A firm or individual who for a commission matches borrowers and lenders. The lender or borrower may pay the fee. A mortgage broker takes applications and sometimes processes loans, but generally does not use its own funds for closing. A mortgage broker does not retain servicing.
Mortgage brokerage agreement
A written agreement or contract between a mortgage broker and borrower. In some states such as Wisconsin, entrance into this agreement is required in order for a mortgage broker and a borrower to do business. The agreement must contain the period during which the services are to be performed, whether or not the agreement between broker and borrower is exclusive, a description of the broker's services to be provided, and any fees or conditions of the loan.
Mortgage commitment
An agreement between lender and borrower detailing the terms of a mortgage loan such as interest rate, loan type, term, and amount.
Mortgage constant
Ratio of annual mortgage payments divided by the initial principal of the mortgage. Applies only to loans involving constant payment.
Mortgage correspondent
One who services mortgage loans for a fee.
Mortgage disability insurance (mdi)
An insurance policy you can buy that pays off the balance owed if the insured becomes disabled during the term of the mortgage.
Mortgage discount
One-time charge assessed by a bank or other financial institution at the closing of buying real estate. One discount point translates to 1% of the initial mortgage amount.
Mortgage guarantee insurance company (mgic)
Private company established in 1957 in Milwaukee, WI to provide private mortgage insurance (PMI) to mortgage lenders granting mortgages to mortgagors not having at least a 20% down payment upon application. MGIC indemnifies the mortgage lending company should the mortgagor go into foreclosure because of a default. The cost of PMI is included in the closing costs by the mortgagee.
Mortgage instrument
A written mortgage document which states the terms of the mortgage including the interest rate, length of payments, payment dates and remedies the bank is entitled to in the event of the mortgagor's failure to pay as required including late charges.
Mortgage insurance
Insurance on some loans, which protects lenders from possible default by borrower. Conventional loans with down payments of less than 20 per cent of the home value usually require private mortgage insurance (PMI)
