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Orlando Real Estate
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Services by: |
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CENTURY 21 Solutions Realty |
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(407) 297 - 6608 |
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Orlando Real Estate
Glossary of Real Estate Terms |
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A |
| Abandonment: The
voluntary surrender of property rights, with no intention of
reclaiming them and without vesting interest in another
person. Nonuse is not necessarily abandonment.
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| Absorption rate:
An estimate of the rate at which a particular classification
of space - such as new office space, new housing, new
condominium units and the like - will be sold or occupied
each year. |
| Abstract (or Abstract Of
Title): A summary of the public records relating to
the title to a particular property. An attorney or title
insurance company reviews an abstract of title to determine
whether there are any title defects which must be cleared
before a buyer can purchase clear, marketable, and insurable
title. The abstract also identifies encumbrances, easements
and covenants that affect the property. Also known as a
Title Report. |
| Abutter: A
person whose property abuts, is contiguous, or joins at a
border or boundary; where no other land, road or street
intervenes. |
| Acceleration Clause:
Condition in a mortgage that may require the balance of the
loan to become due immediately, if regular mortgage payments
are not made or for breach of other conditions of the
mortgage. Many states have statutes which limit the
enforcement of these provisions. |
| Acceptance: The
expression of the intention of the person receiving an offer
(offeree, usually the seller) to be bound by the terms of
the offer. The acceptance must be communicated to the
offeror and must be in writing to be enforceable. The buyer
has the right to revoke the offer anytime before the
seller's acceptance. |
| Accession:
Acquisition of title to additional improvements to real
property as a result of annexation of fixtures or of
accretion of alluvial deposits. |
| Accretion: An
increase in dry land by gradual deposit of waterborne, solid
material and riparian land, i.e., accretion by alluvion. The
owner of riparian land becomes owner of title to land formed
by accretion. Antonym: erosion. |
| Accrued depreciation:
The difference between the present worth of improvements and
the reproduction or replacement cost new, both measured on
the appraisal date. |
| Acknowledgment:
A formal declaration made before an authorized official by a
person executing a document, that he signs the document by a
free act and deed. The official is usually a notary public
who witnesses the signature and verifies the identity of the
person. |
| Acquisition: The
act of becoming the owner of certain property; used also of
the thing or property acquired.
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| Acre: A measure
of land equaling 43,560 square feet; or 4,840 square yards;
or 160 square rods; or a tract about 208.71 feet square.
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| Acre foot of water:
A volume of water that will cover an area of one acre to the
depth of one foot: 43,560 cubic feet. |
| Active installation:
An installation in continuous use by active Army
organizations. |
| Actual Cash Value:
An amount equal to the replacement value of damaged property
minus depreciation. |
| Ad valorem tax:
A tax on the value of the object or thing subject to
taxation. |
| Adjustable-Rate Mortgage
(ARM): Also known as a variable-rate loan, usually
offers a lower initial rate than fixed-rate loans. The
interest rate can change at specified time periods based on
changes in an interest rate index that reflects current
finance market conditions, such as the LIBOR index or the
Treasury index. The ARM promissory note states maximum and
minimum rates. When the interest rate on an ARM increases,
the monthly payments will increase and when the interest
rate on an ARM decreases, the monthly payments will be
lower. |
| Adjustment Period:
The time between interest rate adjustment dates for an ARM.
They are usually the initial period between the time the ARM
is originated and the first interest rate change date, and
subsequent adjustment periods between each interest rate
change after the first interest rate change. |
| Administrator: A
person appointed by the court to manage and settle the
estate of a deceased person who has left no will.
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| Adverse possession:
Acquisition of title to real property owned by someone else,
by open, notorious, and continuous possession for the
statutory period of time. Burden to prove title is on the
possessor, who does not have a marketable title until he
obtains and records a judicial decree quieting title. No
right of adverse possession may be obtained against the
United States. |
| Affidavit: A
written declaration, sworn before an officer who has
authority to administer oaths. |
| Agreement of Sale:
Known by various names - such as contract of purchase,
purchase contract, purchase agreement, purchase & sales
agreement, or sales agreement - according to local custom.
