Glossary of Mortgage Loan Related Terms

Title

The written evidence that proves the right of ownership of a specific piece of property.

Title Insurance

Protection for lenders or homeowners against financial loss resulting from legal defects in the title.

Title Search

An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

Total Debt Ratio

Monthly debt and housing payments, divided by gross monthly income, to prove that the seller can transfer free and clear ownership.

Truth-In-Lending Act

A federal law requiring a disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms of different financial institutions.

Two-Step Mortgage

A mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. The lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. Also called Super Seven or Premier mortgage.