Glossary of Terms

Margin
The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.

Market Value
The most probable price which a ready, willing and able buyer would pay and a willing seller will accept, both being fully informed under no pressure to act. The market value may be different from the price a property can actually be sold for at a given time (market price).

Marketable Title
Title that is free of liens, clouds and other legal defects and hence is readily acceptable by a buyer.

Maturity
The termination or due date on which final payment on a loan must be paid in full.

Mechanics Lien
The right of an unpaid contractor or subcontractor to file a lien against property to recover the amount due to him/her.

Mello Roos
A special tax imposed on property, individual lots or all property in the neighborhood to pay for improvements: street lights, sidewalks, toll roads, etc. Also known as Special Assessment.

Merged Credit Report
A credit report which reports the raw data pulled from two or more of the major credit repositories.

Modification
Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.

Monthly Payment
Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan.

Mortgage
A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states (such as California) use First Trust Deeds.

Mortgage Backed Security (MBS)
A bond or other financial obligation secured by a pool of mortgage loans.

Mortgage Banker
A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae.

Mortgage Broker
A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.

Mortgagee
The lender in a mortgage transaction.

Mortgage Insurance (MI)
Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Often mistakenly referred to as PMI, which is actually the name of one of the larger mortgage insurers. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Mortgages above 80% LTV that call themselves "No MI" are usually a made at a higher interest rate. Instead of the borrower paying the mortgage insurance premiums directly, they pay a higher interest rate to the lender, which then pays the mortgage insurance themselves. Also, FHA loans and certain first-time home buyer programs require mortgage insurance regardless of the loan-to-value.

Mortgage Insurance Premium (MIP)
The consideration paid by a mortgagor (borrower) for mortgage insurance - either to the FHA or to a private mortgage insurer.

Mortgage Note
A written promise to pay a sum of money at a stated interest rate during a specified term. The note contains a complete description of the conditions under which the loan is to be repaid and when it is due.

Mortgagor
The borrower in a mortgage transaction who pledges property as security for a debt.

Multi-Dwelling Units
Properties that provide separate housing units for more than one family, although they secure only a single mortgage.