This is a written contract in which a seller agrees to sell
and a buyer agrees to buy the subject property. This
contract spells out specific terms and conditions of the
agreement and is signed by both parties. |
| Air rights: The
rights vested by a grant of an estate in real property to
build upon, occupy, or use, in the manner and degree
permitted, all or any portion of space above the ground or
any other stated elevation within vertical planes, the basis
of which corresponds with the boundaries of the real estate
described in the grant. |
| Alienation: The
voluntary transfer of real property from one person to
another. |
| Allotment:
Authorization by the head of an agency to subordinates to
incur financial obligations up to a specified amount. An
agency makes allotments under the regulations in OMB
Circular No. A-34, and not to exceed the amount allowed by
OMB. |
| Alluvion: a kind
of accretion on riparian land by action of water which
deposits sediment. See also alluvium, avulsion. |
| Alluvium: Sand,
clay or mud deposited as sediment on riparian land.
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| Amenities:
Tangible and intangible benefits generated and received
through exercise of rights to real property, not necessarily
in the form of money. |
| Amortization: A
term used to describe the process of paying off a loan over
a predetermined period of time at a specific interest rate.
The amortization of a loan includes payment of interest and
a portion of the outstanding principal balance during each
payment cycle. |
| Amortization period:
The period of time for economic recovery of the net
investment in a project. This period is the lesser of 1) the
period of time over which the plan can be expected to serve
a useful purpose, or 2) the period of time when further
discounting of beneficial and adverse effects will not
appreciably influence design.
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| Amortization Schedule:
Provided by mortgage lenders, the schedule shows how over
the term of your mortgage the principal portion of the
mortgage payment increases and the interest portion of the
mortgage payment decreases. |
| Animal Unit: A
measure of numbers of livestock equivalent to a mature cow.
One A.U. equals 1,000 pounds live weight, or one cow, horse,
or mule; five sheep or swine; six goats. |
| Animal unit month:
A measure of forage or feed sufficient to feed one animal
unit for 30 days. Usually expressed relative to acres of
land. |
| Annexation: The
act of attaching, adding or joining one thing to another,
generally a smaller or subordinate thing with a large or
principal thing. Usually with respect to land or fixtures.
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| Annual Percentage Rate
(APR): The cost of credit expressed as a yearly
rate. The APR includes the interest rate, points, broker
fees and certain other credit charges that the borrower is
required to pay. |
| Application Fee:
The fee that a mortgage lender charges to apply for a
mortgage to cover processing costs. |
| Apportionment: A
distribution by OMB of amounts available for obligation in
an appropriation or fund account, including budgetary
reserves established by law. An apportionment divides
amounts by specific time periods (quarters), activities,
projects, objects, or a combination. |
| Appraisal: A
professional analysis, including references to sales of
comparable properties, used to estimate the value of the
property. |
| Appraiser: A
professional who conducts an analysis of the property,
including references to sales of comparable properties in
order to develop an estimate of the value of the property.
The appraiser's report is called an "appraisal".
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| Appreciation: An
increase in the market value of a home due to changing
market conditions and/or home improvements. |
| Appropriation:
Authorization by act of Congress permitting Federal agencies
to incur obligations and make payments out of the 'treasury
for specific purposes. |
| Appropriations bill:
A bill that gives legal authority to spend or obligate money
from the Treasury. An appropriations bill usually provides
the actual monies approved by authorization bills, but not
necessarily the full amount permissible. |
| Appurtenance:
Something annexed to another principal thing and which
passes as incident to it, for example a right of way or barn
passing with a principal property. |
| Arbitration: A
process where disputes are settled by referring them to an
impartial third party (arbitrator) chosen by the disputing
parties who agree in advance to abide by the decision of the
arbitrator. There is a hearing where both parties have an
opportunity to be heard, after which the arbitrator issues
the decision. |
| Asbestos: A
toxic material that was once used to make insulation and
fireproofing material in houses. Because some forms of
asbestos have been linked to certain lung diseases, it is no
longer used in new homes. However, some older homes may
still have asbestos in these materials. |
| Assets:
Everything of value an individual owns. |
| Assumption of Mortgage:
An obligation undertaken by the purchaser of property to be
personally liable for payment of an existing mortgage. In an
assumption, the purchaser is substituted for the original
mortgagor in the mortgage instrument and the original
mortgagor is to be released from further liability in the
assumption. T mortgagee's consent is required to release the
original mortgagor. The original mortgagor should always
obtain a written release from further liability if he
desires to be fully released under the assumption. Failure
to obtain such a release renders the original mortgagor
liable if the person assuming the mortgage fails to make the
monthly payments. An "Assumption of Mortgage" is often
confused with "purchasing subject to a mortgage." When one
purchases subject to a mortgage, the purchaser agrees to
make the monthly mortgage payments on an existing mortgage,
but the original mortgagor remains personally liable if the
purchaser fails to make the monthly payments. Since the
original mortgagor remains liable in the event of default,
the mortgagee's consent is not necessarily required for a
sale subject to a mortgage. |
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B |
| Balloon Mortgage:
A mortgage with monthly payments based on a 30-year
amortization schedule and the unpaid principal balance due
in a lump sum payment at the end of a specific period
(usually 5 or 7 years) earlier than 30 years. The mortgage
contains an option to reset the interest rate to the current
market rate and to extend the maturity date provided certain
conditions are satisfied. |
| Bankruptcy:
Legally declared unable to pay your debts as they become
due. Bankruptcy can severely impact your ability to borrow
money. Talk to a credit counselor as soon as you realize you
are having problems paying your bills on time to try to
prevent bankruptcy.
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| Binder (or Offer to
Purchase): 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.
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| Building Line (or
Setback): Distances from the ends and/or sides of
the lot beyond which construction may not extend. The
building line may be established by a filed plat of
subdivision, by restrictive covenants in deeds or leases, by
building codes, or by zoning ordinances. |
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C |
| 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. |
| Certificate of Title:
A certificate issued by a title company or a written opinion
rendered 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. The
protection offered a homeowner under a certificate of title
is not nearly as great as that offered in a title insurance
policy.
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| Closing: The
actual process whereby all parties to a real estate
transaction conclude the details of a sale or mortgage. This
process includes the signing and transfer of documents and
the distribution of funds. |
| Closing (Closing Date):
When the real estate transaction between buyer and seller is
completed. The buyer signs the mortgage documents and the
closing costs are paid. Also known as the settlement date.
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| Closing Agent: A
person that coordinates closing-related activities, such as
recording the closing documents and disbursing funds.
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| Closing Costs:
The expenses which buyers and sellers normally incur to
complete a transaction in the transfer of ownership or
mortgage of real estate. These costs are in addition to
price of the property and are items prepaid at the closing
day. This is a general list of buyer's and seller's
expenses: Loan Fees, Documentary Stamps on Notes, Cost of
Abstract, Recording Deed and Mortgage, Documentary Stamps on
Deed, Escrow Fees, Real Estate Commissions, Attorney's Fees,
Title Insurance, Survey Charge, Appraisal Fees, Inspection
Fees. The agreement of sale negotiated previously between
the buyer and the seller should state in writing who will
pay each of the above costs or how they will be split. Most
areas have local customs that guide which party typically
pays which expense. |
| Closing Statement:
An accounting of funds made at the completion of every real
estate transaction. |
| Cloud On Title:
An outstanding claim, condition or encumbrance which
adversely affects the marketability of title. |
| Collateral:
Property which is pledged as security for a debt. In the
case of a mortgage, the collateral would be the land, the
house, and other buildings and improvements. |
| Commission:
Money paid to a real estate agent or broker by the seller as
compensation for finding a buyer and completing the sale.
Usually it is a percentage of the sale price -- 5 to 7
percent on houses, and can be up to 10 percent on land.
