First South Bank  
About Us
Recent News



Mortgage Terms

Adjustable Rate Mortgage (ARM)
Is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index.
Agreement For Sale
A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under certain stated terms and conditions.
To reduce debt by means of regular periodic payments which include amounts applicable to both principle and interest.
Annual Percentage Rate (APR)
The total cost of credit expressed as a yearly rate. Includes interest, loan discount fee, and other credit costs.
Application Fee
Includes appraisal and credit report fees.
Appraisal Fee
Fee for the inspection by the appraiser of the house and neighborhood, review of sale prices of comparable houses to determine value of property.
An increase in value of real property.
Assumable Loan
A loan transferable from seller to buyer. May require a large down payment, but interest rate could be lower.
Assumption Fee
May be charged for processing buyer’s assumption of seller’s loan.
Assumption of Mortgage
Assumption by the buyer of the primary liability for payment of an existing mortgage or deed of trust, with the seller remaining secondarily liable for the obligation.
Balloon Mortgage

Usually a short-term fixed-rate loan which involves a set interest rate for a certain period of time (usually 5 or 7 years), and one large payment for the remaining amount of the principal at the conclusion of that time frame (may be able to convert or refinance).


Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.
Amount seller pays to lender so buyer gets lower interest rate. Inflated or nonnegotiable selling price covers buydown.
Cash Flow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.).
Certificate of Eligibility
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes.
The conclusion or consummation of the real estate transaction. Closing includes the delivery of deed, financial adjustment, the signing of notes, and the disbursement of funds necessary for the loan transactions.
All paperwork, financial transactions completed, and title passes from seller to buyer, if applicable.
Credit Reporting Fee
Covers cost of buyer’s credit report.
Debt-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-term debts is divided by his or her gross monthly income.
Written instrument duly executed and delivered by which the title to land is transferred from one person to another.
Deed of Trust
A conveyance of land title by a marker or a note (from a debtor) to a third party, a trustee, as collateral security for the payment of the note with the condition that the trustee shall reconvey the title to the debtor upon payment of the note, and with the power in the trustee to sell the land and pay the note in the event of default on the part of the debtor.
Discount Points
The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate. This amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender under market conditions. A point equals one percent of the loan.
Document Preparation Fee
Cost of preparing legal papers.
Down Payment
The difference between the sale price of real estate and the mortgage amount.
Earnest Money Money given up front by a buyer to a seller as part of the purchase price, to bind a transaction or assure payment.
Equal Credit Opportunity Act (ECOA)
Is a federal law that requires lenders and other creditors to make credit equally available without discrimination based, on among other things: race, color, religion, national origin, age, sex, martial status, or receipt of income from public assistance programs.
The difference between fair market value and the current indebtedness, usually referring to the owner’s interest.
Escrow Account
Funds accumulated and held by the lender in an escrow account to pay taxes, hazard insurance premiums, and other assessments imposed by municipalities or subdivisions; also called pre-paids, impounds, or escrow funds.
Escrow Agent
Person or company holding all documents and money until closing/settlement.
Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.
FHA Loan
A loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the country.
For Sale Agreement
A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under certain stated terms and conditions.
General Warranty Deed
A deed containing a covenant whereby the seller agrees to protect the buyer against being dispossessed because of any adverse claims against the land.
Hazard Insurance
Real estate insurance protecting against loss caused by fire , some natural causes, vandalism, etc. depending upon the terms of the policy.
Home Protection Plan
From builder of new home to protect against faulty materials and workmanship; on a pre-owned home, first-year protection against unexpected major repair expense.
A written document containing the conditions under which the possession and use of real property are given by the owner to another for a stated period and for a stated consideration.
Lender’s Inspection Fee
Charge for inspection of new construction by lender or an inspector.
The use of borrowed money to increase one’s return on cash investments.
A claim or charge on property held by another for payment of some debt, obligation, or duty.
Loan Origination Fee
A percent of the loan; covers administrative costs.
Difference between index and actual interest rate of ARMs.
Market Value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Instrument whereby an owner conditionally transfers title of his property to another as security for payment or debt. The owner retains possession and use of the land and, upon debt payment, the mortgage becomes void.
Notary Fee
Cost of a licensed person authenticating execution of documents by both parties.
A written promise to pay a certain amount of money, at a certain time, in a certain number of installments. It usually provides for payment of interest and its payment is at times secured by a mortgage.
Notary Fee
Cost of a licensed person authenticating execution of documents by both parties.
Owner’s Policy
A title insurance policy insuring the owner against loss due to any defect of title not expected to or excluded from the policy.
Private Mortgage Insurance (PMI)
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. This insurance protects the lender against financial loss, should a borrower default on their mortgage.
Charged in both fixed and adjustable rate mortgages to increase mortgage yield and cover closing costs. A "Point" is one percent of the mortgage.
Recording Fee
A charge paid for recording the transfer of a property; this fee is paid to a government branch.
The repayment of a debt from the proceeds of a new loan using the same property as security.
Secondary Financing
Financing real estate with a loan or loans that a re subordinate to a first mortgage or first trust deed.
Title Insurance
Often required to protect lender against loss due to undiscovered title defects. An owner’s policy costs less if bought at the same time. A Title Insurance Binder is a commitment to insure the lender against such defects.
Transfer Taxes
Taxes levied on the transfer of property or on real estate loans by state or local jurisdictions.
Veterans Administration
A federal agency that insures mortgage loans with liberal down payment requirements for honorably discharged veterans and their living spouses.

For more information on Home Mortgage Options, click here to send us your questions, or contact us at 1-888-993-8754.

© First South Bancorp, Inc. All Rights Reserved. Member FDIC. Equal Housing Lender.