percentage of the loan amount.