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| Commitment Letter:
A letter from your lender that states the amount of the
mortgage, the number of years to repay the mortgage (the
term), the interest rate, the loan origination fee, the
annual percentage rate and the monthly charges. |
| Concession:
Something yielded or conceded in negotiating a transaction.
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| Condemnation:
The taking of private property for public use by a
government unit with payment of just compensation under the
government's power of eminent domain. Condemnation may also
be a determination by a governmental agency that a
particular building is unsafe or unfit for use. |
| Condominium: A
unit in a multiunit building. The owner of a condominium
unit owns the unit itself and has the right, along with
other owners, to use the common areas but does not own the
common elements such as the exterior walls, floors and
ceilings or the structural systems outside of the unit;
these are owned by the condominium association. There are
usually condominium association fees for maintenance for
building and property upkeep, taxes and insurance on the
common areas and reserves for improvements. |
| Contractor: In
the construction industry, a contractor is one who contracts
to erect buildings or portions of them. There are also
contractors for each phase of construction: heating,
electrical, plumbing, air conditioning, road building,
bridge and dam erection, and others. |
| Conventional Mortgage:
A mortgage loan not insured by HUD (FHA loans) or guaranteed
by the Veterans' Administration (VA loans). It is subject to
conditions established by the lending institution and State
statutes. The mortgage rates may vary with different
institutions and between States. |
| Cooperative Housing:
An apartment building or a group of dwellings owned by a
corporation, the stockholders of which are the residents of
the dwellings. It is operated for their benefit by their
elected board of directors. In a cooperative, the
corporation or association owns title to the real estate. A
resident purchases stock in the corporation which entitles
him to occupy a unit in the building or property owned by
the cooperative. While the resident does not own his unit,
he has an absolute right to occupy his unit for as long as
he owns the stock.
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| Counter-offer:
An offer made in return by the person who rejects the
previous offer. |
| 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
company that gathers information on consumers who use credit
and sells that information in the form of a credit report to
credit lenders. |
| Credit History:
A credit history is a record of credit use. It is comprised
of a list of individual consumer debts and an indication as
to whether or not these debts were paid back in a timely
fashion or "as agreed." Credit institutions have developed a
complex recording system of documenting your credit history.
This is called a credit report. |
| Credit Report: A
document used by the credit industry to examine an
individual's use of credit. It provides information on money
that individuals have borrowed from credit institutions and
a history of payments. |
| Credit Score: A
computer-generated number that summarizes an individual's
credit profile and predicts the likelihood that a borrower
will repay future obligations. |
| Creditworthy:
Your ability to qualify for credit and repay debts.
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D |
| 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.
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| Deed: The legal
documents conveying title to a property. |
| Deed of Trust: A
legal document in which the borrower conveys the title to a
3rd party (trustee) to hold as security for the lender. When
the loan is paid in full the trustee reconveys the deed to
the borrower. If the borrower defaults on the loan the
trustee will sell the property and pay the lender the
mortgage debt. |
| Default: Failure
to perform a legal obligation; a default includes failure to
pay on a financial obligation, but may also be a failure to
perform some action or service that is nonmonetary.
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| Deposit: The
amount of money you put down on a house to hold it.
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| Depreciation: A
decline in the value of a house due to changing market
conditions, decline of a neighborhood or lack of upkeep on a
home. |
| 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. The amount of stamps required varies with each
State and in some States stamps are no longer used. In some
States these are also known as Transfer Taxes. |
| Downpayment: The
amount of money to be paid by the purchaser to the seller
upon the signing of the agreement of sale, also known as
Earnest Money. The downpayment may not be refundable if the
purchaser fails to buy the property without good cause. If
the purchaser wants the downpayment to be refundable, he
should insert a clause in the agreement of sale specifying
the conditions under which the deposit will be refunded, if
the agreement does not already contain such clause. If the
seller cannot deliver good title, the agreement of sale
usually requires the seller to return the downpayment and to
pay interest and expenses incurred by the purchaser.
