125% Loan
Definition of "125% Loan"
A mortgage loan for 125% of property value. Since such loans are only partly secured, they have many of the characteristics of unsecured loans, including relatively high interest rates. Rates are largely determined by the borrower's credit score, however, and can be quite reasonable when the score is high. A drawback is that borrowers have difficulty refinancing 125% loans and can't sell their house without defaulting unless they can come up with the additional cash required to pay off the 125% loan.
Popular Mortgage Terms
A documentation rule where the borrower discloses income and its source but the lender does not verify the amount. ...
An upfront cash payment required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., '3 points' means a charge equal to 3% of the loan ...
One of many interest rate indexes used to determine interest rate adjustments on an adjustable rate mortgage. ...
A very large increase in the payment on an ARM that may surprise the borrower. The term is also used to refer to a large difference between the rent being paid by a first-time home buyer ...
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A plan purporting to protect FHA homebuyers against property defects. ...
The period used to calculate the monthly mortgage payment. The term is usually but not always the same as the maturity, which is the period over which the loan balance must be paid in ...
An option attached to a mortgage, which allows the borrower to pay only the interest for some period. A mortgage is 'interest only' if the monthly mortgage payment does not include any ...
A mortgage that can be moved from one property to another. Ordinarily, you repay your mortgage when you sell your house and take out a new mortgage on the new home you purchase. With a ...
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