41. Index

A measure of interest rate changes used to determine changes in an ARM's interest rate over the term of the loan.

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42. Initial Interest Rate

The introductory interest rate on a loan; signals that there may be rate adjustments later in the loan.

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43. Joint Tenancy

An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors take the decedent's interest in the property.

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44. Jumbo Loans

Mortgage loans that exceed the loan amounts acceptable for sale in the secondary market; these jumbos must be packaged and sold differently to investors and therefore have separate underwriting guidelines.

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45. Lien

A legal hold or claim on property as security for a debt or charge.

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46. Loan Commitment

A written promise to make a loan for a specified amount on specified terms.

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47. Loan-To-Value-Ratio

The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value.

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48. Lock-in

The fixing of an interest rate or points at a certain level, usually during the loan application process. It is usually done for a certain period of time, such as 60 days, and may require a fee or premium in the form of a higher interest rate.

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49. Margin

The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

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50. Mortgage Insurance Premium (MIP)

The mortgage insurance required on FHA loans for the life of said loans; MIP can either be paid in cash at closing or financed in its entirety in the loan. The premium varies depending on the method of payment.

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