The interest rate is usually a quarter of a percentage point higher than on conventional loans. Lifetime Cap is the same as an annual cap, except the limit is on how high the interest rate can rise over the entire life of the mortgage. Loan commitments also will specify the mortgage's interest rate and a time frame, usually 60 days, within which the loan must be used. Loan Servicing refers to handling billing, collecting payment and paperwork, associated with on-going mortgages. Margin is an additional charge added to an ARM index when the adjustment period arrives.
Mortgage Brokers originate loans that are funded by primary lenders.
Getting your loan through a mortgage broker is riskier than through a primary lender or mortgage banker, because in times of tight money, mortgage brokers are the first lenders to have difficulty fulfilling their mortgage commitments. Mortgage Term is the length of time specified in the contract for repaying the loan, sometimes called the contract life of a loan. Negative Amortization is associated only with ARMs and can occur when a scheduled mortgage payment is too small to pay interest charges on a loan. In such cases, the cash shortfall is added to your mortgage principal, thus making your outstanding mortgage balance grow. Points, or Loan Origination Fees, are the upfront cash paid to lenders at closing as an inducement for making the loan.