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Glossary of Terms |
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Adjustable Mortgage: Loans where interest rate changes during the term of the mortgage, based on an index that the rate is tied into. Amortized Table: A chart that breaks down the total annual payment per year for the life of the mortgage. Amortized Loan: A loan that is paid in equal payments during the life of the loan. Annual Percentage Rate: The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. Appraisal: An opinion of value based upon a factual analysis. Arbitration Agreement: An agreement between the Buyer & Seller to insure that an impartial arbitrator will decide any disputes over the property. Assessments: An value assessed against property in additions to general taxes. Usually for improvements such as streets, sewers, etc. Association Dues: Payments made by home owners to pay for management & maintenance of common areas within the area. Assumable Loan: A type of mortgage that allows the Buyer to take over payments for the Seller. Capital Gains Tax: Generally, the difference between cost & selling price, less certain deductible expenses. Used mainly for income tax purposes. Closing Costs: Expenses from a sale of real estate, such as loan fees, title fees, appraisal fees etc. Commitment Letter: A letter from your lender stating the terms of your loan. Contingency: The dependence upon a stated event which must occur before a contract is binding. (Ex: The sale of a house, contingent upon the buyer obtaining financing.) Conventional Loan: A mortgage or deed of trust not obtained under a government insured program, (such as FHA or VA). Down Payment: Cash paid by the Buyer from his own funds, as opposed to that portion of the purchase price which is financed. Earnest Money: Money given by the Buyer with an offer to purchase a property. Shows good faith. Equity: The market value of real property, less the amount of existing liens. |
Escrow: Funds held by a third party which will not be released to the grantee until conditions of an agreement are fulfilled. Fair Credit Reporting Act: A federal law giving one the right to see his/her credit report so that errors may be corrected. FHA Loan: Federal Agency which insures first mortgages, enabling lenders to loan a very high percentage of the sale price. Fixed Rate Mortgage: A mortgage having a rate of interest which remains the same for the life of the mortgage. Homeowners Insurance: Coverage home buyers must have in place before the loan can close. It protects the investment of the property. Loan Origination Fee: A one time set up fee charged by the lender. Also called loan application. Loan Package: The file of all items necessary for the lender to decide to give or not give a loan. Lock-In: The prohibition of prepayment of a loan secured by a mortgage or deed of trust, so that the borrower is “locked in” to the loan for a specified period. Mortgage Insurance: Insurance that protects the bank if the buyer defaults on the loan. MLS: Multiple Listing Service. Computer system used by Realtors to get information about property for sale. PITI: Principal, Interest, Taxes & Insurance. Included in a monthly payment of real property. All four are part of the monthly payment. PMI: Private Mortgage Insurance. Insurance against a loss by a lender incase the buyer defaults on the loan. Purchase Agreement: An agreement between a Buyer & Seller of property giving all the terms of the sale. Title: The evidence one has of right to possession of land. Title Insurance: Insurance against loss resulting from defects of title to a specifically described parcel of real estate. Underwriting: Process the lender uses to verify information to make sure you qualify for the loan. VA Loan: (Veteran’s Administration) Loans to veterans enabling them to buy a property with little or no money down. |
