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WTF are all these mortgage acronyms & jargon?
Some many terms, so little time. Lenders, loan officers, and others involved in your mortgage process love their acronyms and jargon. Below I’ve compiled a list of many terms and what they mean. It’s incomplete sadly. If I’m missing one, let me know.
Ability to Repay (ATR) Rule
The ability-to-repay rule generally requires lenders to make a reasonable, good faith determination of a borrower’s ability to repay the mortgage. This rule was part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This rule requires lenders to collect and document information on your income and assets, and run employment verification and credit history checks.
Accrued Interest
The interest accumulated on a loan that has not yet been paid. Mortgage interest accrues daily until your payment date.
Additional Principal Payment (Principal Curtailment Payment):
When you pay more than your monthly payment to reduce the balance of your loan. This is how you can pay off your home faster.
Adjustable-Rate Mortgage (ARM)
A mortgage in which the rate changes according to a formula specified in the loan document. These often have an initial fixed period of 5,7 or 10 years and offer a lower rate, when compared to the fixed rate options…
