Frequently Used Terms (H-Z)

Home Equity Line of Credit (HELOC): A mortgage program of revolving credit that allows the customer to borrow at their discretion, repeatedly and at the time of their choosing.

Interest Rate: The amount charged the borrower in addition to the amount of the loan, expressed in percentage.

Lock: When a borrower decides to lock in a current interest rate; when it is locked, it stays that way for the duration of the application process. A lock commitment letter is putting the lock and the terms of the loan in writing.

Mandatory Disclosure: Any of the many laws and regulations concerning the information that must be made clear to the borrower.

No-cost Mortgage: A type of mortgage where most or all of the closing costs are paid for, either by the lender or by the seller.

Points: A borrower's cash payment as part of the loan, agreed to by the lender and the borrower. 1 point equals 1% of the total loan amount. Most loans will have some type of rate/point combination.

Qualification: The process determining whether a borrower has sufficient ability to repay a loan, not factoring in credit history. Sometimes referred to as Pre-qualification.

Second Mortgage: A mortgage made after the first mortgage, where the first is still in tact. The second mortgage acts as an addition, and is subordinant to the first.

Truth-in-Lending Act: A federal law mandating that all terms of the loan be disclosed to the borrower.

Variable Rate: An interest rate that "floats" or changes periodically, according to the dictates of the market.