Miscellaneous Mortgage Terms and Facts |
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Miscellaneous Mortgage Terms and Facts |
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These are miscellaneous mortgage terms and facts that don't fit into previous categories but which appear in the questions at the end of the section.
| 1. | The systematic reduction of debt by repayment of the principal is called Amortization. |
| 2. | The primary determinant of the number of discount points that will be charged by the lender is the money market. |
| 3. | Principal and interest are always components of the mortgage payment. Other components such as taxes and insurance are possible. |
| 4. | Principal and interest are the components of the mortgage payment that amortizes a mortgage. Taxes, property insurance, and mortgage insurance may be required by some lenders but have no bearing on the amortization process. |
| 5. | Negative Amortization occurs when the loan payment is insufficient to pay the interest. |
| 6. | When a transaction is complete, the Mortgagee is the note holder. |
| 7. | Interest is always the first component of the mortgage to be satisfied. Anything left over goes to the principal. Taxes and insurance are escrow accounts. |
| 8. | If the term of the mortgage is decreased, the monthly payment will increase. The term of the mortgage refers to the length of time that the borrower has to repay the loan. Mortgages may be any length. 30 years, 15 years, and 7 years are common terms. |
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