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- Adjustable rate mortgage
- A type of mortgage rate loan that allows the interest
rate to change periodically up or down, usually once or
twice a year.
- Agent
- A person who acts, or has the power to act for another.
A real estate agent acts on behalf of the principal (the
buyer or seller) and has fiduciary responsibilities
towards the principal.
- Buyer's agent
- An agent who represents the buyer and owes fiduciary
duties to the buyer.
- Seller's agent
- An agent who represents the seller and owes fiduciary
duties to the seller. Usually referred to as the listing
agent, this agent is authorized by a property owner to
find a buyer or a tenant for the property.
- Agreement of sale
- A written agreement or contract in which the seller
agrees to sell the the buyer agrees to buy under specific
terms and conditions.
- Amenities
- Features that enhance and add to the value or
desirability of real estate. Common amenities include a
swimming pool, clubhouse and a good view.
- Amortization
- The reduction of a debt over time by making periodic
payments (usually monthly) a portion of which is interest
and a portion of which reduces the outstanding amount of
the debt. The monthly mortgage payments remain the same
over the life of the loan, even though the proportion of
principal to interest changes over time. In the early part
of the loan, principal repayment is very small and
interest repayment very high; at the end of the loan, that
relationship is reversed.
- Appraisal
- The act or process of estimating value; an estimate of
value.
- Appraiser
- Someone who practices appraisal. Appraisers' work
involves appraisal (see above), review (the process of
critically studying a report prepared by another), or
consulting (the process of providing information, analysis
of real estate data, and recommendations on diversified
problems in real estate, other than estimating value).
- Balloon mortgage
- A mortgage for a fixed term shorter than necessary to
fully repay the debt. As a result, the remaining amount of
principal is due at the maturity of the loan.
- Bridge loan
- A loan, usually short term, that finances the portion of
the purchase price not provided by the mortgage loan and
the down payment. A bridge loan is commonly used when a
purchaser has not sold his existing home before he closes
on his purchase of a new home. The bridge loan is paid off
when the old home is sold, out of the proceeds of that
sale.
- Broker, as in real estate broker
- A real estate professional who has acquired a higher
level of training and/or experience than a sales agent.
Generally, the legal representative or proprietor of the
office.
- Capital gain
- Income that results from sale of a capital (tangible)
asset.
- Closing
- The end of the transaction; when the seller hands over
the title to the buyer in exchange for payment.
- Closing costs
- Costs the buyer must pay at the time of the closing in
addition to the down payment which may include points,
title charges, mortgage insurance premium, prepayments for
property taxes, and homeowners insurance. Closing costs
can be as much as three to four percent of the loan
amount.
- Condominium or condo
- A condominium, literally, is a home in a shared building
or development. The buyer owns title to his or her unit,
shares the common areas with other unit owners, and pays a
maintenance fee to the condominium association to pay for
needed maintenance, repairs and improvements to the
property.
- Contingency
- A condition that must be met before a contract is
binding.
- Conventional loan
- A fixed-rate, fixed-term loan that is made without
government insurance.
- Co-operative or co-op
- In a residential co-operative, the buyer purchases
shares in the co-op corporation, made up of the residents
in the co-op property. The buyer owns the shares rather
than owning real property. In exchange, ha has the right
to lease and occupy a co-op unit.
- Deed
- A legal document by which property title is transferred
from one owner to another.
- Down payment
- The down payment is the percentage of the purchase price
that the buyer must pay in cash and may not borrow from
the lender. The downpayment amount, in addition to the
mortgage, equals the purchase price of a property.
- Dual agency
- Representing both parties in a transaction. In virtually
all states, it is unethical and illegal for a broker to
represent both buyer and seller in a real estate
transaction without written consent of both.
- Earnest money
- The deposit money given to the seller by the potential
buyer as evidence of good faith in purchasing real estate.
The broker places the money in an escrow/trust account
until closing, when it becomes part of the down payment.
- Equity
- The value of the property, less the amount of unpaid
mortgages and any outstanding liens.
- Escrow
- Money or other valuables given to a third party with
directions to deliver them to another party upon the
fulfillment of a specific act or condition.
- Exclusive agency listing
- A written agreement giving the broker the right to
market an owner's property for a certain period of time,
but also allowing the owner to sell the property during
that period without paying a commission.
- EXCLUSIVE BUYER'S AGENT
- An agent who represents the buyer and owes fiduciary
duties to the buyer only and never takes listings or works
for a brokerage company that takes listings.
- Exclusive right-to-sell
- A written agreement between the agent and the owner,
whereby the owner promises to pay a fee or commission to
the broker if his property is sold during the listing
period, regardless of whether the broker is responsible
for the sale.
