Home Loans from Quicken Loans
Mortgage lending has a language all its own. If you run across a term you’re unfamiliar with—or if you just want to be better versed in mortgage-speak—we’ve got definitions for most of the terms you’ll encounter.
Adjustable-Rate Mortgage (ARM)
A type of mortgage that’s commonly called an ARM. The interest rate is initially fixed for a specified number of years, after which it can adjust up or down periodically based on a disclosed index. With an ARM, you will usually get a lower interest rate during the initial term than you would with a fixed-rate mortgage, which could allow you to qualify for a larger loan. However, keep in mind that the interest rate may increase in future years, making future monthly payments higher. Most adjustable-rate mortgage programs offer the protection of a rate cap, which limits the amount the rate can be increased each year, as well as over the life of the loan.
The date the interest rate may adjust for an adjustable-rate mortgage. This date will be referenced in your disclosures and on your Note. To change to another type of loan, such as a fixed-rate loan, contact your lender at least three months before this adjustment date, but keep in mind that not all ARMs have a conversion option.
The amount of time between the adjustment dates for an adjustable-rate mortgage. For example, the interest rate on a six-month ARM could go up, go down, or stay the same every six months.
The periodic repayment of the loan balance. As you pay each month, a portion goes to the estimated loan principal and a portion goes to the interest. An amortization schedule shows the balance after each payment is made.
The amount of time you have to repay your loan, usually shown as a number of months. For example, the amortization term for a 30-year mortgage is 360 months (30 years x 12 months).
Annual Percentage Rate (APR)
The annual percentage rate reflects the annualized total cost of your mortgage and is calculated using the interest rate on your mortgage loan, the term of the loan, and certain other loan costs, such as closing costs and points.
The process of providing a lender with your personal information—such as income, assets, and debts—so the lender can determine whether you qualify for a loan.
A professional, impartial opinion of a property’s estimated market value. The value is estimated based on the property’s style and appearance, construction quality, and usefulness, as well as the value of similar properties in the same or nearby community that recently have been sold. An appraisal, which is documented either in writing or electronically, is NOT a warranty of value and does not indicate that a property is habitable, sound, etc.
An increase in the value of a property due to market conditions or other causes. (Of course, market conditions can also cause a property to depreciate.)
Anything of monetary value owned by a borrower, including real property, personal property, bank accounts, stocks, mutual funds, etc. A review of assets is a basic part of the mortgage application process.
The person applying for the mortgage who will be responsible for repaying the loan. There may be more than one borrower on a loan.
A mortgage that enables a borrower to obtain financing for a new house before their present house is sold, with the present home used as collateral. This type of loan is also known as a “swing loan.”
Charles Schwab Bank
This offer is subject to change or withdrawal at any time and without notice. Nothing herein is or should be interpreted as an obligation to lend. Loans are subject to credit and property approval. Other conditions and restrictions may apply. Hazard insurance may be required. Program terms and conditions are subject to change.
Charles Schwab Bank and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Investment products are offered by Charles Schwab & Co., Inc. (member SIPC). Charles Schwab & Co., Inc. does not solicit, offer, endorse, negotiate or originate any mortgage loan products and is neither a licensed mortgage broker nor a licensed mortgage lender. Home lending is offered and provided by Quicken Loans, Inc, Equal Housing Lender. Quicken Loans Inc., is not affiliated with The Charles Schwab Corporation, Charles Schwab & Co., Inc. or Charles Schwab Bank. Deposit and other lending products are offered by Charles Schwab Bank, Member FDIC and an Equal Housing Lender.
Quicken Loans is licensed in all 50 states Quicken Loans Nationwide Mortgage Licensing System #3030. Restrictions may apply. Equal Housing Lender. Lending services provided by Quicken Loans Inc., a subsidiary of Rock Holdings Inc.