Products - Glossary

Adjustable Rate Mortgage (A.R.M) - A mortgage loan that allows the interest rate to be changed at specific intervals over the maturity of the loan. The lender may adjust the rate of interest on the loan in accordance with an established index.

Cap - In adjustable rate mortgages, a limit placed on adjustments to protect the borrower from large increases in the interest rate. The annual cap is the limit on the amount of adjustment in the interest rate on an adjustable rate mortgage over a twelve month period. A life of loan cap is a limitation on the maximum interest rate that can be applied to an adjustable rate mortgage during the term of the loan.

Certificate of Deposit - Time deposit which must be on deposit for a specific length of time.

Disclosure - Required detailed information about any product.

Discount Points - Amounts paid to the lender in order to obtain a lower rate. One discount point is equal to one percent of the loan amount.

Fixed Rate Mortgage - A loan secured by real property featuring an interest rate that is constant for the term of the loan.

Index - Most lenders tie adjustable rate mortgage interest rate changes to changes in an "index rate". These rates usually go up and down with the general movement of interest rates. First Federal uses the weekly one-year constant maturity as it's index. This index added to your margin is used to determine your interest rate.

Jumbo CD - Negotiable Certificates of Deposits of $100,000.00 or more.

Lien - A charge against property making in security for the payment of a mortgage, judgement, or debt.

Loan-to-value - The portion of the amount borrowed compared to the value of the property involved in the transaction.

Margin - A constant amount, determined by the lender, added to the index for the purpose of adjusting the interest rate.

Origination - Charges to a borrower to cover the cost of issuing the loan.

Tiered Product - Deposit products which interest earned is based on a specific maintenance balance within the account.

Truth-in-savings - Government Regulation DD which calculated interest paid on a deposit account in an annualized form.

Unimproved Real Estate - Land that has received no development of construction.


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