COMPLIMENTS OF
REALTY & INSURANCE
AGENCY, INC.
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- Acceleration Clause
A provision in a mortgage that gives the lender the right
to demand payment of the entire outstanding balance if a
monthly payment is missed.
- Adjustable-rate
Mortgage (ARM)
A mortgage whose interest rate changes over time based on
an index.-
- Amortization
The gradual repayment of a mortgage by installments
Annual Percentage Rate (APR)
- The total yearly cost of a mortgage stated as a
percentage of the loan amount; includes the base interest
rate, primary mortgage insurance, and loan origination
fee (points).
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- Appraisal
A professional opinion of the estimated market value
of a property.
- Assessed Value
The valuation placed upon property by a public tax
assessor for the purposes of taxation.
- Assumable Mortgage
A mortgage that can be taken over (assumed) by the
buyer when a home is sold.
- Assumption
- The transfer of the Seller’s existing mortgage to
the buyer.
- Balloon Payment
A (generally large) principal payment due all at once
at the end of some loan term.-
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- Cap
A provision of an ARM limiting how much the interest
rate or mortgage payments may increase.
Certificate Of Title
The document signed by a title examiner, stating that
a Seller has an insurable title to the property.
Closing
The occasion where a sale is finalized and the title
is legally transferred to the Buyer.
Closing Costs
Expenses (over and above the price of the property)
incurred by buyers and sellers in transferring ownership
of a property. Also called "Settlement Costs".
Comparative Market Analysis (CMA)
A survey of attributes and selling prices of
comparable properties on the market or that have recently
sold; used to assist in determining a reasonable pricing
strategy for a Seller’s property.
Condominium (Condo)
A form of ownership in which the owner holds title to
an individual unit plus an interest in common areas of a
multi-unit project.
Contingency
A condition that must be met before a contract is
legally binding.
Conventional Mortgage
Any mortgage that is not insured or guaranteed by the
federal government.
Contract
A binding legal agreement between two or more parties
that outlines the conditions for the exchange of value.
Conversion Clause
A provision that allows converting an ARM to a fixed-rate
loan after a specified interval.
Credit Report
A report of an individual’s credit history prepared
by a credit bureau and used by a lender in determining a
loan applicant’s creditworthiness.-
- Deed
The legal document conveying title to a property.
Down Payment
The part of the purchase price which the buyer pays in
cash and does not finance with a mortgage.
Due-on-sale-clause
A provision in a mortgage allowing the lender to
demand repayment in full if the borrower sells the
property securing the mortgage.
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- Earnest Money
A deposit given to the Seller, or Seller’s agent, to
show that the buyer is serious about buying the property.
Equity
The difference between the market value of the property
and the owner’s outstanding debt.
Escrow
The holding of documents and/or money by a third party
prior to closing; also, an account held by a lender into
which an owner pays money for taxes and insurance.
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- FHA Loan
A mortgage that is insured by the Federal Housing
Administration.
Finance Charge
The total cost, including all fees, points, and
interest payments a borrower pays to obtain credit.
First Mortgage
A mortgage in which the interest rate does not change
during the entire term of the loan.
Fixture
A recognizable entity (such as a toilet bowl, kitchen
cabinet, light unit, etc.) that is permanently attached
to property and belongs to the property when it is sold.
Foreclosure
The process by which a mortgaged property may be sold
when a mortgage is in default.-
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- Graduated Payment Mortgage
A mortgage that starts with low monthly payments that
increases at a predetermined rate.
- Hazard Insurance
Insurance to protect the owner and the lender against
physical damage to a property from various insurable
perils such as fire, wind, vandalism, or other hazards.
Such as a homeowner’s insurance policy.
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- Interest
The fee charged or cost for borrowing money.
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- Late Charge
The penalty a borrower must pay when a debt is made after
the due date.
Lien
A security claim on property until a debt is satisfied.
Listing Contract
An agreement (contract) whereby an owner engages a real
estate company for a specified period of time to sell a
property, for which upon the sale, the agent receives a
fee of commission.
Loan-to-value Ratio (LTV)
The relationship between the amount of a mortgage and the
total value of the property.-
- Market Value
The price that is established for a property established
by present economic conditions, location of the property,
specifics of the property, and general trends.
Mortgage
A legal document that pledges a property to a lender as
security for payment of a debt.
Mortgage Insurance Premium (MIP)
The fee paid by a borrower to FHA or a private insurer
for mortgage insurance.
Mortgagee
The lender in a mortgage agreement.
Mortgagor
The borrower in a mortgage agreement.
Multiple Listing Service (MLS)
A system that provides to its members detailed
information about various properties that have sold.-
- Negative Amortization
Payment terms under which the borrower’s monthly
payments do not cover the interest due; as a result, the
loan balance increases.-
- Origination Fee
Application fee(s) for processing a mortgage.-
- PITI
Stands for principal, interest, taxes, and insurance.
They are the components of a monthly mortgage.
Points
A one-time charge by a lender to increase the yield of
the loan.
Prepayment Penalty
A fee charged to a borrower who pays off a loan before it
is due.
Prequalification
Informal estimate to determine how much money a purchaser
will be eligible to borrow before a loan is applied for.
Principal
The amount borrowed or remaining unpaid on a mortgage;
also, that part of the monthly payment that reduces the
outstanding balance of a mortgage.
Private Mortgage Insurance (PMI)
Insurance provided by non-government insurers that
protects lenders against loss if a borrower defaults.
Prorate
Divide or assess proportionately.
Purchase and Sale Agreement
A written contract signed by the buyer and seller stating
the terms and conditions under which a property will be
sold.-
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- Realtorâ
A member of the National Association of Realtorsâ .
Radon
A radioactive gas found in some buildings that
insufficient concentrations can cause health problems.
RESPA
Real Estate Settlement Procedures Act is a consumer
protection law that requires lenders to give borrowers
advanced notice of closing costs.-
- Survey
A drawing showing the legal boundaries of a property.-
- Title
A legal document establishing the right of ownership of a
property.
Title Company
A company that specializes in insuring title to a
property.
Title Insurance
Insurance to protect the lender (lender’s policy) or
the buyer (owner’s policy) against loss arising from
disputes over ownership of a property.
Title Search
A check of title records to ensure that the seller is the
legal owner of the property and that there are no liens
or other claims outstanding.
Transfer Tax
State or local tax payable when title passes from one
owner to another.
Truth-in-lending
A federal law that requires lenders to fully disclose, in
writing, the terms and conditions of a mortgage,
including the APR and other charges.-
- Underwriting
The process of evaluating a loan application to determine
the risk involved for the lender.-
- VA Loan
A loan that is guaranteed by the Veterans Administration.-
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Revised: February 03, 2010.