A prepayment is a payment a borrower makes that is in excess of scheduled mortgage payment amount specified by the lender.
For extra payment that pays off the entire balance, it is termed as a full prepayment.
Additional payments that do not fully repay the loan balance are called partial prepayments.
Subordination refers to the order of priorities regarding claims to an asset should the borrower default on the debt secured by it.
When the term subordination is mentioned in mortgages, it almost always arise because the borrower has an interest on a second mortgage.
Either that, or an investor is exploring creative ways to strike a deal with another.
In theory, any loan that involved making use of the equity in a home can be defined as a home equity loan.
But in practice, when the term home equity loan is used, it refers to a lump sum term loan borrowed against the home value that is repaid by recurring installments over a specified period of time.
While HELOCs are home equity loans by definition, they are referred to as HELOCs instead in practice.
A short sale is an agreement made between lender and borrower whereby the borrower will sell the property and the lender will accept the proceeds of the sale as full settlement of the outstanding balance due on the mortgage.
While this might sound like an impossibility to most people, short sales do occur frequently when a lender is desperate to minimize it’s losses on a defaulting borrower.
To help convince a bank to accepting a short sale, borrower should consider: