Amortization schedule
A month-by-month breakdown of principal and
interest to be paid on a note as well as the balance
after payment is made.
Annuitant
The person receiving payments from an annuity.
Annuity
An income stream paid over time by an insurance
company.
Balloon payment
A loan payment (lump sum payment) whose purpose
is to pay off the loan in full. It is usually much larger
than a normal monthly payment. The main reason to
consider such a payment is that the interest rate usually
will be lower than that on a normal 15 or 30 year loan.
As a result, the payments will be a little lower than those
of a longer term loan until the balloon payment is due.
Beneficiary
A person who is designated to receive a payment or
payments.
Charter Financial
Member of the Houston Better Business Bureau since
August 10, 1999. Member of the Greater Southwest
Houston Chamber of Commerce.
They have been purchasing mortgage notes since
1993. They are a national purchaser of privately-held
mortgages, seller-financed business notes, lottery
winnings, annuities, and structured court settlements.
Charter Financial purchases notes on a variety of
properties. Please click here to see a list of these
properties.
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Collateral
Something that is used to secure a loan or note.
Credit Score
A number that is assigned to an individual's credit
report that rates their likelihood of repaying a debt.
Debt ratio
An individual's total debt in relation to their income.
Deed of Trust
A document that gives a lender the right to sell
your property if you can NOT repay your loan.
With a deed of trust, three parties are involved;
the borrower, lender, and a trustee.
The borrower conveys (passes, gives) title to a
trustee who will hold title to the property for
the benefit of the lender. The title remains
"in trust" until the loan is paid.
Equity
The difference between what a property is worth
and how much is owed on it.
Estoppel letter
A letter that is sent to the payer of a mortgage note
prior to funding the transaction. This letter asks the
payer to verify the balance, interest rate on the note,
payer's work number, etc.
First position note
A note that takes precedence over all other liens and
notes. Charter Financial ONLY purchases first lien
position notes. Please click here for an exception to
this rule.
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Hypothecate
The process of buying a property with borrowed funds,
and then using that same property to secure (collateral-
ize) the loan.
Income stream
Any kind of note that is paid out over time, same as
"payment stream".
Land Contract
Also known as a contract of deed or agreement for sale.
A land contract is an installment sale in which an indi-
vidual buys a home today but only gets title after some
or all of the payments are made. If you miss a payment,
then you could lose some or all of your equity.
Because title has not been transferred, there is nothing
to foreclose on.
Loan-to-value
Also referred to as LTV. This is the ratio of the loan
amount to the value of the property.
Lottery & Casino winnings
IGT (International Game Technology) is the foremost
supplier of gaming machines and gaming monitoring
systems in the world.
Mortgagee
The person or investor who receives the payments
from a mortgage.
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Mortgager
The person who makes the payments on a mortgage.
Owner financing (Seller financing)
The seller of a property or business finances the sale
of that home or business.
Partial
The purchase of a portion of an income stream's
remaining payments, the purchase of a specific
payment, or any combination of the two.
Promissory note
Basically, it is a piece of paper. It is an IOU with a promise
to pay back money to a lender. It is also known as an
installment note, a demand note, a straight note, and paper.
Seasoning
The length of time a mortgage note or business
note has been in place and paid on.
Second position note
A mortgage note that is "behind" another note on
the same property.
Secondary mortgage market
An existing mortgage is purchased and sold here. A
new mortgage is originated in the primary mortgage
market.
Time value of money
Addresses the way the value of money changes over
a period of time. It determines how much a future
payment is worth in today's dollars.
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Title insurance
Insures that a piece of property is "free and clear" of
any liens.
UCC-1
Uniform Commercial Code Form One. This document
is filed at the county courthouse and lists items that
secure a business loan. For example, on a restaurant
note, you would find items such as tables, chairs,
machinery, etc. This filing places a lien on those items
so that the buyer of the business can not sell them.
This lien is released when the note is paid in full.
Underlying note balance
Occurs when a note holder of a mortgage is currently
making payments on another note (the underlying
note).
For example, if a person sells a property for $100,000
and takes back a note (seller financing) but still owes
a mortgage of $20,000, then this $20,000 is the under-
lying balance.
Charter Financial must pay off this balance at the time
the deal is funded so that they will be in first position.
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