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- 1003
- The number assigned to the form all potential
customers must complete to apply for a home loan. This application is commonly
referred to as �the 1003� and is produced by the Federal government.
- Abstract of Judgment
- A summary of the essential provisions of a court
judgment which, when recorded in the county recorder�s office, creates a lien
upon the property of the debtor in that county, both presently owned or after
acquired.
- Abstract of Title
- A historical summary of all the recorded transactions
that affect the title to the property. An attorney or a title company will
review an abstract of title to determine if there are any problems affecting
the title to the property. All such problems must be cleared before the buyer
can be issued a clear and insurable title.
- Acceleration Clause
- Allows the lender to speed up the rate at which your
loan comes due or even to demand immediate payment of the entire balance of
the loan should you default on you loan.
- Acceptance
- An offeree's consent to enter into a contract and be
bound by the terms of the offer.
- Accrued Interest
- Interest on a note, bond, etc., which has been earned
but not yet paid.
- Addendum
- An attachment to a contract, deed or other document
that incorporates additional terms of information to the original.
- Additional Principal Payment
- A payment by a borrower of more than the scheduled
principal amount due in order to reduce the remaining balance on the loan.
- Acre
- A measure of land equal to 43,560 square feet.
- Adjustable Rate Mortgage Loans (ARM)
- Loans with interest rates that are adjusted
periodically based on changes in a pre-selected index. As a result, the
interest rate on your loan and the monthly payment will rise and fall with
increases and decreases in overall interest rates. These mortgage loans must
specify how their interest rate changes, usually in terms of a relation to a
national index such as (but not always) Treasury bill rates. If interest rates
rise, your monthly payments will rise. An interest rate cap limits the amount
by which the interest rate can change; look for this feature when you consider
an ARM loan.
- Adjustable-Rate Rider
- A rider is an addition to a security instrument. The
adjustable-rate rider outlines terms and conditions specific to an
adjustable-rate loan. It must be recorded along with the security instrument
at the county recorder�s office.
- Adjusted Basis
- The original cost of a property plus the value of any
capital expenditures for improvements to the property minus any depreciation
taken.
- Adjustment Date
- The date on which the interest rate changes for an
adjustable-rate mortgage (ARM).
- Adjustment Period
- This is the length of time for which the interest
rate is fixed on an adjustable. Therefore if the adjustment period is six
months, then the interest rate will remain fixed for six months, after which
time it will adjust.
- Agreement of Sale
- A written signed agreement between the seller and the
purchaser in which the purchaser agrees to buy certain real estate and the
seller agrees to sell upon terms of the agreement. Also known as contract of
purchase, purchase agreement, offer and acceptance, earnest money contract or
sales agreement.
- Affidavits
- As part of the closing process, you're likely to sign
numerous affidavits. You may be required, for example, to sign an affidavit of
occupancy. It states that you will use the property as a principal residence.
Or, you and the seller may have to sign an affidavit stating all of the
improvements to the property required in the sales contract were completed
before closing.
- ALTA
- An acronym for American Land Title Association.
Commonly used in reference to a particular type of Title policy.
- American Land Title Association (ALTA)
- An organization composed of title insurance
companies, which has adopted certain insurance policy forms to standardize
title insurance coverage on a national basis.
- Amortization
- Payment of debt in regular, periodic installments of
principal and interest, as opposed to interest only payments. Amortization is
the process of reducing principal and interest in equal installment payments
at specific intervals over a set term. For example, a fully amortized loan
payment is a portion of which will be applied to pay the accruing interest on
the loan with the remainder being applied to principal. Over time, the
interest portion decreases as the loan balance decreases and the amount
applied to principal increases so that the loan is paid off in the specified
term .
- Amortization Schedule
- A timetable for payment of a mortgage loan. An
amortization schedule shows the amount of each payment applied to interest and
principal and shows the remaining balance after each payment is made.
- Amortization Term
- The amount of time required to amortize the mortgage
loan. The amortization term is expressed as a number of months. For example,
for a 30-year fixed-rate mortgage, the amortization term is 360 months.
- Amount Financed
- This figure is used to calculate your APR. It
represents your loan amount minus any prepaid finance charges and assumes you
will keep the loan to maturity and make only the required monthly payments.
- Annual Mortgagor Statement
- A report sent to the mortgagor each year. The report
shows how much was paid in taxes and interest during the year, as well as the
remaining mortgage loan balance at the end of the year.
- Annual Percentage Rate (APR)
- The annual cost of a loan to a borrower. Like an
interest rate, the APR is expressed as a percentage of the loan amount. Unlike
an interest rate, however, it includes other charges or fees to reflect the
total cost of the loan. The Federal Truth in Lending Act requires that every
consumer loan agreement disclose the APR in large, bold print. Since all
lenders must follow the same rules to ensure the accuracy of the APR,
borrowers can use the APR as a good basis for comparing the cost of loans.
- Annuity
- Fixed payments an individual receives for a lifetime
or specified number of years at consistent intervals. For example, a customer
may receive an annuity from a pension plan or from an investment.
- Appraisal
- An appraisal is a written analysis of the estimated
value of your property. A qualified appraiser who has knowledge, experience
and insight into the marketplace prepares the document. It demonstrates
approximate fair market value based on recent sales in your neighborhood and
is required to purchase or refinance your new home or property.
- Appraisal Fee
- A fee charged by a licensed, certified appraiser to
provide an appraisal.
- Appraiser
- A person qualified by education, training, and
experience to estimate the value of real property and personal property.
- Appreciation
- An increase in the value of a property due to changes
in market conditions or other causes. The opposite of depreciation.
- As Is Condition
- Premises accepted by a buyer or tenant in the
condition existing at the time of the sale or lease, including all physical
defects.
- Assessment
- A local tax levied against a property for a specific
purpose, such as road or sidewalk construction or sewer or street light
installation.
- Assessment Report
- Report that appraisers use to record property values,
marketability analyses and any pertinent comments regarding the subject
property. Assessment reports are classified as appraisal reports or inspection
reports.
- Assessment Upgrade
- Approved recommendation from an appraiser that you
must use a more comprehensive type of assessment. An example of an upgrade
recommendation includes any adverse/atypical findings or other atypical
property or neighborhood condition observed by the appraiser. You must also
upgrade an assessment when its value does not support the loan transaction;
the appraiser is unable to view the subject property from the public street;
the assessment is "subject to" completion; or repair or property rights are
leasehold.
- Asset
- Anything of monetary value that is owned by a person.
Assets include real property, personal property, and enforceable claims
against others (including bank accounts, stocks, mutual funds, and so on).
- Assignment
- The transfer of ownership, rights, or interests in
property by one person, the assignor, to another, the assignee.
- Assumable Mortgage
- A mortgage loan which allows a new home buyer to take
over the obligation of making loan payments with no change in the terms of the
loan. Assumable loans do not have a due-on-sale clause. The lender has to be
notified and agree to the assumption. The lender may require the buyer to
qualify for the loan and may charge an assumption fee. The seller should
obtain a written release from the lender stating clearly that he/she is no
longer liable to make mortgage payments.
- Assumption
- An act that occurs when the buyer of a property
assumes the seller's debt or obligation without obtaining new financing. This
must be approved by the lender and be permitted under the terms of the note
that the seller executed with the lender.
- Assumption Fee
- The assumption fee is the amount paid to a lender
resulting from a buyer taking over the payments on a seller�s existing loan.
The purchaser of the property usually pays this fee.
- Attachment
- A legal process whereby the judgment creditor may
obtain a lien against the debtor�s property.
- Attorney in Fact
- A person given the authority to act on behalf of
another under a power of attorney.
- Automated Underwriting
- Automated underwriting is used to offer instant
decisioning regarding your loan request. Automated underwriting is similar to
instant offer service. You are usually required to provide additional
information to the lender to close your loan.
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- Balance Sheet
- A document showing the financial situation--assets,
liabilities, and net worth--of a company at a specific point in time.
- Balloon Mortgage
- Balloon mortgage loans are short-term fixed-rate
loans with fixed monthly payments for a set number of years followed by one
large final balloon payment for all of the remainder of the principal.
Typically, the balloon payment may be due at the end of five, seven, or ten
years. Borrowers with balloon loans may have the right to refinance the loan
when the balloon payment is due, but the right to refinance is not guaranteed.
- Balloon Payment
- The final lump sum payment that is made at the
maturity date of a balloon mortgage.
- Bankruptcy
- The financial inability to pay one's debts when due.
The debtor surrenders his assets to the bankruptcy court. An individual
typically files for Chapter 7 (all debts wiped out) or Chapter 13 (establishes
a payment plan to pay off debts). A bankruptcy stays on an individual's credit
report for 7 years.
- Basis Point
- A basis point is 1/100th of a percentage point. For
example, a fee calculated as 50 basis points of a loan amount of $100,000
would be 0.50% or $500.
- Beneficiary
- The person designated to receive the income from a
trust, estate, or a deed of trust.
- Binder
- A preliminary agreement, secured by the payment of
earnest money, between a buyer and seller as an offer to purchase real estate.
A binder secures the right to purchase real estate upon agreed terms for a
limited period of time. If the buyer changes his mind or is unable to
purchase, the earnest money is forfeited unless the binder expressly provides
that it is to be refunded.
- Bi-weekly Mortgage
- A mortgage which requires 1/2 the normal monthly
payment every two weeks. Over the course of the year, 26 half payments are
made which is equivalent to 13 full mortgage payments. As a result of this
extra payment the loan amortizes much faster than a loan with normal monthly
payments.