- Fannie Mae
- Nickname for the Federal National Mortgage Association,
FNMA is a public corporation originally established by the
federal government. Fannie Mae purchases mortgage loans
from lenders, and thus, is a major source of funds for
mortgage companies.
- FHA or Federal Housing Administration
- Part of the US Department of Housing and Urban
Development (HUD) --established in 1934 to encourage
improvement in housing standards and communities. The FHA
insures mortgage loans. See HUD listing ahead.
- FHA mortgage
- A mortgage loan insured by the Federal Housing
Administration.
- FSBO
- A term or abbreviation that is used to indicate that a
property is "For Sale By Owner"
- Home inspection
- An examination of the physical structure, systems and
condition of a home.
- Homeowners insurance
- Insurance that protects the homeowner from
"casualty" (losses or damage to the home or
personal property) and from "liability" (damages
to other people or property). Homeowners insurance is
required by the lender and is usually included in the
monthly mortgage payment.
- HUD or the US Department of Housing and Urban
Development
- Department of Housing and Urban Development, a
government agency created to make the American dream of
home ownership a real possibility for everyone. HUD has
many programs involving homeownership assistance for low-
and moderate-income families, community planning and
development, fair housing and equal opportunity, and home
improvement loans. The Housing and Urban Development home
page is a rich resource of information.
- Lien
- A hold or a claim on the property of another to satisfy
an unpaid debt.
- Listing contract
- An agreement between a homeowner and a licensed real
estate broker that authorizes the broker to market the
property for sale during a given time period.
- Loan origination fee
- A fee charged by the lender for evaluating, preparing
and submitting a proposed mortgage loan.
- Loan-to-value ratio
- The ratio of a mortgage loan principal to the property's
appraised value or its sales price, whichever is lower.
Loan-to-value ratios vary depending upon the individual
lender's policy.
- Lock-in rate
- A commitment made by a lender to make a mortgage loan at
a specified rate, pending loan approval, on or prior to a
specified date.
- Market value
- The highest price a buyer will pay for a property and
lowest price the seller will accept.
- Mortgage
- A lien on real estate given by the buyer to secure
repayment of money borrowed to purchase the real estate.
- Mortgage broker
- An individual or company that obtains mortgages for
others by finding lending institutions, insurance
companies, or private sources to lend the money; may also
handle collections and disbursements.
- Mortgage insurance
- A policy that provides protection for the lender in case
of default and/or which guarantees repayment of the loan
if the borrower becomes disabled or dies.
- NATIONAL ASSOCIATION OF REALTORS
- The NATIONAL ASSOCIATION OF REALTORS is the largest
trade association in the country serving over 700,000
REALTORS. The purpose of the NATIONAL ASSOCIATION OF
REALTORS is to enhance the ability and opportunity of its
members to conduct business successfully and ethically,
and to promote the preservation of the right to own,
transfer, and use real property.
- Offer
- A proposal to purchase real estate at a particular price
and subject to other specified terms and conditions.
Acceptance of the offer by the seller creates a purchase
contract. (Counteroffer: An offer made in response to a
different offer.)
- Private mortgage insurance or PMI Insurance
- Insurance issued to a lender to protect it against loss
on a defaulted mortgage loan. Its use is usually limited
to loans with high loan-to-value ratios (generally in
excess of 80%). The borrower pays the premiums.
- PITI Payment
- A loan payment that combines Principal, Interest, Taxes
and Insurance.
- Point
- An amount equal to one percent of the loan amount paid
to a lender for making the loan. A lender may charge the
borrower several points in order to provide the loan.
- Principal
- One of the parties to a transaction. For example, the
buyer and seller are principals in the purchase of real
property.
- REALTOR
- A REALTOR is a real estate professional who is a member
of the NATIONAL ASSOCIATION OF REALTORS and subscribes to
its strict Code of Ethics. This distinguished professional
is committed to protecting and promoting private ownership
of real property, establishing and maintaining high
professional standards of practice, and creating unity in
the NATIONAL ASSOCIATION OF REALTORS organization and
respect for the real estate profession. When you want to
buy or sell a home, call a REALTOR.
- Title
- Ownership of real property. Title is transferred from
one party to another through a document called a deed.
- Title insurance
- Protection for lenders and homeowners against financial
loss resulting from legal defects in or other claims
against the property's title.
- Trust
- A property interest held by one person for the benefit
of another.
- VA or US Department of Veterans Affairs
- A federal agency designed and operated to help veterans
enter the housing market. The VA assists veterans in terms
of low or no down payment, mortgage qualification
assistance and low interest rates.
- VA loan
- A mortgage loan guaranteed by the US Department of
Veterans Affairs against loss to the lender, and made
through a private lender.
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