Morgage Terms - Explain Morgage Types

Common Morgage Terms and Programs

This list of common morgage terms will help explain the various types of loans that are available to consumers. Browse through this list and familiarize yourself with the options available to you as well as some of the terms and phrases that will be used through out the process of obtaining a loan.

Fixed Rate Morgage
Is a type of loan with an Interest Rate that remains constant throughout the life of the loan... to read more click on 'Fixed Rate Morgage'...you can also use our calculators for a comparison of Fixed Rate deals lenders may have offered you.

10 Year Morgage
Is a type of Fixed Rate loan that is amortized over a period over 120 Months that normally has an interest rate equivalent to that of a 15 Year Term...to read more click on '10 YR Morgage'...you can also apply for a free quote on 10 Year Mortgage deals to find out current 10 Year Interest Rates. of loan volume.

15 Year Morgage
Is a common loan term that is amortized over a period of 180 Months. The interest rate is traditionally lower than that of the 30 Year Fixed Rate...to read more click on '15 YR Morgage'...you can also call us for a free quote on today's 15 Year Morgage rates.

20 Year Morgage
Is a loan amortized for 240 Months and is traditionally offered at a rate equal to the 30 yr term...to read more click on '20 YR Morgage'...to learn what today's 20 Year Deals may be simply fill out the 'Quick Application' provided above.

25 Year Morgage
Is a loan paid over a period of 300 Months---and it is becoming increasingly popular. The rate is equivalent to that of the 30 Year Fixed Rate program...to read more click on '25 YR Morgage'...for a comparison of 25 Year deals be sure to ask for a quote.

30 Year Morgage
This is the most common loan term; it is an agreement to pay the balance of your loan in full over the next 360 Months...to read more click on '30 YR Morgage'...for today's 30 Year Interest Rates be sure to call us at the number provided above.

40 Year Morgage
Is an increasingly popular loan option that amortizes the balance over 480 Months in order to reduce the monthly payments in comparison to a 30 Year Fixed loan...To read more click on '40 YR Morgage'...the 40 Year Interest Rates are generally slightly higher than that of the 30 Year Term.

50 Year Morgage
This loan is amortized over 600 Months and is designed to drastically reduce monthly payments...for more info click '50 YR Morgage'...a major difference between 40 and 50 year terms is that 50 year terms are generally offered only by 'subprime' lenders in order to make affordable the higher rates of such loans; whereas 40 Year Terms are available for Subprime Loans and traditional loans as well.

Adjustable Rate Morgage
Is a loan with a rate (and payment) that adjusts monthly in relation to an index (Read About Mortgage Indexes Below)...to read more click on 'Adjustable Rate Morgage'...the definition is provided as well as a detailed accounting of the benefits of this type of loan.'

Variable Rate Morgage
Is a term that is used interchangeable with 'Adjustable Rate Mortgage'...to read more click on 'Variable Rate Morgage'...or apply today for current rate information.

1 Year ARM
A One Year ARM is a type of Adjustable Rate loan wherein the payment and rate are fixed for 12 Months. After this period of time the rate begins to adjust monthly in relation to the selected Index...to read more click on '1YR ARM'

2 Year ARM
A Two Year ARM is an adjustable rate loan that has a fixed rate and payment for a period of 24 months before 'adjusting' in relation to an Index...to read more click on '2YR ARM'...these types of loans are generally offered by Subprime Lenders and usually have a Prepayment Penalty for two years, too.

3 Year ARM
The Three Year ARM is fixed for a 36 Month Period before it begins adjusting monthly in relation to an Index. Traditionally these loans are offered at rates slightly below that of the 5 Year ARM...to read more click on '3YR ARM'...this is also a program that is offered by both traditional lenders and subprime lenders.

5 Year ARM
The Five Year ARM is a program that has a fixed payment and rate for the first 60 months of the loan. After that point it begins adjusting in connection to an Index...to read more click on '5YR ARM'...Many people appreciate the relative security of this loan that offers an interest rate below that of the 30 Year Fixed Term.

7 Year ARM
The Seven Year ARM is an option that keeps the payment and interest rate fixed for 84 Months and then begins adjusting monthly...to read more click on '7YR ARM'...historically, the rate on this program is slightly below that of the 30 Year Term. Many borrowers enjoy the stability of this option considering that the average borrower owns their home for just over 7 years.

