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A
- 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.
- ARM (Adjustable Rate Mortgage)
- 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.
- APR (Annual Percentage Rate)
- 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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B
- 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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C
- 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 principals 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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D
- 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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E
- 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 property 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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F
- 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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G
- 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 payroll deductions, that is regular and
dependable. This income may come from more than one
source.
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H
- 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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I
- 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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J
No terms listed.
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K
No terms listed.
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L
- Land 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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M
- 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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N
- 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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O
- 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 and submission of a
proposed mortgage loan.
- Owner Financing
- A purchase in which the seller
provides all or part of the financing.
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P
- 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
mortgage insurance company to protect the lender against
losses caused by mortgage default. This is commonly
required on loan transactions involving less than a 20%
down payment or equity position.
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Q
- Qualifying Ratios
- Guidelines used by lenders to
determine how much of a loan a home buyer qualifies for.
Often referred to as debt-to-income ratios (or DTI).
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R
- 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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S
- Second Mortgage
- A loan issued on property that is
already encumbered by an existing mortgage (ie: the
first mortgage). The second mortgage is subordinate to
the first.
- Secondary Mortgage Market
- The market wherein home loans are
sold by the lender after closing to Fannie Mae, Freddie
Mac or a variety of other institutional investors.
- Survey
- A map prepared by an engineer or
surveyor charting a particular piece of real estate.
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T
- 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
- A policy designed to protect the
buyer or lender after closing from financial losses
arising from any defects in the title that may have
occurred prior to 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
- Federal law that requires lenders to
disclose the terms and conditions of a mortgage,
including the APR, based on certain charges incurred by
the borrower. If the charges were $0, the APR would be
equal to that actual interest rate on the loan.
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U
- Underwriting
- The process of evaluating a loan
application to determine the risk involved for the
lender.
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V
No terms listed.
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W
No terms listed.
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X
No terms listed.
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Y
No terms listed.
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Z
No terms listed.
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