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Defining Mortgage and Loan Terms

Mortgage and Loan Terms

Home Mortgage Alliance Corporation (HMAC) offers various mortgage and loan programs.  These various programs are made available to our partners so that they can be direct lenders and owners.  This article will define mortgage and loan terms so that you can easily know what these terms are.

Mortgage and Loan Terms: Mortgage Programs

Here are some of the mortgage and loan terms that are specifically related to Mortgage Programs:

FHA

An FHA insured loan is a Federal Housing Administration insurance-backed mortgage. FHA loans are a type of federal assistance loan and have historically enabled lower-income Americans to purchase a home.

FHA 203k

Federal Housing Administration (FHA) 203k loans are designated for houses that are damaged or that are in need of rehabilitation. The loan covers not only the cost of the property, but also the cost of any necessary home repairs.

HARP

The Home Affordable Refinance Program (HARP) is a government program established by the Federal Housing Finance Agency in March 2009 in order to help underwater homeowners refinance their mortgages. This program is designed to assist homeowners whose mortgage payments are current, but who cannot refinance due to decreasing home prices.

HomePath

Fannie Mae’s HomePath program is available to purchase qualified foreclosed homes which are currently owned by Fannie Mae. The program has expanded conventional guidelines for borrowers, making it easier to obtain the loan.

USDA

A USDA loan, also known as the USDA Rural Development Guaranteed Housing Loan Program, is specifically for rural property owners. The household income of potential borrowers must meet certain guidelines, and the home to be purchased or served must be located in an eligible rural area, as defined by USDA.

VA

A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs. It is designed to offer mortgages to eligible American veterans or their surviving spouses.

Mortgage and Loan Terms: Loan Programs

Here are some of the mortgage and loan terms that are specifically related to Loan Programs:

Adjustable Rate

A mortgage in which the interest rate changes periodically based on the changes in a specified index.

Fixed Rate

A mortgage in which the interest rate does not change during the entire term of the loan.

Home Equity

A loan secured by a second deed of trust on a house. It is typically used as a home improvement loan.

Hybrid

Hybrid loans are often referred to as 3/1 or 5/1. The first number is the length of the fixed-rate term and the second is the adjustment interval that applies when the fixed-rate term is over. So with a 7/1 hybrid, for instance, you would pay a fixed interest rate for seven years; after that, the interest rate will change annually.

Interest Only

A mortgage loan in which the borrower only pays the interest on the principal balance, while the principal balance remains unchanged.

Jumbo

The current loan limit for a conforming loan is $417,000, except for in Alaska, Hawaii, Guam, and the U.S. Virgin Islands where conforming loans are limited to $625,500. Loan amounts of $417,001 and above are considered non-conforming or jumbo mortgages and are usually subject to higher pricing.

Reverse Mortgage

A loan available to home owners over 62 years old, in which they can draw the mortgage principal in a lump sum, by receiving monthly payments over a specified term, as a revolving line of credit, or a combination thereof.

Most of those contained in this article about mortgage and loan terms are part of the PARTNERSHIP PROGRAM offered by Home Mortgage Alliance Corporation.  Becoming a partner allows you to be a direct lender/owner and all you have to do is Sign-up and be a partner.

For more financial and mortgage terms check our Knowledge Base.

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