Whether you are a first-time home buyer, an individual interested in securing a home mortgage loan, or want information about refinancing an existing loan, we at Meridian Mortgage Solutions, Inc. understand that every client that decides to apply for a home mortgage loan comes with varying needs and expectations.
That is why we make it a point to offer many different loan programs, including conventional, non-conventional, and government loan programs, to fit your specific needs. We want you to feel secure and confident that you have chosen a loan program that works to your advantage. Our team of Financial Specialists is available to assist you every step of the way, because we believe that sound advice and individualized customer service is required to make you feel you have made the right choice by working with Meridian Mortgage Solutions, Inc.
We recognize that some of our clients may be unfamiliar with certain terms and phrases that are associated with our various loan programs. To assist you as you decide which loan program will work best for you, we have compiled a glossary of useful terminology that will provide a better understanding of common loan and mortgage types.
An adjustable rate mortgage is a type of mortgage loan with an interest rate that is subject to change over the term of the loan. The interest rate varies according to an economic index described in your loan agreement, and payments may increase or decrease over time. An adjustable rate mortgage is also known as a “variable rate mortgage” or a “floating rate mortgage.”
An assumable mortgage is a loan that allows a home buyer to take over a seller’s mortgage when purchasing a home. Assumable mortgages require the lender’s approval, because when you assume a mortgage you inherit both its interest rate and monthly payment schedule.
A balloon mortgage is a short term (typically 5-7 years) mortgage that provides a level payment feature during the term of the loan, but as opposed to a 30 year fixed rate mortgage, balloon loans do not fully amortize over the original term. At the end of the loan term, the remaining principal loan balance must be paid in full, which can be accomplished by refinancing.
A construction loan is a mortgage loan on completed construction under one mortgage or trust deed where the completion certificate and the certificate of occupancy have been obtained.
Any kind of lender agreement that’s not backed in full by the Veteran’s Administration (VA) or protected by the Federal Housing Administration (FHA). Conventional loans are secured by government-sponsored enterprises such as the Federal National Mortgage Association (aka “Fannie Mae”) and the Federal Home Mortgage Corporation (aka “Freddie Mac”). These are the nation’s two largest federally chartered and stockholder-owned mortgage companies.
A mortgage loan with an interest rate that does not change over the term of the loan. The distinguishing factor of a fixed-rate mortgage is that the interest rate over every time period of the mortgage is known at the time the mortgage is originated. The benefit of a fixed-rate mortgage is that the homeowner will not have to contend with varying loan payment amounts that fluctuate with interest rate movements.
A home loan whose interest rate is subject to change, and whose amount must be fully paid at the end of the term. In a typical mortgage loan, the principal is scheduled to be paid off, or fully amortized, over the term of the loan.
Home Equity Conversion Mortgage (HECM) is Federal Housing Administration’s (FHA) reverse mortgage program which enables an older homeowner to withdraw some of the equity in their home in the form of monthly payments for life or a fixed term, in a lump sum, or through a line of credit.
Also known as a “reverse mortgage”, this type of mortgage enables older homeowners to convert the equity they have in their homes into income. This loan type is designed specifically for people that have little income but a great deal of equity in their home (i.e. retired people).
A home equity line of credit (HELOC) also known as a second mortgage is a line of credit that uses the borrower’s home as collateral for the loan. This makes a revolving line of credit available to the borrower, allowing for periodic borrowings and subsequent repayments.
A loan in which only the interest is repaid throughout the course of the loan. The original amount is repaid at the end of the term of the loan, rolled over by the same bank, or refinanced by the owner. A loan is considered “interest only” if the monthly payment does not include any repayment of principal – the payment covers only the interest and the actual loan balance remains unchanged. This type of loan can be done on a fixed rate or ARM loan.
A reverse mortgage allows homeowners, aged 62 or older to convert a portion of their home equity into cash payments without selling the home or making additional monthly payments. Reverse mortgages can provide money for needed home repairs or supplement retirement income. A reverse mortgage does not need to be paid back as long as the homeowner continues to live in the home and it remains their primary residence.
A mortgage loan insured under the Veteran Administration’s (VA) mortgage loan program. Veterans who served on active duty and were discharged under conditions other than dishonorable are eligible for VA loans benefits. This type of loan requires a Certificate of Eligibility from the VA.
Meridian Mortgage Solutions is a subsidiary of Endeavor Capital, LLC Licensed through the Indiana Department of Finance and Insurance. License #17519 & 17520, NMLS#222524
Endeavor Capital, LLC and its DBA's are not acting on behalf of or at the direction of HUD/FA or the Federal government.
Illinois Department of Finance and Professional Regulation, 100 West Randolph, 9th Floor, Chicago, IL 60601, 312-793-3000
Illinois - IL # MB.0006030
Tennessee - TN # 116624-101