Mortgage Glossary

Margin:

An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Mortgage:

A lien on the property that secures the promise to repay a loan.

Mortgage Banker:

A company originates and funds loans internally and then sells them on the secondary market.

Mortgage Broker:

A firm that originates loans for mortgage lenders.

Mortgage Insurance:

A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan.  Mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.

Mortgage Insurance Premium (MIP):

A monthly payment — usually part of the mortgage payment — paid by a borrower for mortgage insurance.

Mortgage Modification:

A loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.