Mortgage Glossary - M

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Margin
An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.

Market Value - The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.

Minimum Payment
The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be "interest only" (simple interest). In other plans, the minimum payment may include principal and interest (amortized).

Mortgage Banker
Originates mortgage loans, loaning you his funds and closing the loan in his name.

Mortgage Broker
Like a mortgage banker, takes loan applications and processes the necessary paperwork. Unlike a mortgage banker, a broker does not fund the loan with his own money, but works on behalf of several investors such as mortgage bankers, S and L's, banks or investment bankers.

Mortgage Escrow - Accounts The account set by the Lender to pay Taxes and Insurance on behalf of the Borrower.

Mortgage Insurance (MIP or PMI)
Insurance purchased by the borrower to insure the lender or the government against loss should you default. MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or VA loans) regardless of your LTV (loan-to-value). Should you pay off a government-insured loan in advance of maturity, you may be entitled to a small refund of MIP. PMI, or Private Mortgage Insurance, is paid on those loans which are not government-insured and whose LTV is greater than 80%. When you have accumulated 20% of your home's value as equity, your lender may waive PMI at your request. Please note that such insurance does not constitute a form of life insurance which pays off the loan in case of death.

Mortgage Loan
A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or Deed of Trust is your agreement to pledge your home or other real estate as security.

Mortgagee
The lender in a mortgage loan transaction.

Mortgagor
The borrower or homeowner in a mortgage loan transaction.