Glossary

Annual Percentage Rate (APR): Annual Percentage Rate is the actual rate of a mortgage loan taking the Closing Cost into consideration. The idea is to factor in the Closing Costs of the mortgage loans so that we are comparing the real per dollar cost of the mortgage loans. For mortgage loans that have no Closing Cost, the Note Rate is the same as the APR. For mortgage loans that have the Closing Cost, we subtract the net Closing Cost from the principle. This is the actual amount of money that you get from the mortgage loan. We take this money amount as if it is the principle to calculate the rate of the mortgage loan which we call the APR. Another factor that affects the APR is the year term of the mortgage loan. For a short-term mortgage that we offer, such as the 3-year, 5-year or 7-year mortgage loan, our calculation assume the mortgage loan will be paid off at 3, 5 or 7 years even though they may be extended without incurring the regular Closing Cost. The shorter the year term of a mortgage loan, the higher the APR will be. Lender may not calculate the APR exactly the same way. Using our Web site, you may obtain year to year comparisons of different mortgage loans. We even calculate the year to year APR's for you to compare. This is more exact than using a single APR figure based on the year term of a mortgage loan. If you compare APR's from other lenders, make sure that you know what assumptions are made for the calculations.
Adjustable Rate Mortgage (ARM): Adjustable Rate Mortgage is a mortgage which adjusts its interest rate periodically. The period between adjustment can be as short as 1 month or as long as 1 year. There are mortgage loan programs that have an initial fixed rate periods of 3, 5 or 7 years. Then they becomes ARM after the initial fixed rate periods.
Amortization: Amortization is the calculation of the amount of your monthly payment in such a way that you will pay off the principle and interest of your mortgage loan in an exact number of payments. Most mortgage loans are amortized in 30 years. That means that they are paid off in exactly 360 monthly payments. Some mortgage loans have a short fixed rate period such as 3, 5 or 7 years but they are amortized in 30 years. That means that the monthly payment is calculated as if it was a 30-year mortgage loan. But the mortgage loan will be ended in 3, 5 or 7 years. When the mortgage loan ends, the borrower may have the option to convert it to some other terms as defined in the mortgage loan documents.
Back button: This is the button on your browser to go back to the previous Web page. This is not part of the Web page and is usually the first button below the menu bar of most browsers.
Closing cost: Closing cost is the initial expenses you paid to obtain your mortgage loan. In our calculation, we consider only the mortgage loan origination fee (i.e. points) and other closing fees as your closing cost. Pre-paid interest and other recurring fees are not considered as your closing cost even though you pay them at the time you obtain your mortgage loan.
Cost and interest: Beside interest you paid on your mortgage loan, you also incurred closing cost to obtain your mortgage loan. The cost and interest of your mortgage loan is all the expense you paid for the mortgage loan. Your monthly payment includes a small portion of money which applies towards reducing your principle. This amount is not an expense and therefore is not part of your cost and interest of your mortgage loan.
Current market value: The current market value of your house is the price you would have sold your house for averaged in the past 6 months. In other word, it is the appraised value of your house. If you are buying a house, the price you paid may not be the same as the appraised value. However, your house's current market value is the appraised value.
Default value: In a Web page that requires the visitor to answer questions, there are often supplied answers to the questions. The visitor may accept these "default values" as his own. If the visitor feels that these answers do not apply to his situation, he may change them accordingly.
Fixed rate period / Initial interest rate: Besides fixed rate mortgages that pay off in 15 or 30 years, there are mortgages that amortized in 30 years with an initial fixed rate period of only 3, 5 or 7 years. After the fixed rate period, the mortgages need to be paid off or become adjustable rate.
Loan origination fee (ala Points): Loan origination fee or points is the amount of closing cost charged as a percentage of the mortgage loan amount. One point equals to one percent of the mortgage loan amount. The amount of points charged is in reverse proportion to the interest rate of the mortgage loan. The lower the interest rate, the more the points will be charged on the mortgage loan. In addition to points, there are other closing fees not directly related to a percentage of the mortgage loan amount. These closing fees are basically the same no matter what is the interest rate of the mortgage loan. We usually separate the points and the closing fees as two components of the closing cost.
No closing cost (No Point No Fee): Some mortgage lenders are willing to pay for all the closing cost of your mortgage loan in exchange for a higher interest rate on your mortgage loan. In a period of low interest rate, mortgage with no closing cost may have an interest rate even lower than that of your existing mortgage. In such situation, you have no reason not to refinance.
Radio button: On a Web page that requires visitor answering questions. There may be questions that require the visitor to select one of the alternative listed there. Those alternatives are preceeded with a small hollow circle (or a small hollow diamond in some browsers) called radio button. The visitor clicks on the small circle (or diamond) to select it. Once selected, the circle (or diamond) is marked with a dot inside it. Unselected radio buttons remain hollow. Radio buttons come in a set. If one of the radio button in the set is selected, all other radio buttons in that set become unselected.

Glossary

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