Second Mortage Terms
Adjustable Mortgage Loan: A mortgage instrument that allows maximum flexibility in selecting the terms under which interest rates and payments may be adjusted over the maturity of the loan.
Annual Percentage Rate (APR): Expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.
Fixed-Rate Mortgage: A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
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Foreclosure: A proceeding to extinguish all rights, title, and interest, of the owner(s) of property in order to sell the property to satisfy a lien against it.
Home Equity Line Of Credit: Allows the property owner to borrow against the equity in the home from time to time without reapplying for a loan.
Piggyback Mortgage: A combination of a first mortgage for 80% of property value, and a second for 5%, 10%, 15%, or 20% of value. These combinations are designated as 80/5/15, 80/10/10, 80/15/5, and 80/20/0, respectively.
Second Mortgage: A junior mortgage that ranks after a first mortgage in priority. Properties may have two, three, or more mortgages, deeds of trust, or land contracts, as liens at the same time.
Secondary Mortgage Market: The buying and selling of first mortgages or trust deeds by banks, insurance companies, government agencies, and other mortgagees. This enables lenders to keep an adequate supply of money for new loans.
Variable Payment Plan: Any mortgage repayment schedule that provides for periodic change in the amount of monthly payments. Changes may occur as a result of the expiration of an interest only period, a planned step-up in payments, or a change in the interest rate due to fluctuation in an index.
Wraparound Mortgage: A loan arrangement in which an existing loan is retained and an additional loan is combined with the existing loan. The new lender accepts the obligation to make payments on the old loan.
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