Definitions related to mortgages, refinancing, real estate, and lending.

subordination definition

Define: subordination

Definition: Subordination is the act of lowering the priority of a mortgage lien.

subordinate loans

Define: subordinate loans

Definition: Subordinate loans are any mortgage priority than the first mortgage. This includes a second mortgage at the time of purchase or an equity line of credit.

settlement

Define: settlement

Definition: A settlement is the process of completing a loan transaction at which time the mortgage documents are signed and then recorded, funds are disbursed, and the property is transferred to the buyer (if applicable). This is also called closing or escrow in different jurisdictions.

secondary market

Define: secondary market

Definition: The secondary market is the market in which mortgage loan and mortgage-backed securities are bought and sold.

residential mortgage loans

Define: residential mortgage loans

Definition: A residential mortgage loan is a mortgage on the consumer’s dwelling to finance the acquisition or initial construction of that dwelling.

referral

Define: referral

Definition: A referral is any oral or written action directed by a person in order to influence the selection of a settlement provider paid for by that consumer.

rate lock agreement

Define: rate lock agreement

Definition: A rate lock agreement is an agreement in which an interest rate is locked in or guaranteed for a specific time period prior to closing.

qualified mortgage

Define: qualified mortgage

Definition: A qualified mortgage is a category of loans that have certain, more stable features that help make it more likely a borrower will be able to afford a mortgage loan. Interest-only loans, negatively amortizing loans, balloon loans, and term longer than 30 years aren’t allowed.

primary mortgage market

Define: primary mortgage market

Definition: Primary mortgage market is the entities involved in originating a mortgage loan including mortgage brokers and lenders.

prepaids

Define: prepaids

Definition: Prepaid expenses may include property taxes, homeowner’s insurance, and mortgage interest that will accrue before the first mortgage payment is due.