10 Year ARM
The Ten Year ARM offers a fixed payment and rate for the first 120 months...to read more click on '10YR ARM'...this program generally fluctuates with a rate just above or just below that of the 30 Year Program.

Morgage Indexes / Indices
Adjustable Rate loans have interest rates based on a fixed 'margin' added on top of an 'Index' that adjusts monthly...to read more click on 'Morgage Indexes'...the most commonly used Indices are listed below.

CMT
The Constant Market Treasuries is a set of 'theoretical' securities based on the most recently auctioned 'real' securites...to read more click on 'CMT'...this indes is considered fairly volitile and reacts more quickly to the market than the MTA or COFI.

CODI
The Certificate of Deposit Index is the 12 month average of the monthly average yields on the nationally published 3-month Certificate of Deposit rates...to read more click on 'CODI'...because this is an annual average it tends to be more steady than the CMT (but less steady than the COFI)

COFI
Refers to the Cost of Funds Index which s the weighted-average interest rate paid by the 11th Federal Home Loan Bank District and other source funds...to read more click on 'COFI'...this index is known to be slow in responding to the market and therefore tends to be the steadiest of the common indices.

LIBOR
Is an acronym for London Interbank Offered Rate and is the interest rate offered by a group of London banks for U.S. dollar deposits of a stated maturity...to read more click on 'LIBOR'...today it is the most popular of the mortgage indices used.

MTA
The Monthly Treasury Average is the 12 month average of the monthly average yields of U'S. Treasury securities adjusted to a constant maturity of one year...to read more click on 'MTA'...it is also known as the 12 Month Moving Average Treasury index (MAT or 12 MAT)

Home Equity Morgage
This refers to a type of loan that is usually placed behind the existing loan on a property. It is often used as a credit line that can be used up to a specific dollar amount at an established rate...to read more click on 'Home Equity Mortgage'...the interest rate for such programs adjusts monthly in relation to an index.

2nd Morgage / Second Morgage
Is a loan that takes the second (junior) lien position behind an existing loan...to read more click on '2nd Morgage'...because of the 'junior' position and because they generally have higher Loan to Values these loans typically have higher interest rates than 1st Mortgages.

FHA / VA
The Federal Housing Administration and the Veterans Administration are able to assist homebuyers with these loan programs...to read more click on 'FHA Morgage VA'...they help individuals who may not have much money for a downpayment or don't have perfect credit.

Morgage Documentation Types
Learn about the different types of income and asset documentation that are required for certain types of loans...to read more click on 'Morgage Documentation Types'...by reading this before you talk to a lender you can determine which sort of documentation will support your application best (and which type of documentation may work against you).

SIVA / Stated Income Verified Assets
Is a loan documentation type that requires you to verify your assets with supporting documentation (such as bank statements, VOD, 401K Statement, etc) but permits you to 'State' your income...to read more click on 'SIVA'...keep in mind that while the Stated Income Verified Assets option does not require you to prove your income it still requires you to prove that you are actually employed.

SISA / Stated Income Stated Assets
This documentation option allows you to 'state' both your income and your assets...to read more click on 'SISA'...so while you don't have to prove the amount of your income or assets you still have to prove that A) You are employed and B) That your asset accounts exist (for example, you can show a 401K Statement with your name and account number but have the amounts Blacked Out).

NINA / No Income No Assets
This documentation type allows you to avoid any references to your income, assets or employment...to read more click on 'NINA'...it is a loan based on the strength of your Credit History and your Loan to Value.

NIVA / No Income Verified Assets
This documention option requires that you verify your assets with supporting documentation (such as monthly statements) but does not require you to verify income or employment...to read more click on 'NIVA'

No Ratio
This is a type of documentation that does not require that your Debt to Income Ratio be used as a means of qualification and therefore does not require that you disclose your income...to read more click on 'No Ratio Morgage'...the No Ratio Doc Type is often used by couples wherein only one person is actually on the loan (though many other persons use it for a variety of reasons). Note that you still must prove employment.

Full Documentation Morgage
This is the standard documentation type for loan qualification and requires that you support both your income and assets with supporting documentation...to read more click on 'Full Documentation Loan'...the interest rates for Full Doc loans are traditionally lower than the various types of 'alternative' documentation listed above.

Helping To Explain The Common Types Of Morgages Available To You