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| Abstract
(of title) |
A
written summary of the title history of a particular piece
of real estate.
|
| Acceleration
Clause |
A
provision of a mortgage or note which provides that the
entire outstanding balance will become due and payable in
the event of default.
|
| Adjustable
Rate Mortgage (ARM) |
A
mortgage in which the interest rate is adjusted
periodically, based on the movement of a financial index.
|
| Amortization |
Repayment
of loan by installment payments. As the payments are made,
the debt is reduced so that at the end of fixed period or
term, no money will be owed.
|
| Annual
Percentage Rate (APR) |
The
annual percentage rate refers to the total cost of the loan,
expressed as a yearly rate.
|
| Application
Fee |
That
part of the closing costs pre-paid to the lender at time of
application to cover initial expenses.
|
| Appraisal |
A
report made by a qualified person as to the value of a
property as of a given date.
|
| Assessed
Value |
The
value placed on a piece of real estate by the taxing
authority for the purpose of taxation. Also called an
assessment.
|
| Assumption
of Mortgage |
The
purchaser takes over mortgage payments for the balance of
the loan, assuming primary liability. Unless specifically
released by the lender, the seller remains secondarily
liable.
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| Balloon
Mortgage |
A
mortgage with periodic payments that do not fully amortize
the loan. The outstanding balance of the mortgage is due in
a lump sum at the end of the term.
|
| Bridge
Loan |
A
short-term loan secured by the equity in an as-yet-unsold
house, with the funds to be used for a down payment and/or
closing costs on a new house. There is no payment of
principal until the house is sold or the end of the loan
term, whichever comes first. Interest payments may or may
not be deferred until the house is sold.
|
| Broker |
The
person who, for a commission or a fee, brings parties
together and assists in negotiating contracts between them.
|
| Buydown |
Money
advanced by an individual (e.g. builder, seller, buyer,
lender, developer) to lower monthly mortgage payments for a
few years or the whole term.
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| Cap
(interest rate) |
The
maximum interest rate increase allowable on an adjustable
rate mortgage. Does not result in negative amortization. See
Negative amortization.
|
| Cap
(payment rate) |
The
maximum payment amount increase allowable on an adjustable
rate mortgage. May result in negative amortization. See
Negative amortization.
|
| Certificate
Of Title |
A
statement that shows ownership of property, stating that the
seller has clear legal title.
|
| Closing |
The
concluding day of the real estate transaction, when title
and deed pass from seller to buyer, the buyer signs the
mortgage and pays the purchase price and closing costs.
|
| Closing
Costs |
Expenses
(over and above the price of the property) incurred by
buyers and sellers in transferring ownership of a property.
Also called "settlement costs."
|
| Closing
Statement |
A
financial disclosure giving an account of all funds received
and expected at closing, including the escrow deposit for
taxes, hazard insurance and mortgage insurance for the
escrow account.
|
| Commission |
An
agent's or broker's fee for bringing the pricipals together
and helping to negotiate a real estate transaction, often a
percentage of the sales price or flat fee.
|
| Commitment |
An
agreement, frequently in writing, between a lender and a
borrower to loan money at a future date, subject to certain
conditions.
|
| Comparables |
Refers
to similar properties used for comparison purposes in the
appraisal process. These properties will be reasonably the
same size and location, with similar amenities and
characteristics, so that the approximate fair market value
of the subject property can be determined.
|
| Condominium |
Ownership
of a single unit in a multiunit building or complex of
buildings. Along with this goes a share of ownership of the
common areas.
|
| Contingency |
A
condition that must be met for a contract or a commitment to
remain binding.
|
| Conventional
Mortgage |
Any
mortgage loan that is not insured by FHA, guaranteed by VA,
of funded by a government authorized bond sale or grant.
|
| Convey |
To
transfer real estate from one person to another.
|
| Credit
Report |
The
report to a prospective lender on the credit standing of a
prospective borrower.
|
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| Deed |
A
legal written document by which title to property is
transferred.
|
| Default |
Failure
to fulfill the terms as agreed to in the mortgage of note.
|
| Down
Payment |
The
difference between the sale price of a property and the
mortgage amount.
|
| Due-On-Sale |
A
clause in a mortgage which gives the lender the right to
require immediate repayment of a mortgage balance if the
property changes hands.
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| Earnest
Money |
The
deposit money given to seller or his agent by the potential
buyer at the time of the purchase offer. If the offer is
accepted, the money will become part of the down payment.
|
| Easement |
A
right to the limited use of land owned by another. An
electric company, for example, could have an easement to put
up electric power lines over someone's property.
|
| Encumbrance |
Anything
that affects or limits the title to a property, such as
outstanding mortgages, easement rights or unpaid back taxes.
|
| Equity |
The
value in which the owner has in real estate over and above
the mortgages against it. When the mortgage and all other
debts against the property are paid in full, the owner has
100% equity in his property.
|
| Escrow |
Funds
and/ or deed left in trust to a third party. Generally, a
portion of the monthly mortgage payment is held in escrow by
the lender to pay for taxes, hazard insurance and yearly
mortgage insurance premiums.
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| First
Mortgage |
A
mortgage that has a primary lien against a property.
|
| Fixed-Rates
Mortgage |
A
mortgage with an interest rate and monthly payments that
remain constant over the life of the loan.
|
| Fixture |
Property,
such as a hot water heater or plumbing fixture, that has
become permanently attached to piece of real estate and goes
with the property when it is sold.
|
|
| Flood
Certification |
An
independent agency report required by the lender to
determine whether a property is located in a flood hazard
zone, which would then require a federally mandated flood
insurance policy.
|
| Foreclosure |
A
legal procedure in which property mortgaged as security for
a loan is sold to pay the defaulting borrower's debt.
