GNMA

 

A government-owned corporation that assumed responsibility for the special assistance loan program formerly administered by Fannie Mae. Popularly known as Ginnie Mae.

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GROWING-EQUITY MORTGAGE (GEM)

 

A fixed-rate mortgage that provides scheduled payment increases over an established period of time. The increased amount of the monthly payment is applied directly toward reducing the remaining balance of the mortgage.

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GUARANTEE MORTGAGE

 

A mortgage that is guaranteed by a third party.

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HOUSING EXPENSE RATIO

 

The percentage of gross monthly income budgeted to pay housing expenses.

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HUD-1 STATEMENT

 

A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.

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HYBRID ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)

 

A combination fixed rate and adjustable rate loan - also called 3/1, 5/1, 7/1 - can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move or refinance, before or shortly after, the adjustment occurs.

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HYBRID ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)

 

These increasingly popular ARMS- also called 3/1, 5/1, or 7/1- can offer the best of both works; lower interest rates (like ARMS) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest rate for the first five years and then turns into a traditional adjustable-rate loan, based on then- current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

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INDEX

 

The index is the measure of interest rate changes a lender uses to decide the amount an interest rate on an ARM will change over time. The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. Some index rates tend to be higher than others and some more volatile.

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INITIAL INTEREST RATE

 

This refers to the original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). It's also known as "start rate" or "teaser."

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INSTALLMENT

 

The regular periodic payment that a borrower agrees to make to a lender.

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INSURED MORTGAGE

 

A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI).

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INTEREST

 

The fee charged for borrowing money.

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INTEREST ACCRUAL RATE

 

The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.

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INTEREST RATE BUYDOWN PLAN

 

An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.

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INTEREST RATE CEILING

 

For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.

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INTEREST RATE FLOOR

 

For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.