- Blanket Mortgage
- A mortgage covering at least two or more pieces of
real estate, both of which together serve as collateral for the loan.
- Bond
- An interest-bearing certificate of debt with a
maturity date. An obligation of a government or business corporation. A real
estate bond is a written obligation usually secured by a mortgage or a deed of
trust.
- Borrower (Mortgagor)
- An individual who applies for and receives funds in
the form of a loan and is obligated to repay the loan in full under the terms
of the loan.
- Bridge Loan
- An interim loan typically used when the buyer is
unable to sell his/her house but needs money to close the transaction on the
house he/she is buying. The bridge loan is made on the buyers current
residence to finance the buyers new residence. The loan is paid off when the
buyers current residence is sold.
- Broker
- An individual who assists in arranging funding or
negotiating contracts for a client but does not loan money himself.
- Buydown
- When the lender and/or the home builder subsidizes
the mortgage by lowering the interest rate during the first few years of the
loan. While the payments are initially low, they will increase when the
subsidy expires.
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- Call Option
- A provision of a note that allows the lender to
require repayment of the loan in full before the end of the loan term. The
option may be exercised due to breach of the terms of the loan or at the
discretion of the lender.
- Capacity
- Your ability to make your mortgage payments on time.
This depends on your income and income stability, your assets and reserves,
and the amount of your income each month that is available after you have paid
for your housing costs, debts and other obligations.
- Caps (interest)
- Consumer safeguards that limit the amount the
interest rate on an adjustable rate mortgage can change in an adjustment
interval and/or over the life of the loan. For example, if your per-period cap
is 1% and your current rate is 7%, then your newly adjusted rate must fall
between 6% and 8% regardless of actual changes in the index.
- Cash Out
- Any cash received when you get a new loan that is
larger than the remaining balance of your current mortgage, based upon the
equity you have already built up in the house. The cash out amount is
calculated by subtracting the sum of the old loan and fees from the new
mortgage loan.
- For example, if your existing loan is $100,000, you
might refinance it with a loan of $120,000. After you pay off your current
loan ($100,000) and any loan-origination costs for the new loan (for example
$2,000 in points), you would be left with $18,000 cash out.
- Cash-out loans may not be available for all types of
property.
- Certificate of Eligibility
- The document given to qualified veterans which
entitles them to VA guaranteed loans for homes, business, and mobile homes.
Certificates of eligibility may be obtained by sending DD-214 (Separation
Paper) to the local VA office with VA form 1880 (request for Certificate of
Eligibility).
- Certificate of Occupancy
- Document issued by a local governmental agency that
states a property meets the local building standards for occupancy and is in
compliance with public health and building codes. This document is normally
required by a lender prior to closing the loan.
- Certificate of Reasonable Value
- An appraisal issued by the Veterans Administration
showing the property's current market value.
- Certificate of Title
- A certificate issued by a title company or a written
opinion by an attorney that the seller has good marketable and insurable title
to the property which he is offering for sale. A certificate of title offers
no protection against any hidden defects in the title which an examination of
the records could not reveal. The issuer of a certificate of title is liable
only for damages due to negligence.
- Certificate of Veteran Status
- The document given to veterans or reservists who have
served 90 days of continuous active duty (including training time). It may be
obtained by sending DD 214 to the local VA office with form 26-8261a (request
for certificate of veteran status). This document enables veterans to obtain
lower down payments on certain FHA insured loans.
- Chain of Title
- The chronological order of conveyance of a parcel of
land from the original owner to the present owner.
- Example : An abstractor can research title to
property going back to the date that the property was granted to the United
States.
- Change Frequency
- The frequency (in months) of payment and/or interest
rate changes in an adjustable-rate mortgage (ARM).
- Clear Title
- A title that is free of liens or legal questions as
to ownership of the property.
- Closing
- The meeting between the buyer, seller and lender or
their agents where the property and funds legally change hands. Also called
settlement. Closing costs usually include an origination fee, discount points,
appraisal fee, title search and insurance, survey, taxes, deed recording fee,
credit report charge and other costs assessed at settlement. The costs of
closing usually are about 3 percent to 6 percent of the mortgage amount.
- Closing Agent
- Neutral third party appointed to act as a custodian
for documents and funds during the transfer of property from seller to buyer.
Depending on local law and custom, this could be an attorney, escrow agent or
title company.
- Closing Costs
- Also known as settlement costs, these costs are for
services that must be performed to process and close your loan application.
Examples include title fees, recording fees, appraisal fee, credit report fee,
pest inspection, attorney's fees, taxes, and surveying fees.
- Closing Statement
- A statement required by Federal law (the Real Estate
Settlement Procedures Act) that itemizes all changes imposed on the borrower
and seller (if any) in connection with a mortgage secured loan transaction.
Also known as a settlement statement, HUD-1 or HUD-1A
- Cloud on Title
- Any conditions revealed by a title search that
adversely affect the title to real estate. Usually clouds on title cannot be
removed except by a quitclaim deed, release, or court action.
- Collateral
- An asset (such as a car or a home) that guarantees
the repayment of a loan. The borrower risks losing the asset if the loan is
not repaid according to the terms of the loan contract.
- Combined Loan-to-Value (CLTV)
- The unpaid principal balances of all the mortgages on
a property (first and second usually) divided by the property's appraised
value.
- Commission
- Money paid to a real estate agent or broker for
negotiating a real estate or loan transaction.
- Commitment
- A promise by a lender to make a loan on specific
terms or conditions to a borrower or builder. A promise by an investor to
purchase mortgages from a lender with specific terms or conditions. An
agreement, often in writing, between a lender and a borrower to loan money at
a future date, subject to the completion of paperwork or compliance with
stated conditions.
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- Comparables
- An abbreviation for "comparable properties"; used for
comparative purposes in the appraisal process. Comparables are properties like
the property under consideration; they have reasonably the same size,
location, and amenities and have recently been sold. Comparables help the
appraiser determine the approximate fair market value of the subject property.
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- Comparative Market Analysis
- An informal estimate of market value that a real
estate agent or broker calculates based on sales of comparable properties. An
appraisal or a comparative market analysis are the most accurate ways to
determine what your home is worth.
- Compound Interest
- Interest which is calculated not only on the initial
principal but also the accumulated interest of prior periods.
- Condemnation
- The determination that a building is not fit for use
or is dangerous and must be destroyed; the taking of private property for a
public purpose through an exercise of the right of eminent domain.
- Conforming Loan
- Any loan that meets the criteria and limits set forth
by the largest buyers of loans, Fannie Mae or Freddie Mac.
- Consideration
- Anything of value given to induce another to enter
into a contract. Earnest money deposit on a sales contract is consideration.
- Construction Loan
- A short-term, interim loan for financing the cost of
construction. The lender makes payments to the builder at periodic intervals
as the work progresses.
- Contingency
- A condition that must be met before a contract is
legally binding. For example, home purchasers often include a contingency that
specifies that the contract is not binding until the purchaser obtains a
satisfactory home inspection report from a qualified home inspector.
- Contract
- An agreement between competent parties to do or not
do certain things for consideration.
- Example : To have a valid contract for the sale of
real estate there must be :
- An Offer
- An Acceptance
- Competent Parties
- Consideration
- Legal Purpose
- Written Documentation
- Description of the property
- Signatures by principals or their attorney-in-fact>
- Contract of Sale
- The agreement between the buyer and seller on the
purchase price, terms, and conditions of a sale.
- Contractor
- A person who contracts to erect buildings. There are
also contractors for each phase of construction: heating, electrical,
plumbing, air conditioning, road building and others.
- Conventional Loan
- Loans that are not made under any government housing
program; they are not subject to the restrictions of government housing
programs, such as loan size limits.
- Conversion Clause
- A provision in some ARMs that allows you to change an
ARM to a fixed-rate loan, usually after the first adjustment period. The new
fixed rate will be set at current rates, and there may be a charge for the
conversion feature.
- Conveyance
- The written instrument by which title to real
property is transferred from one party to another.
- Cost of Funds Index (COFI)
- A common index used in adjustable rate loans based on
the weighted-average interest rate paid for deposits by savings institutions
that are members of the 11th Federal Home Loan Bank District.
- Covenant
- A clause in a mortgage that obligates or restricts
the borrower and that, if violated, can result in foreclosure.
- Credit
- The ability of a person to borrow money, or obtain
goods with payments over time, as a consequence of the favorable opinion held
by a lender as to the person's financial situation and reliability.
- Credit Bureau
- A credit bureau is a clearinghouse for credit history
information. Credit grantors provide the bureau with factual information on
how their credit customers pay their bills. The bureau regularly assembles
this information, along with public record information obtained from
courthouses around the country, into a "file" on each consumer.
- Credit Ratio
- The ratio, expressed as a percentage, which results
when a borrower's monthly payment obligation on long-term debts is divided by
his or her net income (FHA/VA loans) or gross monthly income (Conventional
loans).
- Credit Report
- A report detailing a borrower�s credit history
including payment history on revolving accounts (e.g. credit cards) and
installment accounts (e.g. car loan). A credit report also includes
information found from public records including tax liens and judgments.
- Credit Score
- A numerical assessment assigned to the customer by
credit bureaus that represents a measurement of the customer�s overall credit
rating. The scores are weighted and range from approximately 365 to 840. Low
scores reflect a �high risk�, while higher scores reflect a �lower risk�. Each
credit bureau has its own credit score system.
- Creditor
- An individual or entity to whom money is owed.
- Creditworthy
- Your ability to qualify for credit and repay debts.
- Current Value Index
- Your current index value is the index that is used to
figure your interest adjustment on ARMs.
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- Debt
- A sum of money owed
from one person or institution to another person or institution.
- Debt-to-Income Ratio
- The percentage of gross monthly income that goes
toward paying for your monthly housing expense, installment debts, alimony,
child support, car payments, and payments on revolving or open-ended accounts
such as credit cards.
- Deed
- A formal written instrument by which title to real
property is transferred from one owner to another. The deed should contain an
accurate description of the property being conveyed, should be signed and
witnessed according to the laws of the State where the property is located,
and should be delivered to the purchaser at closing day. There are two parties
to a deed: the grantor and the grantee.
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- Deed of Trust
- Used in many states in lieu of a mortgage to secure
the payment of a note. In a deed of trust there are three parties - the
borrower, the trustee, and the lender, (or beneficiary). In such a
transaction, the borrower transfers the legal title for the property to the
trustee who holds the property in trust as security for the payment of the
debt to the lender or beneficiary. If the borrower pays the debt as agreed,
the deed of trust becomes void. If, however, he/she defaults in the payment of
the debt, the trustee may sell the property without a court proceeding.
- Deed Restriction
- A clause in a deed that limits the use of land.
- Default
- Failure to meet legal obligations in a contract,
including failure to make payments on a loan. A mortgage is generally
considered to be in default when a payment is 30 days past due.
- Defective Title
- Any recorded instrument that would prevent a
grantor/seller from giving a clear title.
- Example : The seller has a contractor lien on the
property that was filed when he/she failed to pay the contractor for the
kitchen remodel. The seller may obtain clear title by paying the contractor
and removing the lien.
- Deferred Interest
- Occurs when your monthly payments are not large
enough to pay all the interest due on the loan. This unpaid interest is added
to the unpaid balance of the loan. The danger of deffering your interest is
that the buyer ends up owing more than the original amount of the loan. Also
called Negative Amortization.
- Deferred Maintenance
- Repairs necessary to restore a property to good
condition.
- Deficiency Judgment
- Personal claim against the debtor when the sale of
foreclosed property does not yield sufficient proceeds to pay off the
mortgages, accrued interest, legal fees, etc.
- Delinquency
- Failure to make payments on time. This can lead to
foreclosure.
- Department of Veterans Affairs (VA)
- An independent agency of the federal government which
guarantees long-term, low-or no-down payment mortgages to eligible veterans.
- Depreciation
- A decline in the value of a home due to changing
market conditions, decline of a neighborhood or lack of upkeep on a home.
- Disclosure Statement
- A statement required by law, in which sellers of
particular kinds of property or under certain circumstances, must reveal
specified information to potential buyers.
- Discount Points
- Additional points you can pay a lender to lower the
interest rate on your loan at closing. Each point is equal to 1 percent of the
loan amount (e.g. two points on a $100,000 mortgage would cost $2,000). Also
referred to as Points.
- Documentary Stamps
- A state tax, in the forms of stamps, required on
deeds and mortgages when real estate title passes from one owner to another.
- Downpayment
- A portion of the price of a home, usually between
3-20%, not borrowed and paid upfront.
- Due-on-Sale Clause
- Provision in a mortgage or deed of trust allowing the
lender to demand immediate payment of the loan balance upon sale of the
property.
- Dragnet Clause
- A provision in a mortgage that pledges several
properties as collateral. A default in the mortgage could lead to foreclosure
proceedings on any of the properties in the dragnet.
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- Earnest Money Deposit
- The deposit you make to show that you are committed
to buying the home. The deposit will not be refunded to you after the seller
accepts your offer, unless one of the sales contract contingencies is not
satisfied.
- Easement
- A right of way giving persons other than the owner
access to or over a property.
- ECOA
- See Equal Credit Opportunity Act
- Effective Age
- Age of a structure based upon its present condition
rather than actual age. Takes into account rehabilitation and maintenance.
- Eminent Domain
- The right of the government or a public utility to
acquire property for necessary public use by condemnation, with proper
compensation to the owner.
- Encroachment
- A building, a part of a building, or an obstruction
(e.g.. a fence or a wall) that physically intrudes upon or overlaps into the
property of another.
- Encumbrance
- A legal right or interest in land that affects a good
or clear title, and diminishes the land's value. It can take numerous forms,
such as zoning ordinances, easement rights, claims, mortgages, liens, charges,
a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance
does not legally prevent transfer of the property to another. A title search
is all that is usually done to reveal the existence of such encumbrances, and
it is up to the buyer to determine whether he wants to purchase with the
encumbrance, or what can be done to remove it.
- Equal Credit Opportunity Act (ECOA)
- A Federal act passed in 1974 that prohibits
discrimination in lending on the basis of sex, marital status, race, color,
religion, national origin, age or receipt of public assistance.
- Equity
- The value in your home above the total amount of the
liens against your home. If you owe $100,000 on your house but it is worth
$130,000, you have $30,000 of equity.
- Equity Line of Credit
- A combination of a line of credit and equity loan
secured by real property. A maximum loan amount is established based on credit
and equity. A mortgage is recorded against the potential borrower�s property
for said maximum loan amount. The potential borrower has the right to borrow,
as needed, up to the amount of the credit line.
- Equity Loan
- A loan based on the borrower's equity in his or her
home.
- Escrow
- Refers to a neutral third party who carries out the
instructions of both the buyer and seller to handle all the paperwork of
settlement or "closing." Escrow may also refer to an account held by the
lender into which the homebuyer pays money for tax or insurance payments.
- Escrow Account
- An account held by the lender to which the borrower
pays monthly installments, collected as part of the monthly mortgage payment,
for annual expenses such as taxes and insurance. The lender disburses escrow
account funds on behalf of the borrower when they become due. Also known as
Impound Account.
- Estimated Closing Fees
- An estimate of the fees that must be paid on or
before the closing date by the buyer and/or seller for services, taxes and
items necessary to obtain mortgage. These fees will average between 2% and 5%
of the loan amount and vary by lender, property location, and type of
mortgage.
- Examination of Title
- The report on the title of a property from the public
records or an abstract of the title.
- Executor
- A person named in a will to administer an estate. The
court will appoint an administrator if no executor is named. "Executrix" is
the feminine form.
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- Fair Credit Reporting Act
- A consumer protection law that regulates the
disclosure of consumer credit reports by consumer/credit reporting agencies
and establishes procedures for correcting mistakes on one's credit record.
- Fair Market Value
- The highest price that a buyer, willing but not
compelled to buy, would pay, and the lowest a seller, willing but not
compelled to sell, would accept.
- Fannie Mae
- A tax-paying corporation created by Congress that
purchases and sells conventional residential mortgages as well as those
insured by FHA or guaranteed by VA. This institution, which provides funds for
one in seven mortgages, makes mortgage money more available and more
affordable. Also Referred to as Federal National Mortgage Association.
- Farmer's Home Administration (FmHA)
- An agency of the U.S. Department of Agriculture, that
provides financing for purchasers of homes and farms in small towns and rural
areas.
- Federal Deposit Insurance Corporation (FDIC)
- Independent deposit insurance agency created by
Congress to maintain stability and public confidence in the nation's banking
system.
- Federal Home Loan Mortgage Corporation (FHLMC)
- Also called Freddie Mac, is a quasi-governmental
agency that purchases conventional mortgages from insured depository
institutions and HUD-approved mortgage bankers.
- 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 does not lend money or plan or construct housing.
- Federal Reserve Board
- The 7-member Board of Governors that oversees Federal
Reserve Banks, establishes monetary policy (interest rates, credit, etc.), and
monitors the economic health of the country. Its members are appointed by the
President subject to Senate confirmation, and serve 14-year terms. also called
the Fed.
- Federal Tax Lien
- A lien attaching to a property for nonpayment of a
Federal tax. A Federal tax lien differs from other liens in that it�s not
automatically eliminated by a senior lien holder foreclosing on a mortgage or
trust deed recorded before the tax lien.
- Fee Simple (Fee Absolute or Fee Simple Absolute)
- Absolute ownership of real property; owner is
entitled to the entire property with unconditional power of disposition during
the owners life and upon his death the property descends to the owner's
designated heirs.
- FHA Loans
- Fixed- or adjustable-rate loans insured by the U.S.
Department of Housing and Urban Development. FHA loans are designed to make
housing more affordable, particularly for first-time homebuyers. FHA loans
typically permit borrowers to buy a home with a lower down payment than
conventional loans. With FHA insurance, eligible buyers can purchase a home
with a down payment of as little as 3% of the appraised value or the purchase
price-whichever is lower. FHA borrowers typically are required to participate
in a face-to-face meeting with their lender or a government approved mortgage
counselor prior to closing on a new mortgage loan. The current FHA loan limits
vary depending on home type and home location.
- FHA Mortgage Insurance
- Requires a small fee (up to 3 percent of the loan
amount) paid at closing or a portion of this fee added to each monthly payment
of an FHA loan to insure the loan with FHA. On a 9.5 percent $75,000 30-year
fixed-rate FHA loan, this fee would amount t o either $2,250 at closing or an
extra $31 a month for the life of the loan. In addition, FHA mortgage
insurance requires an annual fee of 0.5 percent of the current loan amount,
the more years the fee must be paid.
- FICO
- The most common credit-scoring model used by lenders,
it is also known as a
Fair, Isaac score. Your FICO can range
from 200 to 900. According to this model, the higher your score, the less
likely you are to default on your loan.
- Fiduciary
- A person in a position of trust or responsibility
with specific duties to act in the best interest of a client. A real estate
broker is a fiduciary for his/her clients.
- Filing Fees
- The amount charged by public officials in your area
for recording your mortgage and other documents.
- Finance Charge
- Your finance charge is the total of all the interest
you would pay over the entire life of the loan, assuming you kept the loan to
maturity, as well as all prepaid finance charges. If you pre-pay any principal
during your loan, your monthly payments remain the same, but your total
finance charge will be reduced.
- First Adjustment
- When you can expect the first rate adjustment in your
ARM loan.
- First Mortgage
- A mortgage that has priority as a lien over all other
mortgages. In the case of a foreclosure the first mortgage will be satisfied
before other mortgages.
- Fixed Income
- Income of a specified and consistent value that is
received at specified and consistent intervals. Types of fixed income include
social security benefits, VA benefits, pension income, permanent disability
benefits, welfare/aid income and child support/alimony.
- Fixed-Rate
Loans
- Fixed-rate loans have interest rates that do not
change over the life of the loan. As a result, monthly payments for principal
and interest are also fixed for the life of the loan. Fixed-rate loans
typically have 15-year or 30-year terms. With a fixed-rate loan, you will have
predictable monthly mortgage payments for as long as you have the loan.
- Fixture
- Personal property that becomes real property when
attached in a permanent manner to real estate.
- Float
- Until you request to secure a lender's quoted interest
rate, the interest rate will continue to change, or float, due to market
fluctuations. Locking or securing a rate protects you from these potential
fluctuations from the time your lock is confirmed to the day your lock period
expires. You may choose to float your rate up until the time your lender
contacts you to schedule your closing. At this time, an interest rate must be
secured in order to prepare your closing documents.
- Flood Insurance
- Insurance that compensates for physical property
damage resulting from flooding. It is required for properties located in
federally designated flood areas.
- Forbearance
- Grace period given when a lender postpones foreclosure
to give the borrower time to catch up on overdue payments.
- Foreclosure
- The legal process by which a borrower in default under
a mortgage is deprived of his or her interest in the mortgaged property. This
usually involves a forced sale of the property at public auction
- Free and Clear
- Real property against which there are no liens,
especially voluntary liens. n with the proceeds of the sale being applied to
the mortgage debt.
- Freddie Mac
- See Federal Home Loan Mortgage Corporation
- Fully Amortized ARM
- An adjustable-rate mortgage (ARM) with a monthly
payment that is sufficient to amortize the remaining balance, at the interest
accrual rate, over the amortization term.
- Fully Indexed Rate
- The fully indexed rate is equal to the rate index plus
the loan�s margin and is used with adjustable-rate mortgages. Example: If
LIBOR is 6.50% and the margin on the loan is 4.00%, the fully indexed rate is
10.50%.
- Funding
- The disbursement of loan funds, either by check or by
wire transfer to the title company.
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- General Warranty Deed
- A deed which conveys not only all the grantor's
interests in and title to the property to the grantee, but also warrants that
if the title is defective or has a "cloud" on it (such as mortgage claims, tax
liens, title claims, judgments, or mechanic's liens against it) the grantee
may hold the grantor liable.
- Ginnie Mae
- Provides sources of funds for residential mortgages,
insured or guaranteed by FHA or VA.. Also referred to as Government National
Mortgage Association.
- Good Faith Estimate
- Written estimate of the settlement costs the borrower
will likely have to pay at closing. Under the Real Estate Settlement
Procedures Act (RESPA), the lender is required to provide this disclosure to
the borrower within three days of receiving a loan application.
- Government National Mortgage Association (GNMA)
- See Ginnie Mae.
- Grace Period
- Period of time during which a loan payment may be made
after its due date without incurring a late penalty. The grace period is
specified as part of the terms of the loan in the Note.
- Graduated Payment Mortgage (GPM)
- A type of flexible-payment mortgage where the payments
increase for a specified period of time and then level off. This type of
mortgage has negative amortization built into it.
- Grantee
- The party in the deed who is the buyer or
recipient.
- Grantor
- The party in the deed who is the seller or giver.
- Gross Monthly Income
- The income you earn in a month before taxes and other
deductions. Under certain circumstances, it may also include rental income,
self-employed income, income from alimony, child support, public assistance
payments, and retirement benefits.
- Guarantee or Guaranty
- A promise by one party to pay a debt or perform an
obligation contracted by another in the event of that person's default.
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- Hazard Insurance
- A policy that protects the insured against loss due to
fire or certain natural disasters in exchange for a premium paid to the
insurer. Also known as Home Owner�s Insurance or fire insurance.
- Holdback
- A portion of a mortgage loan held back by the lender
from the customer until a contingency is met by the customer. An example of a
contingency would be repairs needed for a property�s roof. Upon completing the
required repairs, the lender releases the held back funds to the borrower.
- Home Equity Line of Credit
- A credit line that is secured by a second deed of
trust on a house. Equity lines of credit are revolving accounts that work like
a credit card, which can be paid down or charged up for the term of the loan.
The minimum payment due each month is interest only.
- Home Equity Loan
- A loan in real estate property that is used to secure
or guarantee the amount borrowed. Sometimes referred to as a second mortgage
or borrowing against your home. The loan allows you to tap into your home's
built-up equity, which is the difference between the amount your home could be
sold for, and any claims held against it. People often use a home equity loan
for home improvements or to pay for a new car. A home equity loan is a good
way to borrow money for two main reasons. First, the interest rate is usually
one of the lowest loan rates a borrower can get. Also, the interest you pay on
the loan is usually tax-deductible. But taking out a home equity loan also
means the lender can take possession of the home if the loan isn't repaid.
This is why some people decide to not borrow against their home, and may
decide to take out a personal loan. But for many borrowers, a home equity loan
can be the best loan option. Your best loan option is the loan that best meets
your needs.
- Home Inspection
- A professional inspection of a home to review the
condition of the property. The inspection should include an evaluation of the
plumbing, heating and cooling systems, roof, wiring, foundation and pest
infestation.
- Homeowners Association
- An association of homeowners in a particular
subdivision, planned unit development (PUD), or condominium organized to
manage the common area of the development and to enforce the association rules
and regulations.
- Homeowners Insurance
- Just as you insure your automobile to protect against
theft and damage, you insure your home. Homeowners insurance is required by
all lenders to protect their investment, and must be obtained before closing.
In most cases, coverage must be equal to the loan balance, or the value of the
home.
- Homeowner's Warranty (HOW)
- A type of insurance that covers repairs to specified
parts of a house for a specific period of time. It is provided by the builder
or property seller as a condition of the sale.
- Housing and Urban Development (HUD)
- A U.S. government agency established to implement
federal housing and community development programs; oversees the Federal
Housing Administration.
- Housing Code
- Local government ordinance that sets minimum standards
of safety and sanitation for existing residential buildings.
- Housing Expenses-to-Income Ratio
- The ratio, expressed as a percentage, which results
when a borrower's housing expenses are divided by his/her net effective income
(FHA/VA loans) or gross monthly income (Conventional loans).
- HUD-1 statement
- A document that provides an itemized listing of the
funds that are payable at closing. Items that appear on the statement include
real estate commissions, loan fees, points, and initial escrow amounts. Each
item on the statement is represented by a separate number within a
standardized numbering system. The totals at the bottom of the HUD-1 statement
define the seller's net proceeds and the buyer's net payment at closing. The
blank form for the statement is published by the Department of Housing and
Urban Development (HUD). The HUD-1 statement is also known as the "closing
statement" or "settlement sheet."
- Hypothecate
- To pledge a property as security without having to
give up possession of it.
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- Impound Account
- An impound account is an account established by the
lender to pay a borrower's tax and insurance costs. The borrower's monthly
mortgage payment is then increased to cover these costs, with the additional
amount being held in the impound account and disbursed by the lender when the
payments are due. Lenders typically prefer this arrangement because it reduces
the possibility of a lapse in tax or insurance payments that could diminish
the value of the lender's investment (your house). Therefore, while it is
often possible to opt out of an impound account it will result in additional
charges.
- Index
- Most lenders generally tie adjustable rate mortgage
loan (ARM)interest rate changes to an "index." An index is a widely published
rate such as LIBOR, T-Bill, or 11th District Cost of Funds (COFI). Lenders use
these indices to establish the interest rates charged on mortgage loans. For
ARMs, a predetermined margin is added to the index to compute the interest
rate adjustment.
- Initial Cap
- Consumer safeguard that limits the amount the interest
rate on an adjustable rate mortgage can change during the first adjustment
period.
- Initial Interest Rate
- The initial interest rate is the rate you pay when you
first get your loan. On an ARM, this rate may be for 5 years (5/1 ARM) or only
a month.
- Inquiry
- A request for a copy of your credit report. An inquiry
occurs every time you fill out a credit application and/or request more
credit. Too many inquiries on a credit report can lower your credit score.
- Installment
- The regular periodic payment that a borrower agrees to
make to a lender. The installment is more often referred to as your monthly
mortgage payment.
- Interest
- The cost you pay to borrow money. It is the payment
you make to a lender for the money it has lent to you. Interest is usually
expressed as a percentage of the amount borrowed.
- Interest Accrual Rate
- The percentage rate at which interest accrues on the
mortgage. In most cases, it is also the rate used to calculate the monthly
payments, although it is not used for an adjustable-rate mortgage (ARM) with
payment change limitations.
