Important Mortgage Terms You Should Know (Part 4 of 5)

As Your Mortgage Experts we feel it's important for our clients to familiarize themselves with terminology that is used throughout the loan process. Reading over your loan documents or speaking to someone who works in the mortgage industry might make you feel like you're in a foreign country, but getting to know these terms will help you feel more comfortable.


Mortgage Broker
This person assists in arranging funding or negotiating contracts for a client. Brokers usually charge a fee or receive compensation for their services.

Mortgage Insurance (MI)
Money paid to insure the mortgage when the down payment is less than 20%. See Private Mortgage Insurance or FHA Mortgage Insurance.

Origination Fee
Until recently, this was a fee charged by a loan originator to provide the borrower with a lower interest rate. It was usually charged as a percentage of the loan amount. However, with the new Good Faith Estimate required by HUD in 2010, the "origination fee" can also incorporate any fees from the lender required to fund the loan that are paid to the lender or mortgage broker. This can also include processing, underwriting, and administrative fees.

Also known as total monthly housing expense, this is an acronym for the principal, interest, taxes and insurance.

Piggy Back Loan
"Piggy Back Loan" is a slang term, which really is another way of describing 1st and 2nd mortgages that close concurrently. In today's mortgage lending environment, obtaining a piggy back loan can be very difficult if a borrower has less than 20% for a down payment. In such instances, obtaining one mortgage with private mortgage insurance may be the only option. Also see Private Mortgage Insurance.