The time between changes in your interest rate and monthly payments with an adjustable rate mortgage.
A person acting on behalf of another.
Agreement of Sale
A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties. Also, known as contract of purchase, purchase agreement, sales agreement, or binder.
Annual Percentage Rate (APR)
The quoted interest rate on a loan plus all additional service and finance charges associated with the loan, including those paid at the time of closing and those paid over the term of the loan. The APR is usually slightly higher than the note rate.
What the lender charges to process your application. This is usually not refundable.
An expert judgment or estimate of the quality or value of real estate as of a given date.
The valuation placed on property by a public tax assessor as the basis for taxes.
One that lets you transfer your mortgage and its terms to the purchaser of your home. This can be an advantage if and when you sell.
Bill of Sale
A document which transfers personal property.
Allows you to make regular payments equal to one half your monthly payment every two weeks, which results in prepayment of your mortgage by one full payment each year.
Allows the lender to require repayment of the loan in full before the term is up.
Safeguards that limit how much your ARM interest rate and payments can go up at anyone time and over the life of the loan.
Certificate of Title
A document signed by a title examiner or attorney, stating that the seller has a good, marketable, and insurable title.
A document which details the net amount of money a buyer and seller must pay to complete the purchase of real estate. Also, called settlement sheet or HUD-1 statement.
Payment to a real estate broker for services performed.
Mortgage loans made without government backing provided on VA and FHA loans.
To transfer title of property from one person to another.
A document which transfers title to real property from one owner to another.
Deed of Trust
Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties involved: the borrower, the trustee, and the lender (or beneficiary).
A deposit given to the seller, and usually held in escrow, by a potential buyer to show they are serious about buying a house.
The difference between the current market value of a property and the debts against it. In general, sales prices minus mortgage balance equals equity.
Funds, property, or other things of value left in trust to a third party. The escrow may be released upon the fulfillment of certain conditions or by agreement of the parties.
Fixed Rate Loan
One where the interest rate doesn’t change.
Personal property which is permanently attached to real property, such as lighting, medicine cabinets, and mantels. Fixtures are included when the property is sold.
Protects property against damages caused by fire, windstorms, and other common hazards.
A published rate used by lenders to calculate the interest adjustments on ARMs. It can vary by lender.
The rate charged for the first interval of an ARM. It is usually lower than current fixed rates.
A contract between a homeowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed to market the property within a given time and the homeowner agrees to pay a commission. Also, called a listing contract.
The percentage of the appraised value or sales price (whichever is lower) of the property that a lender is willing to lend. For example, if a home is appraised at $300,000 and the lender has an 80% loan-to-value ratio, the most you could borrow would be $240,000 ($300,000 x .80).
The amount added to an index to determine the interest rate on an ARM.
The highest price a ready, willing, and able buyer will pay, and the lowest price a ready, willing, and able seller will accept. Market value is the basis for the listing or asking price.
The actual amount for which a piece of property is sold. Also, called sales price or purchase price.
A loan to purchase a house where a claim, or lien, against the house is given by the buyer to the lender as security.
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of indebtedness, and states the manner in which it shall be paid. Also, called a deed of trust note.
What a lender charges to initiate and process a mortgage loan.
Principal, interest, taxes, and insurance. Most residential mortgage payments include P.I.T.I. Also, called carrying charges.
One percent of the mortgage amount. Also called discount points.
Penalty for paying a mortgage note or deed of trust note before it actually becomes due.
Principal has three definitions in real estate:
• A capital sum lent on interest.
• One who appoints an agent to act on their behalf.
• Either party to a contract.
Managing real estate including selecting tenants, leasing space, collecting rent, and repairing property.
To distribute proportionality. Property taxes, insurance, or condominium fees are often prorated at settlement.
Rate Guarantee (Lock-In)
A guarantee that the rate in effect when you apply will be the final rate when you close your loan. Good for a specific time only.
Taking out a new loan to payoff an existing loan. Generally involves new loan costs.
A person with a real estate license and associated with a specific real estate broker. Also called an agent.
The conclusion of a real estate transaction when the deed is delivered, notes are signed, and funds are disbursed. Also, called closing.
A map or plat made by a licensed surveyor showing land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to confirm a building is actually sited on the land according to its legal description.
The number of years it will take to payoff your loan making your regular payments.
A document that indicates rights of ownership and possession of a particular property.
A summary of the public records relating to the title of a particular piece of land. An attorney or title company reviews an abstract or title to determine whether there are any title defects.
Protects lenders and homeowners against loss of their interest in property due to legal defects in a title.
Title Search or Examination
A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims.
State tax, local tax (where applicable), and tax stamps (in some areas) required by law when title passes from one owner to another.
Guidelines the lender uses to determine if a borrower qualifies for a loan.