- Interest Cost
- Interest cost shows how much you will pay in interest
over the life of the loan, assuming you keep the loan for the entire period.
- Interest Due
- Interest due is the portion of the mortgage payment
that goes toward interest. When you close on your home, you will usually owe
interest for the time between your closing date and when you make your first
payment.
- Interest Only Loan Option
- Loan payments have two components, principal and
interest. An interest-only loan has no principal component for a specified
period of time. These special loans minimize your monthly payments by
eliminating the need to pay down your balance during the interest-only period,
giving you greater cash flow control and/or increased purchasing power.
- Interest Rate
- The annual rate of interest on the loan, expressed as
a percentage of 100.
- Interest Rate Adjustment Period
- The interest rate adjustment period is how often your
rate is adjusted on an ARM after the initial rate period is over. For example,
a 5/1 ARM means you have an initial rate period of 5 years that is fixed and
then after 5 years, your rate changes every year.
- Interest Rate Ceiling
- For an adjustable-rate mortgage (ARM), the maximum
interest rate, as specified in the mortgage note.
- Interest Rate Floor
- For an adjustable-rate mortgage (ARM), the minimum
interest rate, as specified in the mortgage note.
- Interest Rate Increase Cap
- The interest rate increase cap is the maximum
allowable increase in your interest rate (on an ARM) each time your rate is
adjusted. It is usually 1 or 2 percentage points. For example, if your rate
adjusts every year, each year it cannot exceed the stated cap.
- Investment Income
- Money earned from investments of money, such as stock
dividends and annuity payments.
- Involuntary Lien
- A lien imposed against property by law or legal action
without the consent of an owner. Examples include taxes, special assessments,
federal income tax liens, judgment liens, mechanics liens and materials liens.
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- Joint Liability
- Liability shared among two or more people, each of
whom is liable for the full debt.
- Joint Tenancy
- The ownership of property by two or more persons with
the survivor taking the share of the deceased.
- Judgement
- The decision of a court of law stating that one
individual is indebted to another and fixing the amount of indebtedness.
Judgements, when recorded, become a lien on real property owned by the
defendant.
- Judgement Lien
- The claim on the property of a debtor resulting from a
judgement.
- Judicial Foreclosure
- A court supervised foreclosure process used in states
using a mortgage or security deed.
- Jumbo Loan
- A loan which is larger (more than $240,000) than the
limits set by the Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two
agencies, they usually carry a higher interest rate.
- Junior Mortgage
- A mortgage subordinate or secondary to another
mortgage. In the case of a foreclosure, a senior mortgage will be paid first.
Back to Index
- Kicker
- A payment required by a mortgage in addition to normal
principal and interest. Sometimes known as a participation loan.
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- Land Contract
- A real estate installment selling arrangement whereby
the buyer may use and occupy land, but no deed is given by seller until the
sales price has been paid.
- Late Charge
- The penalty a borrower must pay when a payment is made
a stated number of days (usually 15) after the due date.
- Lease with Option to Purchase
- A lease under which the lessee has the right to
purchase the property. The option may run for a portion or for the full length
of the lease
- Lender
- Company that performs the functions necessary to
complete a mortgage transaction. Lenders include approved sellers, mortgage
brokers, and third-party originators (TPOs).
- Liabilities
- A person's financial obligations. Liabilities include
long-term and short-term debt, as well as any other amounts that are owed to
others.
- LIBOR
- LIBOR stands for London Inter-Bank Offered Rate. This
is a favorable interest rate offered for U.S. dollar deposits between a group
of London banks. There are several different LIBOR rates, defined by the
maturity of their deposit. The LIBOR is an international index that follows
world economic conditions. LIBOR-indexed ARMs offer borrowers aggressive
initial rates and have proven to be competitive with popular ARM indexes like
the Treasury bill.
- Lien
- A claim or charge on property for payment of some
debt. With respect to a mortgage, it is the right of the lender to take the
title to your property if you do not make the payments due on the mortgage.
- Lifetime Interest Rate Cap
- The highest interest rate that can be charged for an
adjustable rate mortgage during the life of the loan.
- Liquid Assets
- Cash or assets, such as checking/savings accounts,
stocks/bonds, that are immediately convertible to cash.
- Lis Pendens
- Latin for "lawsuit pending." Recorded notice that
litigation is pending on a property. Most lenders will require the clearance
of the Lis Pendens prior to closing.
- Loan Application
- Document required by lenders prior to loan approval
containing detailed information about the borrower and property.
- Loan Application Fee
- Fee charged by a lender to cover the initial costs of
processing a loan application. The fee may include the cost of obtaining a
property appraisal, a credit report, and a lock-in fee or other closing costs
incurred during the process or the fee may be in addition to these charges.
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- Loan origination fee or points
- Charge by a lender or broker connected with
originating a loan. This is different from discount points which are used to
buy down the rate of interest.
- Loan Servicing
- The act of collecting loan payments, handling property
tax and insurance escrows, foreclosing on defaulted loans and remitting
payments to the investors.
- Loan-To-Value (LTV) Percentage
- The relationship between the principal balance of the
mortgage and the appraised value (or sales price if it is lower) of the
property. For example, a $100,000 home with an $80,000 mortgage has a LTV
percentage of 80 percent.
- Lock or Lock-In
- A lender's guarantee of an interest rate for a set
period of time-usually between loan application approval and loan closing. The
lock-in protects you against rate increases during that time.
- LTV
- See Loan To Value Ratio
Back to Index
- Manufactured Housing
- Homes and dwellings that are not built at the home
site and are moved to the location are considered manufactured housing.
Manufactured housing units must be built on a permanent chassis at a factory
and then transported to a permanent site and attached to a foundation. All
manufactured homes must be built to meet standards set forth by the U.S.
Department of Housing and Urban Development (HUD). The standards focus on such
aspects as design, strength, energy efficiency, and fire resistance.
- Margin
- The number of percentage points a lender adds to the
index value to calculate the ARM interest rate at each adjustment period.
- Market Value
- The highest price a buyer would pay and the lowest
price a seller would accept on a property. Market value may be different from
the price a property could actually be sold for at a given time.
- Marketable Title
- A title that is free and clear of objectionable liens,
clouds, or other title defects. A title which enables an owner to sell his
property freely to others and which others will accept without objection.
- Mechanics Lien
- A lien created by state law for debts owed to a
carpenter, contractor, plumber or other entity hired by the property�s
titleholder for services performed or materials provided to repair or improve
the property.
- MIP (Mortgage Insurance Premium)
- Insurance purchased by borrower to insure against
default on government (FHA or VA) loans.
- Monthly Mortgage Payment
- A monthly mortgage payment typically contains four
parts called the PITI (principal, interest, taxes, and insurance). If you pay
your taxes and insurance on your own, you pay only principal and interest to
your lender.
- Mortgage
- A loan secured by a lien on your home. In some states
the term mortgage is also used to describe the document you sign to show that
you have granted the lender a lien on your home; other states use a deed of
trust document instead of a mortgage. It may also be used to indicate the
amount of money you borrow, with interest, to purchase your house. The amount
of your mortgage is usually the purchase price of the home minus your down
payment.
- Mortgage Banker
- A non-depository financial institution that
specializes in originating and servicing loans. They generally sell their
loans to investors, but may continue to service them.
- Mortgage Broker
- A mortgage broker is one who arranges financing for a
borrower by placing loans with lenders. Mortgage brokers are paid a fee by the
borrower or the lender when the loan closes.
- Mortgage Insurance
- A contract that insures the lender against loss caused
by a mortgagor's default on a government mortgage or conventional mortgage.
Mortgage insurance can be issued by a private company or by a government
agency such as the Federal Housing Administration (FHA). Depending on the type
of mortgage insurance, the insurance may cover a percentage of or virtually
all of the mortgage loan.
- Mortgage Insurance Premium (MIP)
- The amount paid by a mortgagor for mortgage insurance,
either to a government agency such as the Federal Housing Administration (FHA)
or to a private mortgage insurance (MI) company.
- Mortgage Lender
- The lender providing funds for a mortgage. Lenders
also manage the credit and financial information review, the property and the
loan application process through closing.
- Mortgage Loan
- A loan for which real estate serves as collateral to
provide for repayment in case of default.
- Mortgage Note
- Legal document obligating a borrower to repay a loan
at a stated interest rate during a specified period of time. The agreement is
secured by a mortgage or deed of trust or other security instrument.
- Mortgagee
- The lender in a mortgage loan transaction.
- Mortgagor
- The borrower or homeowner.
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- Negative Amortization
- Occurs when your monthly payments are not large enough
to pay all the interest due on the loan. This unpaid interest is added to the
unpaid balance of the loan. The danger of negative amortization is that the
home buyer ends up owing more than the original amount of the loan.
- Net Effective Income
- The borrower's gross income minus federal income tax.
- Non Assumption Clause
- A statement in a mortgage contract forbidding the
assumption of the mortgage by another borrower without the prior approval of
the lender.
- Non-Conforming Loan
- Also called a jumbo loan. Conventional home mortgages
not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac
(FHLMC) because of various reasons, including loan amount, loan
characteristics or underwriting guidelines. Non-conforming loans usually incur
a rate and origination fee premium.
- Note
- An agreement containing an expressed and absolute
promise of the signer to pay to a named person or bearer a definite sum of
money at a specified date or on demand. Usually provides for interest, and if
concerning real property, is secured by a mortgage or trust deed.
- Note Rate
- The interest rate stated on a mortgage note.
- Notice of Default
- A notice filed with a county records office to show
that the borrower under a mortgage or deed of trust is in default.
- Notice of Recision
- Borrowers� signed acknowledgement that they wish to
cancel their loan.
- Notice of Right to Cancel
- Under Regulation Z, customers must be notified they
are entering into a transaction that will result in a lien against their
primary residence. This document explains they have the right to cancel the
transaction, at no cost, within 3 business days from the date of signing the
closing documents on a loan.
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- Occupancy Date
- This provision is a good way to help ensure that your
home will be ready for occupancy after the closing takes place. As part of
your formal purchase offer, consider including a provision that holds the
seller responsible for paying you rent should they not move out on or prior to
the agreed-upon date. This allows you, for example, to use the money you
receive to pay your own rent if you are leasing your current residence.
- Offer
- When you make an offer on a house, it means you are
making a formal bid to buy a home. You can work with your real estate sales
professional to put together a written bid that abides by the laws in your
state. Your offer should include such aspects as the address of the home, the
sales price, the type of mortgage financing you will use to purchase the home,
any personal property that might be included as part of the sale, and a target
date for closing and occupancy. An earnest money deposit typically accompanies
the offer. Your real estate sales professional can provide guidance on other
elements of the offer.
- Once you have made an offer, the seller has the
opportunity to accept, decline, or make a counter-offer. If your offer is
accepted, you have a ratified sales contract. This contract is the starting
point for working with an approved lender to get the mortgage that's right for
you.
- Offeree
- One who receives the offer. When the buyer makes an
offer to the seller the seller is an offeree.
- Offeror
- One who makes the offer. When the buyer makes an offer
to the seller the buyer is an offeror.
- Office of Comptroller of the Currency
- The oldest federal financial regulatory body, which
oversees the nation's federally chartered banks.
- Office of Thrift Supervision
- Regulatory and supervisory agency for federally
chartered savings institutions.
- Origination Fee
- The fee charged by a lender to prepare loan documents,
run credit checks, inspect and sometimes appraise a property; usually computed
as a percentage of the face value of the loan.
- Owner Financing
- A purchase in which the seller provides all or part of
the financing.
- Owner of Record
- The individual named on a deed that has been recorded
at the county recorders office.
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- Package Mortgage
- Mortgage covering both real and personal property.
- Paper
- A mortgage, deed of trust or land contract provided in
lieu of cash.
- Partial Release
- A provision in a mortgage that allows some of the
property secured to be freed from serving as collateral.
- Participation Mortgage
- A mortgage that allows the lender to share in part of
the income or resale proceeds.
- Pass Through Certificates
- Interests in a pool of mortgages sold by mortgage
bankers to investors. Money collected as monthly mortgage payments is
distributed to those who own certificates.
- Payment Cap
- Consumer safeguards that limit the amount monthly
payments on an adjustable-rate mortgage may change. Since they do not limit
the amount of interest the lender is earning, they may cause negative
amortization.
- Payment Change Date
- The date when a new monthly payment amount takes
effect on an adjustable-rate mortgage (ARM) or a graduated-payment
adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in
the month immediately after the adjustment date.
- Payment Schedule
- The method for disclosing your payment schedule varies
by loan type. For fixed-rate loans, the payment schedule indicates what your
required monthly payment will be throughout the life of your loan. The payment
schedule for VA, FHA, one-time MIP and uninsured conventional loans should
also indicate a fixed monthly payment. The payment schedule for fixed-rate
insured loans may gradually decrease over time due to a declining insurance
premium. For adjustable rate loans, the payment schedules will vary by loan
type and are based on conservative assumptions of future interest rates.
- Per Diem Interest
- Interest calculated per day. Depending on the day of
the month on which closing takes place, borrower pays interest from the date
of closing to the end of the month. The first mortgage payment of a loan is
generally due the first of the following month.
- Periodic Cap
- Consumer safeguard that limits the amount the interest
rate on an adjustable rate mortgage (ARM) can
change in an adjustment interval.
- Permanent Loan
- A long term mortgage of ten years or more.
- Piggyback Loan
- An alternative to private mortgage insurance, also
known as a second trust loan. The most common type is an 80/10/10 where a
first mortgage is taken out for 80% of the home�s value, a down payment of 10%
is made and another 10% is financed in a second trust at a higher interest
rate. In some cases, you may even qualify for a piggyback loan with as little
as a 5% down payment
- PITI
- Abbreviation for Principal, Interest, Taxes and
Insurance, the components of a monthly mortgage payment.
- Planned Unit Development (PUD)
- A planned unit development (PUD) is a project or
subdivision that consists of common property and improvements that are owned
and maintained by an owner's association for the benefit and use of the
individual units within the project. For a project to qualify as a PUD, the
owners' association must require automatic, non-severable membership for each
individual unit owner, and provide for mandatory assessments.
- Plat
- A map or chart of a lot, subdivision or community
drawn by a surveyor showing boundary lines, buildings, improvements on the
land, and easements.
- Pledged Account Mortgage (PAM)
- Money is placed in a pledged savings account and this
fund plus earned interest is gradually used to reduce mortgage payments.
- Points (or Discount Points)
- Points are an up-front fee paid to the lender at the
time that you get your loan. Each point equals one percent of your total loan
amount. Points and interest rates are inherently connected: in general, the
more points you pay, the lower the interest rate you get. However, the more
points you pay, the more cash you need up front since points are paid in cash
at closing.
- Power of Attorney
- A legal document that authorizes another person to act
on one's behalf. A power of attorney can grant complete authority or can be
limited to certain acts and/or certain periods of time.
- Pre-approval
- The process of determining how much money a
prospective homebuyer or refinancer will be eligible to borrow prior to
application for a loan. A pre-approval includes a preliminary screening of a
borrower's credit history. Information submitted during pre-approval is
subject to verification at application.
- Predatory Lending
- Abusive lending practices that include making a
mortgage loan to an individual who does not have the income to repay it or
repeatedly refinancing a loan, charging high points and fees each time and
"packing" credit insurance on to a loan.
- Prepaid Expenses
- Taxes, insurance and assessments paid in advance of
due dates.
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- Prepaid Interest
- Interest charged to a borrower at closing to cover
interest on the loan between closing and the end of the month in which the
loan closes.
- Prepayment
- A privilege in a mortgage permitting the borrower to
make payments in advance of their due date.
- Prepayment Penalty
- Money charged for an early repayment of debt.
Prepayment penalties are allowed in some form (but not necessarily imposed) in
many states.
- Prequalification
- The process of estimating how much money a prospective
homebuyer will be eligible to borrow prior to application for a loan.
- Primary Mortgage Market
- Includes banks, savings and loans, credit unions, and
mortgage banks that make mortgage loans directly to borrowers. These lenders
sometimes sell their mortgages to lenders such as FNMA in the secondary
mortgage market.
- Prime Rate
- Lowest commercial interest rate charged by a bank on
short-term loans to its most credit-worthy customers. Often used as an index
for home equity lines of credit.
- Principal
- The amount of money borrowed to buy your house or the
amount of the loan that has not yet been paid back to the lender. This does
not include the interest you will pay to borrow that money. The principal
balance (sometimes call the outstanding or unpaid principal balance) is the
amount owed on the loan at any given time. It is the original loan amount
minus the total repayments of principal you have made to date.
- Private Mortgage Insurance (PMI)
- In the event that you do not have a 20 percent down
payment, lenders will allow a smaller down payment - as low as 5 percent in
some cases. With the smaller down payment loans, however, borrowers are
usually required to carry private mortgage insurance. Private mortgage
insurance will usually require an initial premium payment and may require an
additional monthly fee depending on your loan's structure.
- Processed/Processing
- The time between application and loan closing. During
this time your loan processor, reviews your income and asset documentation,
obtains a title insurance policy and clears any clouds on title, orders and
reviews your property appraisal, obtains evidence of homeowners insurance,
verifies the flood zone status of your property, and coordinates the signing
and closing of the loan. This process typically takes 30 to 45 days.
- Processing Fees
- Fees paid to the lender to compensate for the
administrative functions involved in preparing your loan for funding. These
functions include reviewing your application, income, and assets, ordering and
obtaining a clear title report and securing title insurance, coordinating with
the closing agent, obtaining homeowners insurance verification, coordinating
the appraisal, and others.
- Promissory Note
- A written promise by the borrower to pay a debt owed,
within a specified time, to the holder of the note under conditions mutually
agreed upon.
- Property Taxes
- The taxes assessed on the property by the local
government (e.g. city, county, village or township) for the various services
provided to the property owner. Such services may include police and fire
department services, garbage pick up and snow removal.
Return to Index
- Qualifying Ratios
- The ratio of your fixed monthly expenses to your gross
monthly income, used to determine how much you can afford to borrow. The fixed
monthly expenses would include PITI along with other obligations such as
student loans, car loans, or credit card payments.
- Quiet Title (Action)
- A court action to settle a title dispute.
- Quitclaim Deed
- A deed which transfers whatever interest the maker of
the deed may have in the particular parcel of land. A quitclaim deed is often
given to clear the title when the grantor's interest in a property is
questionable. By accepting such a deed the buyer assumes all the risks. Such a
deed makes no warranties as to the title, but simply transfers to the buyer
whatever interest the grantor has.
Return to Index
- Radon
- A radioactive gas found in some homes that in
sufficient concentrations can cause health problems.
- Rate
- In lending, the amount of interest on the loan
expressed as an interest rate or annual percentage rate (APR) of the
principal.
- Rate Caps
- Lenders offer caps with their adjustable rate
mortgages (ARMs) so you can have more control over your monthly mortgage
payment. Usually, there are two types of rate caps:
- -- A per-adjustment cap, which specifies the most your
interest rate can rise from one adjustment period to the next,
- -- and a lifetime adjustment cap, which specifies how
much your interest rate can rise over the life of your loan.
- Rate Lock or Lock-In
- A lender�s guarantee of an interest rate and related
points for a set period of time, usually between loan application and loan
closing. Protects borrower against rate increases during that time.
- Ratified Sales Contract
- A contract that shows both you and the seller of the
house have agreed to your offer. This offer may include sales contingencies,
such as obtaining a mortgage of a certain type and rate, getting an acceptable
inspections, making repairs, closing by a certain date, and the like.
- Real Estate Professional
- An individual who provides services in buying and
selling homes. The real estate professional is paid a percentage of the home
sale price by the seller. Unless you have specifically contracted with a
buyer's agent, the real estate professional represents the interest of the
property seller. Real estate professionals may be able to refer you to local
lenders or mortgage brokers, but are generally not involved in the lending
process.
- Real Estate Settlement Procedures Act (RESPA)
- A consumer protection law that requires lenders to
give borrowers advance notice of closing costs.
- Real Property
- Land and all attachments to the land, such as
buildings, crops or mineral rights. Ownership of real property can be divided
into various types of interests and rights.
- Reclamation
- The right of the person with title to a property to
recover it from the debtor in event of a bankruptcy.
- Reconveyance
- The transfer of property back to the owner when a
mortgage is fully repaid.
- Recording
- The act of entering documents concerning title to a
property into the public records.
- Recording Fee
- Money paid to a government agent for entering the sale
of a property into the public records.
- Recourse
- The right of the holder of a note secured by a
mortgage or deed of trust to claim money from the borrower in default in
addition to the property pledged as a collateral.
- Refinancing
- The process of paying off one loan with the proceeds
from a new loan secured by the same property.
-
- Regulation Z (Reg Z)
- A federal regulation requiring creditors to provide
full disclosure of the terms of a loan including the terms of the loan and the
annual percentage rate (APR).
- Release of Lien
- When a lien against the property is satisfied, the
note holder records a document that reflects the discharge of the obligation
and releases the lien recorded against the property.
- Replacement Cost
- The cost to replace damaged personal property without
a deduction for depreciation.
- Repossession (or Foreclosure)
- Legal process by which the lender forces the sale of a
property because the borrower has not met the mortgage terms.
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- Residential Mortgage Credit Report (RMCR)
- A report requested by your lender that utilizes
information from at least two of the three national credit bureaus and
information provided on your loan application.
- RESPA
- See Real Estate Settlement Procedures Act.
- Restrictive Covenants
- Private restrictions limiting the use of real
property. Restrictive covenants are created by deed and may "run with the
land," binding all subsequent purchasers of the land, or may be "personal" and
binding only between the original seller and buyer. The determination whether
a covenant runs with the land or is personal is governed by the language of
the covenant, the intent of the parties, and the law in the State where the
land is situated. Restrictive covenants that run with the land are
encumbrances and may affect the value and marketability of title. Restrictive
covenants may limit the density of buildings per acre, regulate size, style or
price range of buildings to be erected, or prevent particular businesses from
operating or minority groups from owning or occupying homes in a given area.
(This latter discriminatory covenant is unconstitutional and has been declared
unenforceable by the U.S. Supreme Court.)
- Reverse Annuity Mortgage (RAM)
- A form of mortgage in which the lender makes periodic
payments to the borrower using the borrower's equity in the home as security.
- Right of First Refusal
- A provision in an agreement that requires the owner of
a property to give another party the first opportunity to purchase or lease
the property before he or she offers it for sale or lease to others.
- Right of survivorship
- The right of a surviving joint tenant to acquire the
interest of a deceased joint owner.
- Right to Rescission
- Under the provisions of the Truth-in-Lending Act, the
borrower's right, on certain kinds of loans, to cancel the loan within three
days of signing a mortgage.
- Rollover Loan
- A loan that is amortized over a long period of time
(e.g. 30 years) but the interest rate is fixed for a short period (e.g. 5
years). The loan may be extended or rolled over, at the end of the shorter
term, based on the terms of the loan.
Return to Index
- Sales Agreement
- Contract signed by buyer and seller stating the terms
and conditions under which a property will be sold.
- Sale-Leaseback
- A technique in which a seller deeds property to a
buyer for a consideration, and the buyer simultaneously leases the property
back to the seller.
- Satisfaction
- Discharge of an obligation by payment of the amount
due, as on a mortgage, trust deed or contract or payment of a debt awarded,
such as a satisfaction of a judgment.
- Savings & Loan
- Depository institutions that specialize in
originating, servicing and holding mortgage loans primarily on owner occupied
residential property.
- Schedule A
- A section of the Preliminary Title Report/Title
Commitment that lists the name of the proposed insured, amount of title
insurance, estate or interest in the land, how legal title is vested and the
legal description of the property.
- Schedule B
- A section of the Preliminary Title Report/Title
Commitment that lists exceptions to title if any.
- Second Mortgage
- An additional mortgage placed on a property that has
rights that are subordinate to the first mortgage. A second mortgage is a lien
in which you are given a lump sum amount that you pay off in installments over
a specified period of time. Home improvement and debt consolidation loans are
considered second mortgages.
- Secondary Mortgage Market
- The market into which primary mortgage lenders sell
the mortgages to obtain funds to originate more new loans. Includes investors
like Fannie Mae and Freddie Mac.
- Section 1031
- The section of the IRS that deals with tax free
exchanges of certain property. General rules for tax free exchanges are :
- The properties must be :
- Exchanged
- Similar
- Used for business or as an investment
- Secured Debt
- Money borrowed that is guaranteed (or secured) by the
borrower's funds and held by the lender in an interest-bearing account.
Typically required when a borrower is without credit or has poor credit. The
lender usually returns the secured money plus a nominal rate of earned
interest to the borrower with a certain period of time if a good credit
history is established. Distinguished from unsecured debt.
- Security Instrument
- The security instrument is used to identify and
encumber the real property used as collateral for the loan. It�s notarized and
then recorded with the county in which the property is located. Once recorded,
it secures an interest in, or lien against, the property. The security
instrument used is state specific. Examples are, deed of trust, security deed,
a trust deed or a mortgage.
- Seller Take-Back
- An agreement in which the owner of a property provides
financing, often in combination with an assumable mortgage. Also see
"Owner Financing"
- Servicing (or Loan Administration)
- The collection of mortgage payments from borrowers and
related responsibilities (such as handling escrows for property tax and
insurance, foreclosing on defaulted loans and remitting payments to
investors).
- Settlement (or Closing)
- The settlement or closing is the conclusion of your
real estate transaction. It includes the delivery of your security instrument,
signing of your legal documents and the disbursement of the funds necessary to
the sale of your home or loan transaction (refinance).
- Settlement Costs
- Also known as closing costs, these costs are for
services that must be performed to process and close your loan application.
Examples include title fees, recording fees, appraisal fee, credit report fee,
pest inspection, attorney's fees, taxes, and surveying fees.
- Settlement Sheet
- The HUD-1 Settlement Statement itemizes the amounts to
be paid by the buyer and the seller at closing. The (blank) form is published
by the U.S. Department of Housing and Urban Development (HUD). Items on the
statement include:
- Real Estate Commissions
- Loan Fees
- Points
- Escrow Amounts
- The form is filled out by your closing agent and must
be signed by the buyer and the seller. The buyer should be allowed to review
the HUD-1 Settlement Statement on the business day before the closing meeting
to know the closing costs in advance. The HUD-1 Settlement Statement is
also known as the "closing statement" or "settlement sheet."
- Shared Appreciation Mortgage (SAM)
- A mortgage in which a borrower receives a below-market
interest rate in return for which the lender (or another investor such as a
family member or other partner) receives a portion of the future appreciation
in the value of the property. May also apply to mortgage where the borrowers
shares the monthly principal and interest payments with another party in
exchange for part of the appreciation.
- Signing Fee
- Fee paid to a notary or signing service to execute
your loan documents.
- Simple Interest
- Interest that is paid on the principal amount
borrowed. Considered the best interest term for a borrower because it is not
compounded.
- Site Condominium
- A detached single-family dwelling characterized as a
site condominium by the way it is platted by the builder, however it is still
considered a condominium.
- Special Assessment
- A special tax imposed on property, individual lots or
all property in the neighborhood to pay for improvements - street lights,
sidewalks, etc.
- Special Warranty Deed
- A deed in which the grantor conveys title to the
grantee and agrees to protect the grantee against title defects or claims
asserted by the grantor and those persons whose right to assert a claim
against the title arose during the period the grantor held title to the
property. In a special warranty deed the grantor guarantees to the grantee
that he has done nothing during the time he held title to the property which
has, or which might in the future, impair the grantee's title.
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- Start Rate
- The interest rate that you pay on your outstanding
balance for the introductory period, which is typically 90 days.
-
- Stated/Documented Income
- Some loan products require only that applicants
"state" the source of their income without providing supporting documentation
such as tax returns.
- Structural Improvements
- A "Structural Improvement" is any permanent
improvement made to your property that is not strictly for decorating
purposes. Examples include: additions, new flooring, kitchen or bathroom
upgrades, new windows and central air. Swimming pools are considered
structural improvements only if they are in ground and your property is in a
year round warm weather climate.
