ABSTRACT ? A written history of public records on property.
ADJUSTABLE RATE MORTGATE (ARM) ? These loans have an interest rate which changes periodically according to a specified financial index.
AMORTIZATION ? Repayment of your loan through scheduled installment payments.
APPRAISAL ? A report made by a qualified person indicating the value of a property as of a given date. During the course of a real estate transaction, this person represents the bank. In addition to value, they may report on repairs required for financing.
APPLICATION FEE ? The amount you pay to a lender to process your application.
ASSUMABLE MORTGATE ? The buyer takes over the seller?s mortgage, and the buyer then accepts the responsibility for the payments. These are becoming more rare as banks have eliminated this option on most new loans.
BALLOON MORTGAGE ? Scheduled repayment of the loan balance at one time.
BINDER ? A preliminary agreement to purchase, often secured by the payment of money in earnest. Also known as a purchase offer.
BLANKET MORTGATGE ? This is one mortgage that covers 2 or more properties.
BUY-DOWN ? Money advanced by an individual (e.g., builder, seller, buyer, developer) to lower monthly mortgage payments for a few years or for the whole term.
CAP (INTEREST RATE) ? The maximum interest rate increase allowable on an adjustable rate mortgage.
CAP (PAYMENT RATE) ? The maximum payment amount increase allowable on an adjustable rate mortgage.
CLOSING ? The actual legal transfer of property from seller to buyer.
CLOSING COSTS ? Fees paid at the time of closing. Costs may vary from lender to lender.
CONVENTIONAL MORTGAGE ? A loan that is not insured or guaranteed by a government or private source.
DEED ? this is the written transfer of property ownership.
DEFAULT ? Failure to meet an obligation when due.
EASEMENT ? The legal right for limited use of another?s land.
ENCUMBRANCE ? A claim, lien, or liability that has been attached to the title of a property. This may affect its value. This is a valid claim against property.
EQUITY ? The difference between the fair market value (appraised value) of your home and your outstanding mortgage balance. It is the portion of property you own.
ESCROW ? Deposits made to a special account until the terms of a contract are fulfilled.
EXECUTION DATE ? The starting point for the contract is the execution date.? It?s best to give an example- the buyer signs the contract to make an offer, perhaps there are some changes and some negotiation that takes a day or two.? Buyer and seller then come to an agreement.? The buyer then initials the changes and gives the contract to the seller.? The actual date that the seller signs becomes the execution date.? It doesn?t matter if it?s a business day, a holiday or a weekend.
FANNIE MAE (FNMA) ? Federal National Mortgage Association ? quasi-government corporation that buys and sells mortgages.
FEDERAL HOUSING ADMINISTRATION (FHA) LOAN ? This agency insures mortgages on residential property with a low down payment.
FIXED RATE MORTGAGE (FRM) ? The interest rate always remains the same on this loan.
FORECLOSURE ? The procedure where the lender reacquires property after default.
FREDDIE MAC (FHLMC) ? Federal Home Loan Mortgage Corporation ? quasi-government agency that pools mortgages and sells participation agreements.
GRANTEE ? Buyer of property.
GRANTOR ? Seller of property.
INDEX ? The guide for rate changes that lenders use to decide how much the annual percentage rate will change over time.
INTEREST RATE ? The periodic charge, expressed as a percentage, for use of credit.
LIEN ? A legal claim on property used as security for a debt.
LOAN-TO-VALUE RATIO ? The relationship, expressed as a percentage between the property?s mortgage and its value. For example, if you owe $75,000 on a $100,000 home, your ratio is 75%.
MARGIN ? On an adjustable mortgage, the number of percentage points the lender adds to the index rate to determine the adjusted rate.
MIP ? MORTGAGE INSURANCE PREMIUM ? Insurance protecting the bank against foreclosure on all FHA mortgages.
MORTGAGE ? A legal document where the owner uses the new property as security to guarantee repayment of the loan. The mortgagee is also known as the lender. The mortgagor is known as the borrower.