Downpayment also refers to the difference between the sales
price and maximum mortgage amount. It is expressed as a
dollar figure or a percentage of the purchase price. For
example, when a house is purchased for $100,000 and $90,000
is borrowed to finance the purchase, then the downpayment is
said to be 10% ($10,000). |
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E |
| 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. |
| Encroachment: An
obstruction, building, or part of a building or other
improvement that intrudes beyond a legal boundary onto
neighboring land. A common example would be fences or walls
that are built on the other side of a property line and
thereby "encroach" on the neighbors property. |
| Encumbrance: A
legal right or interest in land that affects or limits
complete ownership and control over property. It can take
numerous forms, such as zoning ordinances, easement rights,
claims, mortgages, liens, charges, a pending legal action,
unpaid taxes or restrictive convenants. An encumbrance does
not necessarily prevent transfer of the property to another,
but may diminish its value. A title search will usually
reveal the existence of such encumbrances, and it is up to
the buyer to determine whether he wants to purchase the
property with the encumbrance. |
| 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. |
| Escrow: The
holding of money or documents by a neutral third party prior
to closing. It can also be an account held by the lender (or
servicer) into which a homeowner pays money for taxes and
insurance. |
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F |
| FICO Score: A
credit rating generated by an automated processing of a
credit report. Mortgage lenders utilize the score to assist
with the credit decision. Higher scores are indicative of
better credit. Many situations can negatively effect ones
score, including: delinquent accounts, history of late
payments, collection accounts, bankruptcy, limited credit
history, high credit card/credit line balances.
Additionally, other credit report inquiries reduce ones
score |
| Fixed-Rate Mortgage:
A mortgage with an interest rate that does not change during
the entire term of the loan.
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| Foreclosure: A
legal action that terminates all ownership rights in a home
when the homebuyer fails to make the mortgage payments or is
otherwise in default under the terms of the mortgage.
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G |
| 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. |
| Gift Letter: A
letter that a family member writes verifying that he/she has
given you a certain amount of money as a gift and that you
do not have to repay it. You can use this money towards a
portion of your down payment through some mortgage products.
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| Good-Faith Estimate:
A written statement itemizing the approximate costs and fees
for the mortgage.
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| Grantee: That
party in the deed who is the buyer or recipient.
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| Grantor: That
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.
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H |
| Hazard Insurance:
Protects against damages caused to property by fire or other
common hazards. |
| 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. |
| Homeowner's Insurance:
A policy that protects you and the lender from fire or
flood, which damages the structure of the house; a
liability, such as an injury to a visitor to your home; or
damage to your personal property, such as your furniture,
clothes or appliances.
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| Housing Expense Ratio:
The percentage of your gross monthly income that goes toward
paying for your housing expenses. |
| HUD: The United
States Department of Housing and Urban Development. Federal
Housing Administration (FHA) is a division of HUD which
insures home mortgage loans made by lenders and sets minimum
standards for such homes. |
| HUD-1 settlement
statement: A final listing of the costs of the
mortgage transaction. It provides the sales price, and down
payment, as well as the total settlement costs required from
the buyer and seller. |
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I |
| Index: The
published index of interest rates on a publicly traded debt
security used to calculate the interest rate for an ARM. The
index is usually an average of the interest rates on a
particular type of security such as the LIBOR. |
| Individual Retirement
Account (IRA): A tax-deferred plan that can help
build a retirement nest egg. |
| Inflation: An
increase in the general level of prices. |
| 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. |
| 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.
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| Interest Only Loan:
A non-amortizing loan in which the lender receives only
interest during the term of the loan and the principal is
repaid at maturity. |
| Interest Rate:
The percentage of loan amount borrowed which is charged by
the lender for use of the money. Interest rates are usually
expressed as the percentage per year. |
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K |
| Keogh Funds: A
tax-deferred retirement-savings plan for small business
owners or self-employed individuals who have earned income
from their trade or business. Contributions to the Keogh
plan are tax deductible. |
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L |
| Liabilities:
Your debts and other monetary obligations. |
| 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. |
| Loan Origination Fees:
The fee paid to your mortgage lender for processing the
mortgage application. This fee is usually in the form of
points. One point equals 1% of the mortgage amount.
