The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment. The ability of mortgage borrowers to deduct the interest paid on a home loan for purposes of federal and state income taxes. A type of term life insurance often purchased by homebuyers. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the mortgage debt is automatically covered by insurance proceeds.
Negative amortization occurs when monthly payments fail to cover the interest cost.
The interest that isn't covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren't high enough to cover the interest. A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan. The fee is limited to 1 percent for FHA and VA loans. Principal, Interest, Taxes and Insurance.