When you are looking for credit and negotiation with prospective lenders, it is always a good idea to know that the various terms means – both formal and informal ones. Below you will find a few examples of terms that can come in handy when one is searching for optimal credit solutions.
Remortaging is the act of paying off one mortgage loan by obtaining another mortgage loan, using the same real estate as collateral.
Remortgaging is common in countries such as the United States where the standard home mortgage loan is a loan where the interest rate is fixed for the entire loan term. A borrower can’t simply negotiate new and better conditions for the existing loan (e.g. a lower interest rate). Instead, the borrower must obtain a new and more beneficial loan and use the money from that loan to pay back the old loan.
With an adjustable interest rate (ARM loan), there is usually no need to remortage. It is easier to simply negotiate new terms for the existing loan, unless the lender would rather see you leave to another lender than accept your requirements.
Jumbo mortgage loan
A jumbo mortgage loan is a big loan, i.e. a loan that is bigger than what’s normal for that type of loan in that area. The term is chiefly used in the United States, where the Government-sponsored enterprise (GSE) guidelines are used as a watershed.
With other things equal, a jumbo mortgage loan will be seen as riskier for the lender than a conventional loan. This will usually mean a higher interest rate, and sometimes also a shorter repayment term.
For the year 2014, a single-family home mortgage loan over $417,000 was considered a jumbo loan in continental USA.
No-Doc mortgage loan
A No-Doc mortgage loan is a loan extended to someone even though the borrower has provided the lender with little or no documentation. A no-doc mortgage loan may for instance be approved even without a credit score or proof of income. No-Doc mortgage loans were a contributing factor to the U.S. subprime lending crisis of the late 2000s.
The low-doc mortgage loan is similar to the no-doc mortgage loan, but requires a bit more documentation. For instance, BAS statements or bank statements may be accepted instead of tax returns, if the borrower has a high enough credit score.
No-doc and low-doc mortgage loans will typically have a comparatively high interest rate.
NINA mortgage loan
NINA = No Income No Assets
This is a mortgage loan where the borrower doesn’t have to show proof of income or assets. The term is chiefly used in the USA, where NINA mortgage loans were a contributing factor to the subprime lending crisis of the late 2000s.
NINA mortgage loans will typically have a comparatively high interest rate.
NINJA mortgage loan
NINJA = No Income No Job No Assets
This is a mortgage loan where the borrower doesn’t have to show proof of income, job or assets. The term is chiefly used in the USA, where NINJA mortgage loans were a contributing factor to the subprime lending crisis of the late 2000s.
NINJA mortgage loans will typically have a comparatively high interest rate.
The FICO score is a measure of creditworthiness extensively used in the United States. In the year 2013, lenders paid to see over 10 billion FICO scores.
Calculated by the FICO company, a persons FICO score is based on consumer credit information from the three large credit bureaus Experian, Equifax and TransUnion. The main idea is that a persons past and present use of credit can be used to assess how willing and able they will be to honor their debts in the future. The higher the FICO score, the higher the creditworthiness. The classic FICO score runs from 300 points to 850 points.
Even though the FICO score dominates the U.S. market, there are other scores available as well, such as the VantageScore, the Credit Optics Score and the C E Score.