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| Lock-in rate: A
written agreement guaranteeing a specific interest rate when
your mortgage closes.
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| Low-Down-Payment Feature:
A feature of a mortgage, usually a fixed-rate mortgage that
helps you buy a home with as little as a 3% down payment.
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M |
| Margin: The
amount (expressed as a percentage) added to the index for an
ARM to establish the interest rate on each adjustment date.
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| Market Value:
The current value of your home based on what a willing
purchaser would pay. The value determined by an appraisal is
sometimes used to determine market value. |
| Marketable Title:
A title that is free of objectionable liens, easements,
clouds, or other title defects. A title which enables an
owner to sell his property freely to others and which others
will reasonably accept without objection. |
| Maturity (or Maturity
Date): The date a loan becomes payable in full.
This is most often the due date of the final payment of a
loan. |
| 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 (Open-End):
A mortgage note with a provision that permits borrowing
additional money in the future without refinancing the loan.
Open-end provisions often limit such borrowing to no more
than would raise the balance to the original principal
amount. |
| Mortgage Broker:
An independent finance professional who specializes in
bringing together borrowers and lender to facilitate real
estate mortgages. |
| Mortgage Commitment:
A written notice from the bank or other lending institution
saying it will advance mortgage funds in a specified amount
to enable a buyer to purchase a house. |
| Mortgage Insurance (MI or
PMI): Insurance needed for mortgages with low down
payments (usually less than 20% of the price of the home).
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| Mortgage Insurance
Premium: With FHA loans, the payment made by a
borrower to the lender for transmittal to HUD to help defray
the cost of the FHA mortgage insurance program and to
provide a reserve fund to protect lenders against loss in
insured mortgage transactions. In FHA insured mortgages this
represents an annual rate of one-half of one percent paid by
the mortgagor on a monthly basis. |
| 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.
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| Mortgage Note: A
written agreement to repay a loan that is secured by a
mortgage. The note serves as proof of indebtedness, states
the actual amount of the debt that the mortgage secures and
enumerates the terms of repayment. |
| Mortgage Rate:
The cost or the interest rate you pay to borrow the money to
buy your house. |
| Mortgagee: The
lender in a mortgage agreement. |
| Mortgagor: The
borrower in a mortgage agreement. |
| Mutual Funds: A
fund that pools the money of its investors to buy a variety
of securities. |
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N |
| Net Monthly Income:
Your take-home pay after taxes. It is the amount of money
that you actually receive in your paycheck. |
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O |
| Offer: A formal
bid from the homebuyer to the home seller to purchase a
home. |
| Open House: When
the seller's real estate agent opens the seller's house to
the public. You do not need a real estate agent to attend an
open house. |
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P |
| 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. Plats are generally kept as records of the
county, parish or other local government entity.
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| Points (also Discount
Points): An amount of money paid to a lender to
obtain a loan at a certain interest rate. A point is one
percent of the principal amount of the loan. For example, if
a loan is for $100,000, one point is $1,000. Points are paid
at closing. Buyers are prohibited from paying points on FHA
or VA guaranteed loans; however sellers can pay. On a
conventional mortgage, points may be paid by either buyer or
seller or split between them. |
| Pre-approval Letter:
A letter from a mortgage lender indicating that you qualify
for a mortgage of a specific amount. It also shows a home
seller that you are a serious buyer. |
| Pre-qualification letter:
A letter from a mortgage lender that states that you are
pre-qualified to buy a home but does not commit the lender
to a particular mortgage amount. |
| 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.
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| Prepayment:
Payment of mortgage loan, or part of it, before due date.
Mortgage agreements often restrict the right of prepayment
either by limiting the amount that can be prepaid in any one
year or charging a prepayment penalty. The Federal Housing
Administration does not permit such restrictions in FHA
insured mortgages. |
| 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 called 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: See Mortgage Insurance. |
| Property Appreciation:
See Appreciation. |
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Q |
| Quitclaim Deed:
A deed which relinquishes any interest in a particular
property which the grantor may have. A quitclaim deed is
often executed to clear the title when the nature of a
grantor's interest in a property is questionable. By
accepting such a deed the buyer assumes all the risks
because the deed makes no warranties as to the title held by
the grantor. Quitclaim deeds may transfer full ownership in
a property or no interest at all. |
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R |
| Radon: A toxic
gas found in the soil beneath a house that can contribute to
cancer and other illnesses.
