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A
| B | C | D
| E | F | G
| H | I | J
| K | L | M
| N | O | P
| Q | R | S
| T | U | V
| W | X | Y
| Z
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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