Home Buyer's Guide:
Real Estate Glossary
Acceptance: the date when both parties,
seller and buyer, have agreed to and completed signing and/or initialing the
contract.
Adjustable Rate Mortgage: a mortgage that
permits the lender to adjust the mortgage's interest rate periodically on the
basis of changes in a specified index. Interest rates may move up or down, as
market conditions change.
Amortized Loan: a loan that is paid in
equal installments during its term.
Appraisal: an estimate of real estate
value, usually issued to standards of FHA, VA and FHMA. Recent comparable sales
in the neighborhood is the most important factor in determining value.
Appreciation: an increase in the value of
a property due to changes in market conditions or other causes. The opposite of
depreciation.
Assumable Mortgage: purchaser takes
ownership to real estate encumbered by an existing mortgage and assumes
responsibility as the guarantor for the unpaid balance of the mortgage.
Bill of Sale: document used to transfer
title (ownership) of PERSONAL property.
Cloud on Title: any condition that affects
the clear title to real property.
Consideration: anything of value to induce
another to enter into a contract, i.e. money, services, a promise.
Deed: a written instrument, which when
properly executed and delivered, conveys title to real property.
Discount Points: a loan fee charged by a
lender of FHA, VA or conventional loans to increase the yield on the investment.
One point = 1% of the loan amount.
Easement: the right to use the land of
another.
Encumbrance: anything that burdens
(limits) the title to property, such as a lien, easement, or restriction of any
kind.
Equity: the value of real estate over and
above the liens against it. It is obtained by subtracting the total liens from
the value.
Escrow Payment: that portion of a
mortgagor's monthly payment held in trust by the lender to pay for taxes, hazard
insurance and other items as they become due.
Fannie Mae: nickname for Federal National
Mortgage Association (FNMA), a tax-paying corporation created by congress to
support the secondary mortgages insured by FHA or guaranteed by VA, as well as
conventional loans.
Federal Housing Administration (FHA): an
agency of the U.S. Department of Housing and Urban Development (HUD). Its main
activity is the insuring of residential mortgage loans made by private lenders.
The FHA sets standards for construction and underwriting but dues not lend money
or plan or construct housing.
FHA Insured Mortgage: a mortgage under
which the Federal Housing Administration insures loans made, according to its
regulations.
Fixed Rate Mortgage: a loan that fixes the
interest rate at a prescribed rate for the duration of the loan.
Foreclosure: procedure whereby property
pledged as security for a debt is sold to pay the debt in the event of
default.
Freddie Mac: nickname for Federal Home
Loan Mortgage Corporation (FHLMC), a federally controlled and operated
corporation to support the secondary mortgage market. It purchases and sells
residential conventional home mortgages.
Graduated Payment Mortgages: any loan
where the borrower pays a portion of the interest due each month during the
first few years of the loan. The payment increases gradually during the first
few years to the amount necessary to fully amortize the loan during its life.
Lease Purchase Agreement: buyer makes a
deposit for future purchases of a property with the right to lease property in
the interim.
Lease with Option: a contract, which gives
one the right to lease property at a certain sum with the option to purchase at
a future date.
Loan to Value Ratio (LTV): the ratio of
the mortgage loan principal (amount borrowed) to the property's appraised value
(selling price). Example--on a $100,000 home, with a mortgage loan principal of
$80,000, the loan to value ratio is 80%.
Mortgage: a legal document that pledges a
property to the lender as security for payment of a debt.
Mortgage Insurance Premium (MIP): the
amount paid by a mortgagor for mortgage insurance. This insurance protects the
investor from possible loss in the event of a borrower's default on a loan.
Note: a written promise to pay a certain
amount of money.
Origination Fee: a fee paid to a lender
for services provided when granting a loan, usually a percentage of the face
amount of the loan.
Private Mortgage Insurance (PMI): see
Mortgage Insurance Premium.
Second Mortgage/Second Deed of
Trust/Junior Mortgage/Junior Lien: an additional loan imposed on a property with
a first mortgage. Generally, a higher interest rate and shorter term than a
"first" mortgage.
Settlement Statement (HUD-1): a financial
statement rendered to the buyer and seller at the time of transfer of ownership,
giving an account of all funds received or expended.
Severalty Ownership: ownership by one
person only. Sole ownership.
Tenancy In Common: ownership by two or
more persons who hold an undivided interest without right of survivorship. (In
event of the death of one owner, his/her share will pass to his/her heirs).
Title Insurance: an insurance policy that
protects the insured (buyer or lender) against loss arising from defects in the
title.
Contact us
| 
