Understanding Mortgage Terminology

By Sheryl Landrum
LoanPage.com Columnist

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Mortgage terminology can be quite daunting when you are considering a new home loan or refinancing your current mortgage. If I tell you a NINA ARM could be available for 8% would you know what I am talking about? Read further to find out what NINA's ARMs could have to do with your new home loan.

In mortgage terminology, NINA stands for no income/no asset verification home loan. Borrowers with high FICO scores, good jobs, and good home equity could qualify for mortgages without having to provide full documentation and prove their income and assets to the lender. NIVA would be a no income verification with verified assets. These programs are also called SISA and SIVA which stands for stated income/stated asset and stated income/verified asset. Due to the increase in mortgage defaults, many lenders are tightening the guidelines which allow borrowers to qualify for these home loans.

Is an ARM a mortgage or a body part? ARM stands for adjustable rate mortgage and it can be a fully amortized home loan or an interest-only mortgage. The interest rate is set for a specific period of time, usually 3, 5, 7, or 10 years and then will adjust to current market conditions after the adjustment period ends. These ARMs have "caps" that specify how much the interest rate may increase after the introductory rate period ends, how high the interest rate can go in a given year, and how much over the initial introductory rate the interest rate can go during the life of the loan. A 5 year ARM at 6.5% might have a cap of 2/2/6 which means after 5 years the interest rate can change a maximum 2%, it can change by a max of 2% a year, and that the interest rate can't ever exceed 12.5%.

Now that you know what NINA's ARMs stand for, you can embrace your new home loan experience with confidence!

About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding, Inc. in Carlsbad, California and a freelance writer on mortgage issues.

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