Hybrid Annuity

Hybrid Annuity

A form of repurchase agreement in which an investor sells a mortgage-backed security during one period and repurchases it in a subsequent period. While the investor gives up access to the principal and interest on the loan that is sold, the proceeds from the sale of the security could be reinvested and then used to repurchase the security later. The investor hopes that the difference between the original price and the repurchase price ("the drop") is high. A large difference between the original price and the repurchase price results in the security being considered "on special".

Bond Fund

Bond Fund

A fund invested primarily in bonds and other debt instruments. The exact type of debt the fund invests in will depend on its focus, but investments may include government, corporate, municipal and convertible bonds, along with other debt securities like mortgage-backed securities. For investors interested in bonds, a Morningstar bond style box can be used to sort out the investing options available for bond funds. Investors should note that U.S. government bonds are considered to be of the highest credit quality and are not subject to ratings.

Current Face

Current Face

The current par value of a mortgage-backed security (MBS). Current face is determined by multiplying the current pool factor by the mortgage-backed security's original face value. A mortgage-backed security's current face represents the outstanding principal balance (or its outstanding face value) of the mortgage's underlying the security. If the MBS pays interest and principal on payment dates, the current face will decline after each payment is made.

Variable Universal Life Insurance - VUL

Variable Universal Life Insurance - VUL

A form of cash-value life insurance that offers both a death benefit and an investment feature. The premium amount for variable universal life insurance (VUL) is flexible and may be changed by the consumer as needed, though these changes can result in a change in the coverage amount. The investment feature usually includes "sub-accounts," which function very similar to mutual funds and can provide exposure to stocks and bonds. This exposure offers the possibility of an increased rate of return over a normal universal life or permanent insurance policy.

Private Mortgage Insurance - PMI

Private Mortgage Insurance - PMI

A policy provided by private mortgage insurers to protect lenders against loss if a borrower defaults. Most lenders require PMI for loans with loan-to-value (LTV) percentages in excess of 80%. This allows the borrower to make a smaller down payment of as low as 3%, instead of about 20%, and usually requires an initial premium payment and possibly an additional monthly fee depending on the loan's structure. Some of the well-known mortgage-financing companies offering private mortgage insurance products in India are as follows - LIC Housing Finance HDFC ICICI Home Finance SBI Housing Finance UCO Bank Allahabad Bank United Bank of India Kotak Mahindra Bank Citi Bank Standard Bank HSBC

Mortgage Life Insurance

An insurance policy designed specifically to repay mortgage debt in the event of the death of the borrower. These policies differ from traditional life insurance policies in that, for a traditional policy, the death benefit is paid out when the borrower dies; however, a mortgage life insurance policy doesn't pay unless the borrower dies while the mortgage itself is still in existence. There are two basic types of mortgage life insurance: decreasing term insurance, where the size of the policy decreases with the outstanding balance of the mortgage until both reach zero; and level term insurance, where the size of the policy does not decrease. Level term insurance would be appropriate for a borrower with an interest-only mortgage. Before buying mortgage life insurance, one should carefully examine and analyze the terms, costs and benefits of the policy and there are two lifespans to consider – borrower’s lifespan and the mortgage's.