- Subdivision
- A tract of land divided into lots suitable for home
building purposes.
- Subordinate
- A lien taking a legal title position junior to another
lien that recorded later. For example, if a mortgage lien recorded in 1996, it
can subordinate to a lien recorded in 1999. Subordination may apply not only
to mortgages, but also to leases, real estate rights and any other type of
debt instruments.
- Subordination Agreement
- An agreement by which a lienholder agrees to accept a
lien position junior to that of a later-recorded lien. For example, when a
lienholder agrees to subordinate, a formal agreement must be drawn, signed and
recorded to make it a legal transaction. Subordinations may apply not only to
mortgages, but also to leases, real estate rights and any other types of debt
interests.
- Subsidized Second Mortgage
- Alternative financing option for low and
moderate-income households that also includes a down payment and a first
mortgage, with funds for the second mortgage provided by city, county, or
state housing agencies, foundations, or nonprofit corporations. Payment on the
second mortgage is often deferred and carries a low interest rate (if any).
Part of the debt may be forgiven for each year the family remains in the home.
- Survey
- A print showing the measurements of the boundaries of
a parcel of land, together with the location of all improvements on the land
and sometimes its area and topography.
- Sweat Equity
- Value added to a property due to improvements made
personally by the owner.
Return to Index
- Takeout Financing
- A commitment to provide permanent financing upon
completion of construction. The take out loan normally pays off the
construction loan.
- Tax
- As applied to real estate, an enforced charge imposed
on persons, property or income, to be used to support the State. The governing
body in turn utilizes the funds in the best interest of the general public.
- Tax Assessed Value
- The Tax Assessed Value (TAV) is the dollar amount
assigned to your property for the purposes of taxation. The TAV is not
necessarily the market value of your home, but the TAV will take into
consideration your home's market value, as well other factors, including your
property's tax class, maintenance costs, home improvements, etc. The TAV is
established by the county's tax assessor who utilizes features such as sales
prices from surrounding properties, location, condition and age of the
property to determine the TAV.
- Tax Impound
- Money paid to and held by a lender for annual tax
payments.
- Tax Lien
- Claim against a property for unpaid taxes.
- Tax Sale
- Public sale of property by a government authority as a
result of non-payment of taxes.
- Teaser Rate
- A low initial interest rate on a mortgage.
- Tenancy by the Entirety
- A form of ownership by husband and wife whereby each
holds title to the entire property with right of survivorship. In the event of
the death of one, the survivor takes the entire property to the exclusion of
the deceased's heirs.
- Tenancy in Common
- A form of holding title in which the property is owned
by 2 or more persons whereby each tenant holds an undivided interest in the
property and no right of survivorship.
- Tenancy in Severalty
- Ownership of property by one person.
- Term
- The period of time which covers the life of the loan.
For example, a 30 year fixed loan has a term of 30 years.
- Third Party Fees
- Fees paid to a third party for services requested by
the lender on your behalf.
- Time Share
- A form of property ownership under which a property is
held by a number of people, each with the right of possession for a specified
time interval. Time sharing is used mostly for vacation properties.
- Title
- Document that gives evidence of ownership of a
property. Also indicates the rights of ownership and possession of the
property. Individuals who will have legal ownership in the property are
considered "on title" and will sign the mortgage and other documentation.
- Title Company
- A company that insures title to property.
- Title Company Closing Fee
- This fee is paid to the title insurance company that
conducts your closing and handles the transfer of funds among the parties.
- Title Insurance
- A policy, usually issued by a title insurance company,
which insures a home buyer against errors in the title search. The cost of the
policy is usually a function of the value of the property, and is often borne
by the purchaser and/or seller. Policies are also available to protect the
lender's interests.
- Title Search
- An investigation into the history of ownership of a
property to check for liens, unpaid claims, restrictions or problems, to prove
that the seller can transfer free and clear ownership.
- Town House
- Residence which normally has 2 or more floors and is
attached to other similar units. Town houses are commonly found in planned
unit developments (PUDs) and condominiums.
- Tract
- A parcel of land, generally held for subdividing.
- Transfer Tax
- Tax paid to the city, county, state or other
government entity upon sale of a property.
- Treasury Index
- An index that is used to determine interest rate
changes for certain adjustable-rate mortgage (ARM) plans. It is based on the
results of auctions that the U.S. Treasury holds for its Treasury bills and
securities or is derived from the U.S. Treasury's daily yield curve, which is
based on the closing market bid yields on actively traded Treasury securities
in the over-the-counter market.
- Triple-Net Lease
- One in which the tenant pays all operating expense of
the property. The landlord receives the net rent.
- Trust Account
- A separate bank account maintained by a broker or
escrow company to handle all money collected for clients. A broker may not
commingle these funds with his/her own funds.
- Trust Deed
- An instrument used in many states in place of a
mortgage. Grants an interest in the property as collateral for a loan and,
when recorded with the county, creates a lien having priority over later-filed
mortgages or trust deeds. Same as Deed of Trust.
- A party who is given legal responsibility to hold
property in the best interest of or "for the benefit of" another. The trustee
is one placed in a position of responsibility for another, a responsibility
enforceable in a court of law.
- Truth-In-Lending
- A federal law requiring disclosure of the Annual
Percentage Rate to home buyers shortly after they apply for the loan. Also
known as Regulation Z.
- Two-Step Mortgage
- The Two-Step Mortgage is a special type of
adjustable-rate mortgage (ARM) that adjusts only once. Depending on whether
you select a five-year or seven-year Two-Step Mortgage, your interest rate
will adjust once at the end of either five or seven years. Then, your interest
rate stays the same for the remaining 25 or 23 years of your 30-year loan.
- Underwriting
- The decision whether to make a loan to a potential
home buyer based on credit, employment, assets, and other factors, and the
matching of this risk to an appropriate rate and term or loan amount.
Return to Index
- Undivided Interest
- An ownership right to use and possess a property that
is shared among co-owners, with no one co-owner having exclusive rights to any
portion of the property.
- Unencumbered Property
- Real estate with free and clear title.
- Uniform Residential Appraisal Report (URAR)
- The most common appraisal form in use. The URAR is
used to document the methods used to determine the market value of
single-family residences and planned unit developments.
- Unimproved Property
- Land that has received no development.
- Unrecorded Deed
- A document that transfers title from the grantor to
the grantee without recording (i.e. providing public notice).
- Usury
- Interest charged in excess of the legal rate
established by law.
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- VA Loans
- Fixed-rate loans guaranteed by the U.S. Department of
Veterans Affairs. They are designed to make housing affordable for eligible
U.S. veterans. VA loans are available to veterans, reservists, active-duty
personnel, and surviving spouses of veterans with 100% entitlement. Eligible
veterans may be able to purchase a home with no down payment, no cash reserve,
no application fee, and lower closing costs than other financing options.
- VA Mortgage Funding Fee
- A premium of up to 2 percent (depending on the size of
the down payment) paid on a VA-backed loan. On a $75,000 30-year fixed-rate
mortgage with no down payment, this would amount to $1,406 either paid at
closing or added to the amount financed.
- Variable Interest Rate
- An interest rate that fluctuates as a result of
changes in a controlling index rate . With adjustable-rate mortgages, there
are usually maximums as to the frequency and amount of fluctuation.
- Variable Rate Mortgage
- See Adjustable Rate Mortgage.
- Verification of Deposit (VOD)
- Document signed by the borrower's bank or other
financial institution verifying the borrower's account balance and history.
- Verification of Employment (VOE)
- Document signed by the borrower's employer verifying
the borrower's position and salary.
- Verification of Mortgage (VOM)
- Documentation that establishes the customer�s mortgage
payment history.
- Vested
- Having the right to use a portion of a fund such as an
individual retirement fund. For example, individuals who are 100 percent
vested can withdraw all of the funds that are set aside for them in a
retirement fund. However, taxes may be due on any funds that are actually
withdrawn.
Return to Index
- W-2
- A document that reports to the Federal government
income earned by salaried employees. This document reports employees� total
gross and withholdings made during the previous tax year. Employers must mail
W-2s by January 31 of each year for the prior tax year.
- Waiver
- Relaxing a requirement pertaining to the eligibility
of a loan. Waivers may include permitting less documentation than would
otherwise be required.
- Walk-through
- A final inspection of a home to check for problems
that may need to be corrected before closing.
- Warehousing
- Mortgage bankers and other financial institutions make
loans that are then periodically sold on the secondary market. After the loan
is made but before it is sold - the loan is said to be in the lenders
warehouse.
- Warranty Deed
- A deed used in many states to convey fee title to real
property. A deed in which the grantor or seller warrants or guarantees good
title is being conveyed as opposed to a quitclaim deed that contains no
representation or warranty as to the quality of title being conveyed.
- Wraparound Mortgage
- Results when an existing assumable loan is combined
with a new loan, resulting in an interest rate somewhere between the old rate
and the current market rate. The payments are made to a second lender or the
previous homeowner, who then forwards the payments to the first lender after
taking the additional amount off the top.
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- Yield Spread Premium
- Also known as "YSP" or rebate, it is the cash rebate
paid to a mortgage broker based on selling an interest rate above the
wholesale par rate that the borrower qualifies for.
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- Zero Lot Line
- A form of housing where individual units are on
separate lots, but are attached to one another. Example : PUD, townhouse.
- Zoning
- Areas may be zoned to specify use of a property i.e.
residential, commercial, agricultural. These zoning ordinances are normally
enforced by the city or the county.
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