Adjustable Rate Mortgage: A loan that adjusts on a regular schedule based on a national economic index and the lender’s margin.
Amortization Schedule: A timetable for payments of a manufactured home mortgage showing the amount of each payment that is applied to interest & principal.
APR (Annual Percentage Rate): The yearly cost of a mortgage, including interest, prepaid finance charges, closing fees, insurance, and the origination fee (points), expressed as a percentage. APR represents the total cost of credit on a yearly basis after all charges are taken into consideration.
Appraisal: A professional opinion of the market value of a home, in comparison to other homes that have sold within or in proximity to the home in question.
Appreciation: An increase in the value of a home due to change in market conditions, home improvement or other factors.
Assessed Value: The value placed on a home by a public tax assessor for the purpose of determining property taxes.
Borrower: The person who applies for and obtains a manufactured home loan.
Buy-Downs: Points a borrower pays in advance to lower the interest rate.
Cash-Out Refinance: A refinancing transaction in which the new loan amount is greater than the existing loan amount, plus loan settlement costs. The purpose of a cash-out refinance is to extract equity from the borrower's home.
Chattel: A loan secured against personal property, which is common in the financing of manufactured homes.
Clear Title: A title that is free of liens and legal encumbrances on the ownership of personal property.
Closing: The final steps in the transfer of property ownership, which usually occurs at a formal meeting between the buyer, seller, and third party agent(s), where the buyer signs the manufactured home mortgage contract. The seller receives payment for the property, the buyer and/or seller pay closing costs, and the title is transferred from the seller to the buyer.
Collateral: Expenses accepted as security for a loan, that measures the value and condition of the mobile or manufactured home to make sure it is worth at least as much as is being borrowed against it.
Community Reinvestment Act (CRA): A federal law that encourages lenders to meet the credit needs of their local communities.
Conventional Mortgage: A loan that is not insured or guarenteed by a government agency, such as FHA or VA. Conventional mortgage loans are typically fixed in its terms and rate.
Co-signer: A person who agrees to share credit responsibilities and repays the debt if the original borrower defaults.
Creditor: Any person or business to whom the consumer owes money and who has the right to undertake legal action to attain money owed on the original debt.
Credit Reporting Agency: A company that gathers, files and sells information to creditors and others with a legitimate business purpose. Also called a “credit bureau.”
Credit Score: A numerical value based on the analysis of a credit report that is used by creditors to predict how likely an individual is to repay a debt.
Credit Union: A financial institution that is a cooperative and offers checking and savings accounts and other financial services for its members.
Debt-to-Income Ratio (DTI): The maximum percentage of a borrower’s gross monthly income that goes toward paying debts.
Depreciation: A decrease in the value of the property due to changes in market conditions, wear and tear on the property, or other factors.
Disclosures: Federal or state requirements to provide information about a property for sale, especially as it represents actual or potential defects or problems.
Down Payment: The amount of cash a borrower pays toward purchasing a manufactured home. This money is typically given to the seller.
Equal Credit Opportunity Act (ECOA): A federal law that requires all lenders and other creditors to make credit equally available to a potential borrower without discrimination based on race, color, national origin, age, sex, marital status or receipt of income from public assistance programs.
Equity: Ownership interest in an asset after liabilities have been deducted. This is the difference between the appraised value of the home and the loan payoff.
Escrow: A written agreement or something of value put in the care of a third party and not delivered until certain conditions are fulfilled. The time period between when the purchase contract is signed and the loan closing.
Escrow Account: A special account set up by the lender to collect and hold monthly payments toward annual property taxes and/or homeowner’s insurance. This is also called an “impound account.”
Fair Credit Reporting Act (FCRA): A federal law that enables all consumers to learn what information credit reporting agencies have on file and to dispute inaccurate date in the file.
Fair Debt Collection Practices Act: A federal law that protects all consumers from abuse or threats from collection agencies trying to collect overdue payments on behalf of the original creditor.
Fair Housing Act: A federal law that prohibits discrimination in all housing and real estate transactions based on race, color, religion, sex, familial status, handicap, or national origin.
FHA Loan: A type of mortgage that is insured by the Federal Housing Administration, a department of the Federal government.
Finance Charges: The total dollar amount that is charged to use credit, which includes any interest and/or other costs.
Fixed-Rate Mortgage: A loan where the interest rate and payments remain the same over the life of the loan.
Flood Insurance: An insurance policy required by a lender if a buyer’s house is located in a flood zone, as determined by the National Flood Insurance Program (NFIP).
For-Sale-By-Owner (FSBO): A home that is offered for sale by the owner without the use of a real estate agent.
Gift Letter: A document that is required by a lender if a borrower receives a down payment or any part of a down payment from an individual as a gift, that is not to be repaid.
