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In law, a mortgage is a financial instrument that protects a lender by giving them an interest in the property of the borrower.
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A commercial mortgage is a document used to secure the collateral on a commercial real estate loan, or on a multifamily housing loan with five or more units.
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The ratio of the dollar amount paid in interest during the month to the average dollar amount of the funds for that month constitutes the weighted average cost of funds ratio for that month.
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LIBOR is the rate on dollar-denominated deposits, also know as Eurodollars, traded between banks in London.
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A Special type of loan made to older homeowners to enable them to convert the equity in their home to cash to finance other needs. In a reverse mortgage situation, the bank (or lender) makes monthly payments to the homeowner and accordingly increases the debt on the home. This allows the homeowner access to liquidity without having to sell their primary residence.
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These loans begin with an interest rate that is lower than a comparable fixed rate mortgage, but the rate changes at specified intervals based on the movement of a pre-determined index. The interest rate you pay may be greater or less than the original rate, and typically can increase subject to a maximum cap amount (per year and over the life of the loan) written into the loan contract.
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A fixed rate mortgage is the most common type of mortgage where the monthly payments are comprised of principal and interest and never change over the life of the loan.
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A balloon mortgage is simply a residential or commercial mortgage with a call provision.
A traditional mortgage, usually 30 years, matches the term of the loan and is self-amortizing. When the term of the loan has ended and the loan is paid in full, the mortgage has been satisfied and the collateral is released.
With a balloon mortgage, the term of the mortgage is shorter than that of the loan creating a balance due at a future period certain. At that point, the loan must be paid in full or refinanced.
Often a ballon mortgage is referred to as having a "call provision" or having a "bullet" component.
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