487
1003
The standard loan application.
Amortization Schedule
The dollar figures in the Payment Schedule represent principal, interest, plus Private
Mortgage Insurance (if applicable) over the life of the loan. These figures do not reflect
taxes, insurance, escrows, or any temporary buy down payment contributed by the seller.
amortization
Loan payment by equal periodic payment calculated to pay off the debt at the end of a
fixed period, including accrued interest on the outstanding balance.
amount financed
The loan amount applied for less the prepaid finance charges (found on the Good Faith
Estimate). For example, if the borrower’s note is for $100,000 and the Prepaid Finance
Charges total $5,000, the amount financed would be $95,000. The Amount Financed is
the figure on which the Annual Percentage Rate is based.
APR (Annual Percentage Rate)
The Note rate for which the borrower applied. The Annual Percentage Rate (APR) is the
cost of the loan in percentage terms, taking into account various loan charges of which
interest is only one. Other charges used to calculate the Annual Percentage Rate are
Private Mortgage Insurance or FHA Mortgage Insurance Premium (when applicable) and
Prepaid Finance Charges (loan discount, origination fees, prepaid interest, and other
credit costs). The APR is calculated by spreading these charges over the life of the loan,
which results in a rate higher than the interest rate shown on your Mortgage/Deed of Trust
Note. If interest were the only Finance Charge, the interest rate and Annual Percentage
Rate would be the same.
ARM (Adjustable Rate Mortgage)
A mortgage in which the interest rate is adjusted periodically based on a preselected
index. Also sometimes known as the re-negotiable rate mortgage, the variable rate
mortgage, or the Canadian rollover mortgage.
ASCII (American Standard for Computer Information Interchange)
The most common format for text files in computers and on the Internet. In an ASCII file,
each alphabetic, numeric, or special character is represented with a 7-bit binary number (a
string of seven 0s or 1s). 128 possible characters are defined.
balloon loan
A short term mortgage with some features of a fixed rate mortgage. The loan provides a
level payment feature during the term of the loan, but does not fully amortize over the
original term. Balloon loans can have different maturities, but most balloons that are first
mortgages have a term of 5 to 7 years. At the end of the loan term there is still a principal
loan balance; the mortgage company generally requires that the loan be paid in full, which
can be accomplished by refinancing. Many companies have other options, such as a
conversion feature at the end of the term. For example, the loan can convert to a 30 year
Glossary
