Variable Rate Mortgages (VRM)
Mortgage in which the interest rate charged by the lender can vary according to some reference index not controlled by the lender, such as the interest rate on 1-year U.S. T-bills or the 11th District Cost of Funds Index. For the lender, this means that as the cost of money increases, the interest being charged on the existing mortgage can be increased, thus maintaining the gap between the cost of money and return. Either the monthly payment, the maturity date, or both can be charged to reflect the difference in interest rates. In addition, the mortgage usually stipulates a maximum annual charge and a maximum total increase in the interest the lender may charge. Under current regulations established by the FHLBB, the interest rate may not be raised more than 2.5% points above the initial rate. The rate can be changed each six months, with no more than 1/2 of 1% change each six months. Variable rate mortgages are more popularly known as adjustable-rate mortgages (ARM).
Popular Real Estate Terms
The definition of accommodation covers different meanings of the word, but they all express providing space, room, either physical or metaphorical. In other words, accommodation can be ...
Provision in a loan agreement where a debtor authorizes a judgment against him in the event of a default. These agreements are widely restricted, but when they are lawful, the creditor is ...
If buyers are considering a home with an assumable mortgage at a fair interest rate or if the sellers have already paid their mortgage, remember to consider seller financing. With seller ...
Clause in a mortgage that allows the borrower to pay more than the monthly amount and to retire the loan early without a penalty. ...
Governmental body having the responsibility for planning the future development of a jurisdictional area. A planning commission is responsible for developing and managing a zoning ordinance ...
A fund constituted in certain states to compensate aggrieved individuals who incurred losses in a real estate transaction associated with a licensed real estate broker or agent. Normally, ...
Directly enhancing the physical nature of the property such as renovating the building, installing a new driveway and parking lot, and gardening. ...
What Is a Real Estate Bubble? One definition for a real estate bubble is the fast increase in prices, usually driven by investors and speculators in major urban areas. Properties are ...
In general terms, the upside potential signifies the potential of a present investment, be it an asset or property, to bring a profit for the investor in the future. This measure enables ...
Have a question or comment?
We're here to help.