Payment Shock
Definition of "Payment Shock"
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 and the monthly housing expense on the purchased home.
Popular Mortgage Terms
The period until the last payment is due. The maturity is usually but not always the same as the period used to calculate the mortgage payment. ...
A documentation requirement where the applicant's income is not disclosed. ...
Housing expense plus current debt service payments. ...
A documentation rule where the borrower discloses income and its source but the lender does not verify the amount. ...
A borrower who doesn't pay. ...
The maximum allowable decrease in the interest rate on an ARM each time rate is adjusted. It is usually one or two percentage points. ...
A mortgage lender or mortgage broker. ...
The assumption of a mortgage, with permission of the lender, from a borrower unable to continue making the payments. ...
Insurance provided the lender against loss on a mortgage in the event of borrower default. In the U.S., all FHA and VA mortgages are insured by the federal government. On other mortgages, ...
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