Links for financial calculators to come.
Glossary of Terms:
Addenda: These are supplemental documents that are part of a purchase agreement.
Adjustable Rate Mortgage, ARM: A loan where the interest rate adjusts to current rates during the duration of the loan.
Amortization: The process of gradually reducing debt by making regular payments over a specific period of time.
Annual Percentage Rage, APR: The cost of the loan, including the interest rate, points, origination fee and other charges.
Appraisal: A formal report done by a professional appraiser that states the current market value of a home.
Assessments: When a city makes improvements to city property, homeowners must pay for these improvements through their city taxes.
Association Dues: Payments condominium and townhouse owners make for upkeep and management of shared property.
Assumable: A loan where a buyer arranges to take over the seller’s original loan.
Balloon Mortgage: A type of mortgage loan with a fixed rate that is usually short term. At maturity, the loan must be paid off or refinanced.
Buyer’s Broker: An agent who works on behalf of the buyer.
Buy-down: To pay additional points to reduce the monthly mortgage rate.
Closing: A meeting between a buyer, seller, and lender to legally exchange property and funds.
Closing Costs: The costs involved in the transfer of property.
Commitment Letter: A letter from your lender showing qualification of a loan and listing the terms.
Contingency: An addition to a purchase agreement stating that certain terms be met within a time frame for the agreement to remain valid.
Contract: An agreement between two or more people, or entities, that represents a legal commitment.
Contract for Deed: An owner offering the buyer financing, and the buyer makes monthly installments to the owner.
Conventional Loan: Loans without government involvement.
Credit Score: A rating based on your credit history.
Default: Failure of loan payment.
Down Payment: An up-front payment made on a home.
Earnest Money: Money paid to the agent when an offer is made on a property. If the offer is approved, the money is counted toward payment of the property. If the offer is denied, the money is returned to the buyer.
Equity: The portion of the property that you own that is clear of any mortgage.
Escrow: Money paid in addition to the monthly mortgage payment that is used toward paying property taxes and insurance.
FHA Loans: Loans that are backed by the Federal Housing Administration.
Fixed Rate Loan: A loan that has a constant rate for the duration to the terms.
Gross Income: Your income before taxes.
Hud-1 Form: A settlement statement of all of the closing costs.
Homeowner’s Insurance: Insurance which homeowners purchase to protect their investment.
Homestead Taxes: Property taxes paid by owners that actually live in the home.
Interest: A specific amount of money that is charged for use of the borrowed money.
Lien: A claim by one person or entity on a property owned by another as security for a debt.
Loan Origination Fees: Fees you pay your lender for handling and processing you loan application.
Loan Processing: An analysis by a lender to determine you qualification for a loan.
Lock-In Agreement: An agreement you make with your lender to lock in at the rate you qualified at.
Long-Term Debt: Debt you will owe on for more than six months.
Margin: The amount a lender adds to the index to produce an adjusted interest rate.
Market Value: The price a buyer is willing to pay and the seller is willing to accept for a home.
Mortgage: A loan for the purchase of real estate.
Mortgage Discount Points: Prepaid interest on a loan.
Mortgage Insurance: Insurance that protects the lender from a borrower’s default on a loan.
Mortgage Insurance Premium, MIP: Insurance that a lender is required to pay on for an FHA loan.
Mortgagee: A lender
Mortgagor: A home buyer, borrower.
Origination Fee: Fee is charged by a lender for preparation of loan documents.
PITI – The Monthly Loan Payment: Abbreviation for principal, interest, taxes, and insurance.
Points: A fee paid at the time of closing by the mortgagor to the lender to lower the mortgage rate.
Prepayment Penalty: A penalty fee assigned for early payoff on a loan.
Prime Mortgage: Highest grade of mortgage that you quality for.
Principal: Total amount you are borrowing for a home.
Private Mortgage Insurance, PMI: If you make less than 20% down payment on a conventional loan, you will be required to pay for this insurance.
Purchase Agreement: A legally binding agreement between the buyer and seller that lists the terms and conditions of the sale of the property.
Recording Fees: A fee to the lender for recording the home sale with the local authorities.
Re-Issue Credit: Savings on the cost of homeowner’s insurance for using the same company the previous owner used.
Sub-Prime Mortgage: Has a higher interest rate than prime mortgage.
Subagent: A seller’s agent that owes their duties to the seller. A subagent may bring a potential buyer to a property.
Survey: A document that shows the land location, elevations, boundaries and properties.
Title: A document that represents the rights of ownership of a particular property.
Title Insurance: Insurance that you pay to protect the lender from claims on the property title.
Truth-In Housing Inspection Report: An inspection that the seller pays for, that states the condition of the house.
Truth-In Housing Inspection Statement: A statement from your lender stating all fees and costs of a loan using the annual percentage rate.
Underwriting: Risk analysis conducted by a lender to decide who to approve you for the loan.
VA Loan: Low-interest, no down payment loans offered to people served in the U.S. Military and issued from the Veterans Administration
