| A |
TOP |
| 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. |
|
| B |
TOP |
| 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. |
|
| C |
TOP |
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, or 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. |
|
| D |
TOP |
| Deed |
A legal written document by which
title to property is transferred. |
| |
| Default |
Failure to fulfill the terms as
agreed to in the mortgage 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. |
|
| E |
TOP |
| 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 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. |
|
| F |
TOP |
| First
Mortgage |
A mortgage that has a primary lien
against a property. |
| |
| Fixed-Rate
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. |
|
| G |
TOP |
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. |
|
| H |
TOP |
| 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. |
|
| I |
TOP |
| 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. |
|
| J |
TOP |
| No Terms Listed |
|
| K |
TOP |
| No Terms Listed |
|
| L |
TOP |
| 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. |
|
| M |
TOP |
| 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. |
|
| N |
TOP |
| 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. |
|
| O |
TOP |
| 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. |
|
| P |
TOP |
| 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. |
|
| Q |
TOP |
| Qualifying
Ratios |
Guidelines applied by lenders to
determine how large a loan to grant a home buyer. |
|
| R |
TOP |
| 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. |
|
| S |
TOP |
| 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. |
|
| T |
TOP |
| 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. |
|
| U |
TOP |
| Underwriting |
The process of evaluating a loan
application to determine the risk involved for the lender. |
|
| V |
TOP |
| No Terms Listed |
|
| W |
TOP |
| No Terms Listed |
|
| X |
TOP |
| No Terms Listed |
|
| Y |
TOP |
| No Terms Listed |
|
| Z |
TOP |
| No Terms Listed |
A