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Graduated
Payment
Mortgage |
A
fixed rate loan with monthly payments that start low,
increasing by a fixed amount for a specific number of years.
After that period, the payments typically remain constant
for the duration of the loan.
|
| Gross
Income |
Normal
income, including overtime, prior to any taxes or payroll
deductions, that is regular and dependable. This income may
come from more than one source.
|
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| Hazard
Insurance |
Insurance
protection against damage to a property from fire,
windstorms, and other common hazards.
|
| Homeowner's
Insurance |
An
insurance policy that covers the dwelling and its contents
in case of fire or wind damage, theft, liability for
property damage and personal liability.
|
| HUD-1
Form |
See
Real Estate Settlement Statement.
|
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| Income
Property |
Real
estate that is owned for investment purposes and not used as
the owner's residence.
|
| Interest |
A
charge paid for the use of money.
|
| Interim
Financing |
See
Bridge Loan.
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| No
Terms Listed |
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| No
Terms Listed |
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| Land
Sales Contract |
When
the buyer agrees to make payments directly to the seller at
pre-negotiated terms. The seller agrees to deed the property
to the buyer upon completion of the agreement. The buyer
becomes the owner of equity in this type of sale. (Also see
Owner Financing)
|
| Lien |
A
legal claim on a property used as security for a debt.
|
| Loan-To-Value
Ratio |
The
relationship between the amount of the mortgage and property
value, usually shown as a percentage.
|
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| Market
Value |
The
price at which a property will sell, assuming a
knowledgeable buyer and seller, both operating without undue
pressure.
|
| Mortgage |
A
contract in which a borrower's property is pledged as
security for a loan which is to be repaid on an installment
basis.
|
| Mortgage
Note |
A
written promise to pay a debt at a stated interest rate
during a specified term. The agreement is secured by a
mortgage.
|
| Mortgagee |
The
lender in a mortgage contract.
|
| Mortgagor |
The
borrower in a mortgage contract.
|
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| Negative
Amortization |
A
loan in which the outstanding principal balance goes up
instead of down because the monthly payments are not large
enough to cover the full amount of interest due. Also called
deferred interest.
|
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| Offer
to Purchase |
A
written proposal to buy a piece of real estate that becomes
binding when accepted by the seller. Also called a sales
contract.
|
| Origination
Fee |
A
fee charged for the work involved in the evaluation,
preparation, submission, approval and closing of a proposed
mortgage loan.
|
| Owner
Financing |
A
purchase in which the seller provides all or part of the
financing.
|
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| PITI |
An
acronym for payments to lender that cover principal,
interest, taxes and insurance on a property.
|
| Plat |
A
map of a piece of land showing boundary lines, streets,
actual measurements and easements.
|
| Point |
A
fee paid to the lender on closing day to increase the
effective yield of the mortgage. A point is one percent of
the amount of the mortgage loan. Also called a discount
point.
|
| Prepayment
Penalty |
A
charge paid to the lender by the borrower if a mortgage loan
is repaid before its term is over.
|
| Pre-Approval |
A
commitment by a lender to extend credit provided that
specific conditions are met.
|
| Pre-Qualification |
A
preliminary assessment of a buyer's ability to secure a
loan, based on a specific set of lending guidelines and
buyer representations made. This is not a guarantee or
commitment by a lender to extend credit.
|
| Prime
Rate |
The
interest rate charged by banks to their preferred corporate
customers, it tends to be an estimator for general trends in
short term interest rates.
|
| Principal |
The
amount borrowed or remaining unpaid; also, that part of the
monthly payment that reduces the outstanding balance of a
mortgage.
|
| PMI
(Private Mortgage Insurance) |
Insurance
written by a private company to protect the lender against
loss caused by mortgage default.
|
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| Qualifying
Ratios |
Guidelines
applied by lenders to determine how large a loan to grant a
home buyer.
|
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| Real
Estate Settlement Statement |
Final
settlement statement often referred to as the HUD-1 form,
used to itemize buyer, seller, broker, and lender charges
and credits at closing.
|
| Realtor |
A
real estate broker or sales associate affiliated with the
National Association of Realtors.
|
| Recording
Fee |
The
charges made by the register of deeds to record the legal
documents.
|
| Refinancing |
Repaying
a debt with the proceeds of a new loan, using the same
property as collateral or security.
|
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| Second
Mortgage |
A
loan on property which already has an existing mortgage (the
first mortgage). The second mortgage is subordinate to the
first.
|
| Secondary
Mortgage Market |
The
buying and selling of existing mortgages through agencies
(i.e. Fannie Mae, Freddie Mac).
|
| Survey |
A
map prepared by an engineer or surveyor charting a
particular piece of real estate.
|
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| Title |
Ownership
of a property. A clear title is one without any outstanding
liens or encumbrances. A cloud on title refers to any
outstanding liens or encumbrances which could impair the
title.
|
| Title
Insurance Policy |
Protection
against financial loss arising from defects in the title
occurring before purchase.
|
| Title
Search |
A
check of public record to disclose the past and current
facts regarding ownership of a particular piece of property.
|
| Transfer
Tax |
In
some areas city, county or state taxes imposed when property
passes from one person to another.
|
| Truth-In-Lending |
A
federal law that requires lenders to fully disclose, in
writing, the terms and conditions of a mortgage, including
the APR and other charges.
|
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| Underwriting |
The
process of evaluating a loan application to determine the
risk involved for the lender.
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Terms Listed |
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Terms Listed |
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Terms Listed |
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| No
Terms Listed |
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| No
Terms Listed |