Good Faith Estimate: A document that discloses any anticipated settlement or closing costs involved in the transaction.
Gross Income: Money earned before any taxes are withdrawn.
Hazard Insurance: Insurance that protects the homeowner against physical damage to the manufactured home from fire, wind, vandalism and other hazards.
Home Equity Loan: A loan based on the difference of the amount of equity on a home and the home’s current market value.
Homeowner’s Insurance: An insurance policy that combines liability coverage and hazard insurance on your home.
Home Warranty: A guarantee for certain features of a new home, such as the materials, workmanship and/or its main components offered by a dealership or builder.
Housing Ratio: The maximum percentage of a borrower’s gross monthly income that can be used to make the monthly mortgage payments and land or lot rent. Also called “housing allowance”.
Installment Loan: A credit account in which the amount of the payment and the number of payments are fixed.
Interest: The cost of borrowing money.
Interest Rate: The percentage of a sum of money charged for its use.
Interest Rate Lock-In: A written guarantee that a buyer will receive a specified interest rate from a lender, provided that the loan closes within a set period of time.
Lender: The entity, business or person who offers a loan.
Lien: A legal hold or claim of one person on the property of another as security for a debt or charge that may be listed on a credit report as a public record. When the mobile home or manufactured home is in a park or is not attached to real property, the lien will normally appear on the home’s title.
Loan Term: The length of time a borrower has to pay off a loan.
Loan-to-Value Ratio (LTV): The ratio of the loan balance to the appraised value of the house.
Manufactured Home: A home built entirely in a factory under a federal building code administered by the Department of Housing and Urban Development (HUD) that went into effect June 15, 1976.
Mobile Home: A factory constructed home built from 1970 to June 15, 1976.
Mortgage Broker: A company or individual that locates a lender for the borrower for a fee. Brokers are considered the middle man.
Origination Fee: A fee that is charged by lenders for submitting, processing and evaluating a proposed loan.
Payment Plan: An agreement with a lender in which a borrower promises to make up any missed payments by sending one full payment and one partial payment each month until delinquent payments are caught up.
Point: A fee that is one percent of the loan amount.
Prepayment: Paying more each month than the amount of the regular payment to pay the loan off sooner and save money on interest charges.
Prepayment Penalty: Some lenders will charge a borrower either a flat rate, or percentage of the loan, if the loan is paid in full prior to the maturity date.
Principal: The outstanding balance of a loan, not including interest and other charges.
Property Tax: A tax charged by the local government and used to fund a variety of municipal services such as schools, police or street maintenance. Manufactured home owners in parks pay personal property taxes in most states.
Prorations: Certain items that are continuing expenses such as property taxes and space rent that must be distributed between the buyers and the sellers at the close of sale and/or escrow.
Purchase and Sale Agreements: A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Real Estate Settlement Procedures Act (RESPA): A lending regulation that establishes laws and procedures for closing mortgage loans. RESPA prohibits cost increasing practices, such as kickbacks and referral fees and requires advance disclosure of settlement costs.
Realtor: A real estate agent or agency that belongs to the local or state board of Realtors and has an affiliation with the National Association of Realtors.
Refinancing: The process of paying off one loan with the proceeds from a new loan secured by the same property.
Revolving Account: A credit agreement that allows a borrower to pay all or part of the outstanding balance on an account. As credit is paid off, it becomes available again to use for another purchase or cash advance.
Second Mortgage: A home loan that has rights subordinate to the rights of the first mortgage. Not normally offered to manufactured homes located in parks and/or leased lot communities.
Servicing: The collection of payments and management of operational procedures related to a loan.
Single-Family Home: A type of property, usually detached, where one family owns the home and the land on which it stands.
Step-Rate Mortgage: A loan where the repayment schedule provides for 2 or more predetermined rate and payment schedules. The rate and payment for the first period can be noticeably less than a cooresponding fixed rate mortgage. The Step Rate is different than an Adjustable Rate mortage in that the amount of every monthly payment for the full term of the loan is known at closing. The rates and payments on an adjustable rate mortgage will be adjusted based on interest rates that occur in the future so the amount of the monthly payments beyond the initial term are not known at closing.
Survey: A professional measurement of a property and the land around it.
Title: A legal document establishing the right of ownership in a property.
Truth-In-Lending Statement: A document that discloses the terms and cost of a mortgage loan, including APR.
Underwriting: The process of evaluating a borrower’s finances and payment history in order to approve or deny a loan.
VA Loan: A loan that is guaranteed by the Veterans Administration, a department of the Federal Government.
Variable Expense: An expense that changes from period to period, such as utilities, food, clothing and entertainment.