Adjustable rate loan (ARM)
A loan that permits the lender to adjust its interest rate periodically on the basis of changes in an index.
The gradual repayment of a loan by equal installments.
Annual percentage rate (APR)
The actual cost of a loan stated as a yearly rate; including such items as interest payments, principal payments, loan insurance, processing, credit reports, appraisals and loan origination fee (points).
An opinion of a property’s fair market value based on the appraiser’s analysis of the property and recent sales in the area.
The valuation placed on real estate by a public tax assessor for purposes of taxation.
The final lump sum payment that is made at the maturity of a balloon loan.
A temporary buy-down is a loan on which one time payment is made to reduce a borrower’s interest rate during the first year or years of a loan. A permanent buy-down would be a one time payment to reduce the interest rate over the course of the entire loan term.
The time at which a transaction is final.
An amount that a borrower incurs for a service. All these fees should be included on the HUD-1(closing statement).
The document conveying title to real estate.
Deed of trust
The document used in some states instead of a mortgage.
The part of the purchase price of real estate that the buyer pays in cash and does not finance.
A provision in a loan that allows the lender to demand repayment in full if the borrower sells the real estate.
Earnest money deposit
A deposit made by a potential home buyer to show that he or she is in earnest about buying the house.
A right of way giving someone, other than the owner, access to or over a property.
Financial interest in real estate. Equity is the difference between the value of the property and the amount owed.
A privately-shareholder-owned corporation that is the nation’s largest supplier of home loans.
Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential loans made by lenders. The FHA sets standards for construction and underwriting but does not lend money.
A loan in which the interest rate or payment does not change during the course of the loan.
Insurance that compensates damage from flooding. In designated flood areas this insurance is required.
Insurance that covers for fire and certain physical damage to real estate.
A document that obligates a borrower to repay a loan. Minimally stated are, interest rate, payment schedule and due date for a specified period of time.
The interest rate stated on a real estate loan note.
A one time charge by a broker or lender for originating a loan. 1% of the loan amount = 1 point.
A penalty that a lender may impose if a loan is paid off before it is due.
A lenders commitment to a borrower or borrower’s broker guaranteeing a specified interest rate for a specified period of time for a specified fee or price.
Real Estate Settlement Procedures Act (RESPA)
Consumer protection law that requires lenders to give borrowers advance notice of all closing costs.
The required waiting period, 3 days for a refinance.
The notice published in the public records of legal documents that affect specific real estate.
Right of survivorship
An aspect of joint tenancy passing on from a deceased joint tenant’s ownership to the surviving joint tenants.
Tenancy in common
Title to property by two or more co-owners without the right of survivorship.
A document evidencing one’s right to ownership of real estate.
a company that specializes in examining the guaranteeing title (ownership) to real estate.
Insurance that protects the lender or buyer from loss from disputes over ownership of real estate.
An examination of the public records to ensure that the seller is the legal owner of the real estate and that there are no hidden liens or claims against the property.
Truth in Lending
A Federal law that requires lenders and brokers to fully disclose, in writing, the terms and conditions of a loan, including the annual percentage rate and charges.
The process by which the lender determines the risk involved in a loan.
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