Residential Lenders Key Terms

Familiarize yourself with residential lenders key terms

By Missy Duncan

Buying a house can be an exciting and frustrating time for anyone. The home buying and loan process is one that should not be jumped into lightly. There are many terms used by residential lenders that may confuse first-time home buyers. Don't be overwhelmed by the jargon used by these lenders. Arm yourself with the understanding of residential lenders key terms, so you know exactly what terms and conditions you are agreeing to.

HELOC

Home equity lines of credit (HELOC) are a type of loan that let people with home loans borrow from the equity they have already paid on the house. This type of loan can be used for any financial needs the home owner has.
Try: Learn more about Home equity lines of credit from Bob Gammache. Find an easy-to-understand guide to HELOCs at WordPress.

ARF

Assignment Recording Fee (ARF) is a fee that is placed on most home loans. When a lender sets up the loan, they send the loan to a company that receives the payment each month. This fee covers the recording and the transfer of the loan payments from the initial lender to the payment processor.
Try: Locate more information about assignment recording fees at LeadSteps.

P and I payment

P and I payments are the monthly principal and interest payments you make on any home loan. It is the total combined principal and interest that needed each month to pay off the loan in a given amount of time.
Try: Visit Qchest.com to learn more about P and I payments. MortgageQnA.com also offers information about monthly principal and interest payments.

Lifetime cap

A lifetime or overall cap is a limit on the amount a payment can increase or decrease when it comes to an adjustable rate mortgage. A lifetime cap is normally placed at a percentage of the original rate.
Try: Investopedia provides detailed information about lifetime caps. MortgageFit also supplies information about overall caps.

Seller concessions

Seller concessions or seller contributions are funds that are paid to the seller to cover closing costs on the property. The way this normally works is this: the seller asks if you agree to a certain percent of the sale as a seller concession. The percentage is added to the home loan. When the sale is complete, the seller uses the concessions to handle all the costs.
Try: Quicken Loans provides information about seller concessions. REMAX also supplies information about seller concessions.

Aggregate adjustment

The aggregate adjustment is the system used to determine how much money needs to be in the buyer's escrow account. This is used to make sure there are enough funds to cover taxes and insurance.
Try: BankersOnline offers more details about aggregate adjustment. Ruth Technology also provides information about aggregate adjustment accounting.