WEICHERT, REALTORS® - Caton Properties: Real Estate Terms
Acceptance – Consent to an offer to enter into a
contract
Adjustable Rate Mortgage – A loan that allows the lender
to adjust the borrower's interest rate and payments at
prescribed limits.
Amortized Loan – A loan which is paid off in legal
installments during its term
APR (Annual Percentage Rate) – A term used in the Truth
in Lending Act. It represents the relationship of the
total finance charge (interest, discount points,
origination fees, loan broker, commission, etc.) to the
amount of the loan.
Appraisal – An estimate of real estate value, usually
issued to standards of FHA, VA, FNMA. Recent comparable
sales in the neighborhood are the most important factors
in determining value.
Appreciation – Increase in value for any reason.
Assumable Mortgage – Purchaser takes ownership to real
estate with an existing mortgage and assumes
responsibility as the guarantor for the unpaid balance
of the mortgage.
Bill of Sale – Document used to transfer title
(ownership) of the mortgage.
Closing Statement – A financial statement rendered to
the buyer and seller at the time of transfer of
ownership, giving an account of all funds received or
expended. Also called settlement sheet or HUD-1.
Cloud on the Title – Any condition which affects the
title to real property being clear. Normally, this is
any type of lien that requires payoff prior to
settlement.
Comparable Sales – Sales which have similar
characteristics as the subject property and are used for
analysis in the appraisal process.
Contract – An agreement to do or not to do a certain
thing.
Consideration – Anything of value to induce another to
enter into a contract (i.e., money, services, a
promise).
Deed – Written instrument which, when properly executed
and delivered, conveys title to real property.
Discount Point(s) – A loan fee charged by a lender of
FHA, VA, or Conventional loans to increase the yield on
the loan investment. One point is 1% of the loan amount.
Therefore, the more points paid, the lower the interest
rate.
Earnest Money – Initial deposit made by the purchaser of
real estate as evidence of good faith; also called the
good faith deposit.
Easement – The right, privilege, or interest that one
party has in another's land. For example, utility
companies often have easements across private properties
for purposes of telephone poles, wires, and such.
Encumbrance – Anything which burdens or limits the fee
title to property, such as a lien, easement, or
restriction of any kind; that is, any right to or
interest in land which affects its value.
Equity – The value of real estate over and above the
liens against it. It is obtained by subtracting the
total liens from the value.
Escrow Payment – That portion of a mortgagor's monthly
payment held in trust by the lender to pay for taxes,
hazard insurance, mortgage insurance, lease payments,
and other items as they become due.
Exchange – The trading of equity in a piece of property
for equity in another
Fannie Mae – Nickname for Federal National Mortgage
Corp. (FNMA), a tax-paying corporation created by
Congress to support the secondary mortgages insured by
FHA or guaranteed by VA, as well as conventional home
mortgages.
Federal Housing Administration (FHA) – The Federal
Government agency which administers HUD insured loans
FHA Insured Mortgage – A mortgage under which the
Federal Housing Administration insures loans made,
according to its regulation, by approved lenders.
Fixed-Rate Mortgage – A loan that fixes the interest
rate at a prescribed rate for the duration of the loan.
Foreclosure – Procedure whereby property pledged as
security for debt is sold to pay the debt in the event
of a default
Freddie Mac – Nickname for the Federal Home Loan
Mortgage Corp. (FHLMC), a federally controlled and
operated corporation to support the secondary mortgage
market. It purchases and sells residential conventional
home mortgages.
Graduated Payment Mortgage – Any loan where the borrower
pays a portion of the interest due each month during the
first few years of the loan. The payment increases
gradually during the first few years to the amount
necessary to fully amortize the loan during its life.
HUD ONE – See closing statement.
Investor – The holder of a mortgage or the permanent
lender for whom the mortgage banker services the loan.
Any person or institution that invests in mortgages.
Joint Tenants – Ownership by two or more persons who
hold a divided interest with rights of survivorship.
Lease Purchase Agreement – Buyer makes a deposit for the
future purchase of a property with the right to lease
the property in the interim.
Loan to Value Ration (LTV) – The ratio of the mortgage
loan principal (amount borrowed) to the property's
appraised value (selling price). Example – on a $100,000
home, with a mortgage loan principle of $80,000, the LTV
is 80%.
Mortgage – One type of the document used to make
property the security for the payment of a loan.
Mortgage Insurance Premium (MIP) – The consideration
paid by a mortgagor for mortgage insurance either to FHA
or a private mortgage insurance company protecting the
investor from possible loss in the event of a borrower's
default on a loan.
Mortgagee– The lender of the money or the receiver of
the mortgage document.
Mortgagor – The borrower of the money or the giver of
the mortgage.
Note – A written promise to pay a certain amount of
money.
Organization Fee – A fee or charge for work involved in
the evaluation, preparation, and submission of a
proposed mortgage loan.
Prepayment Penalty – A fee paid to the mortgage company
for paying the mortgage before it becomes due. Also
known as prepayment fee or reinvestment fee.
Private Mortgage Insurance (PMI) – See Mortgage
Insurance Premium.
Promissory Note – A written contract containing a
promise to pay a definite amount of money at a definite
future time.
Realtor – A member of local and state real estate boards
which are affiliated with the National Association of
Realtors (NAR).
Rent with Option – A contract which gives one the right
to lease property at a certain sum with the option to
purchase at a future date.
Second Mortgage / Second Deed of Trust / Junior Mortgage
or Junior Lien – An additional loan imposed on a
property with a first mortgage. Generally a higher
interest rate and shorter term than a "first" mortgage.
Severalty Ownership – Ownership by one person only.
Survey – The process by which a parcel of land is
measured and its area ascertained.
Tenancy in Common – Ownership by two or more persons who
hold an undivided interest without right of
survivorship. (In the event of the death of one owner,
his/her share will pass to his/her heirs).
Tenants by the Entirety – Only married couples can take
title in this form of ownership. Should one spouse die,
his/her share is passed on to the surviving spouse.
Title Insurance – An insurance policy which protects the
insured (Purchaser or Lender) against loss arising from
defects in the title.