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| Rate Cap: The
limit on the amount that the interest rate on an ARM can
increase or decrease during any one adjustment period.
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| 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.
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| Real Estate Broker:
A licensed middle man or agent who represents buyers and/or
sellers in real estate transactions. Brokers' fees for their
services are usually charged on a commission basis.
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| 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. |
| Refinance:
Obtaining a new mortgage with all or some portion of the
proceeds used to pay off the original mortgage. |
| Refinancing: The
process where a borrower pays-off one loan with the proceeds
from another loan. A property can be refinanced with a new
loan from the current holder of the mortgage or from a new
lender. |
| Replacement Cost:
The cost to replace damaged personal property without a
deduction for depreciation.
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| Restrictive Covenants (or
Covenants): Private restrictions limiting the use
of real property. Restrictive covenants may bind all
subsequent purchasers of the land or may be binding only
between the original seller and buyer. Restrictive covenants
may affect the property's value and marketability of title.
Restrictive covenants are used for many purposes and may
limit the use of the property, regulate size, style or price
range of buildings to be erected, or prevent particular
businesses from operating or activities occurring. Covenants
are widely used today because of the proliferation of
privately planned communities which use them as a tool to
control and guide future development. |
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S |
| Securities: A
financial form that shows the holder owns a share or shares
of a company (stock) or has loaned money to a company or
government organization (bond). |
| Special Assessments:
A special tax imposed on property, individual lots or all
property in the immediate area, for road construction,
sidewalks, sewers, street lights, or other public projects
that benefit particular property owners. In the context of
condominium and private community association, special
assessments are charges to property owners, over and above
their customary periodic payments, to fund special projects
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| Special Warranty Deed:
A deed in which the grantor warrants or guarantees the title
only against defects arising during grantor's ownership of
the property and not against title defects existing before
the time of the grantor's ownership. |
| State Stamps:
See Documentary Stamps. |
| Survey: A map or
plat made by a licensed surveyor showing the results of
measuring the land with its elevations, improvements,
boundaries, and its relationship to surrounding tracts of
land. A survey is sometimes required by the lender to assure
him that a building is actually sited on the land according
to its legal description. |
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T |
| Title: The right
to, and the ownership of, land by the owner. Title is
sometimes used to mean the evidence or proof of ownership of
land; although another term used for that is "deed".
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| Title Insurance:
Insurance that protects lenders and homeowners against loss
of their interest in the property because of legal problems
with the title. |
| Title Search (or Title
Records Examination): legal owner and to determine
all of the liens, assessments, claims, convenants, or other
encumbrances or restrictions that would affect the title to
the property. The results of the search are expressed in a
Title Report or Abstract. The primary purpose of the search
is to establish whether the property has marketable title.
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| Trustee: A party
who is given legal responsibility to hold and administer
property for the benefit of another (the beneficiary).
Trustee's are obligated to act in the best interest of the
beneficiary. |
| Truth-in-Lending Act
(TILA): Federal law which requires disclosure of a
truth in lending statement for consumer loans. The statement
includes a summary of the total cost of credit such as the
APR and other specifics of the loan. |
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U |
| Underwriting:
The process a lender uses to determine loan approval. It
involves evaluating the property and the borrower's credit
and ability to pay the mortgage. |
| Uniform Residential Loan
Application: A standard mortgage application that
your lender will ask you to complete. The form request your
income, assets, liabilities and a description of the
property you plan to buy, among other things. |
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W |
| Warranties:
Written guarantees of the quality of a product and the
promise to repair or replace defective parts free of charge.
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Z |
| Zoning: Act of
city, county or other local authorities specifying how
property may be used in specific areas. Also know as Land
Use Plans. |
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