|
| A |
| Adjustable rate mortgage: A loan that allows the
interest rate to be changed periodically. |
| Adjustments: Money that both buyers and sellers credit to
each other at closing, including taxes and down payment. |
| Agency: A legal relationship in which an owner
principal engages a broker agent to market the owner's property, or a buyer principal
engages a broker agent to locate and negotiate for purchase of property on satisfactory
terms. |
| Agent: Licensed representative of the seller who assists
both buyers and sellers with information, advice, and assessment of current market
conditions. |
| Amortization: The gradual reduction in the
balance of a mortgage by periodic payments. |
| Appraisal: Unbiased, professional opinion of a property's
value based on its style and appearance, construction quality, usefulness, and the value
of comparable properties. |
| Asking Price: Price at which the owner wants to sell a
property. |
| Assessed value: The valuation placed on property
by a public tax assessor as the basis of property taxes. This value is not necessarily the
appraisal value of a home. |
| Assumption of mortgage: Agreement by the buyer to
assume responsibility for a mortgage owed by the seller; the seller remains liable unless
the lender Agrees to release him/her. |
| B |
| Balloon mortgage:
A mortgage that has a substantial amount of principal due at the maturity of the note. |
| Binder: An
agreement to enter into a contract, accompanied by a deposit, whereby the purchaser
evidences good faith. |
| Broker: A
person licensed by state real estate commission to let independently in conducting a real
estate brokerage business. |
| C |
| Cap: A maximum amount or telling that can be
charged. |
| Closing: Handled at a title company or in an
attorney's office, this is when buyers and sellers sign all the required papers to
transfer ownership. |
| Closing Costs: Fees and expenses, not including
the price of the home, payable by the seller and/or the buyer at the time of closing e.g.,
brokerage commissions, title insurance premiums And inspection and appraisal fees). |
| Commission: Percentage of the home's sale price paid at
closing to the listing agent and to cooperating agents. |
| Comparables: Houses and properties that are similar in
style, appearance, construction quality, and usefulness to a particular property in a
certain location. |
| Competitive Market Analysis (CMA): Realistic estimate of a
home's current market value based on the most salient points of the local real estate
market. |
| Conventional loan: A loan that is made without
government insurance. It may be a fixed or adjustable rate loan. |
| Counter-offer: Offer made by the buyer or seller in
response to the other's bid. |
| Curb appeal: Common term for everything prospective buyers
can see from the street that might make them want to take a closer look at a house for
sale. |
| D |
| Deed: Instrument that transfers title from the seller to
the buyer. |
| Down Payment: Buyer's payment to the seller at time of
closing for that percentage of the purchase price required by the buyer's mortgage loan. |
| E |
| Earnest Money: Money paid by a buyer at the time of making
an offer or entering into a contract to purchase which is intended to show the buyer's
good faith intention to complete the purchase. Generally, earnest money is applied against
the purchase price, but may be forfeited if the buyer fails to complete the purchase. |
| Equity: Difference in dollars between a house's anticipated
sale price and the mortgage. |
| Escrow account: Third party account for holding money, such
as a buyer's earnest money and the owner's taxes and insurance payment. |
| Exclusive Agency: Sales contract in which sellers owe no
commission to an agent if they find a buyer for their house on their own. |
| Exclusive Right to Sell: Sales contract in which sellers
owe commission to the listing agent even if they find a buyer for their house on their
own. |
| F |
| Fair Market Value: Highest price an informed buyer will
pay, assuming there is no unusual pressure to complete the purchase. |
| FHA-insured mortgage: Mortgage with low down payment
requirements, insured by the Federal Housing Administration and made available through
banks and other lenders. |
| Fixed Rate Mortgage: Mortgage that is locked into a set
interest rate and relatively unaffected by inflation and interest rate changes. |
| Funding:
The final step in transferring ownership of a property from seller to buyer. This occurs
within several days after closing. |
| G |
| Graduated Payment Mortgage: Mortgage offering low initial
monthly payments that increase by a predetermined amount, then level off for the duration
of the loan. |
| Growing equity mortgage:
A mortgage loan in which the monthly payments increase by a specific amount each year with
the increase applied to the principal. |
| H |
| Home Warranty: Policy purchased by a buyer or seller as
assurance against unexpected repair costs. |
| Homeowner's Policy: Insurance policy covering at least the
appraised value of a house and property. |
| I |
| Inspection: Formal survey of a home's structure and
systems, often performed by a licensed professional. |
| Inspection Clause: Stipulation in an offer-to-purchase that
makes the contract contingent upon the findings of a professional home inspector. |
| Interest: Charge paid to a lender for borrowed money. |
| L |
| Lease-purchase Agreement: Agreement between a tenant and
landlord that a portion of monthly rent may be credited towards eventual purchase of the
rental property. |
| Lender's Agent: Person who represents the lender holding
the mortgage at closing. |
| Lien: A
legal claim against a property. |
| Listing: Contract in which the seller agrees to pay a
commission to the agent who finds a purchaser who can meet the specified terms. |
| M |
| Market value:
The highest price a ready, willing and able buyer will pay and the lowest price a seller,
not under duress, will accept. |
| Mortgage: Claim that a lender receives on a property for
the loan it makes to a home buyer. |
| Mortgage Broker: Independent, third-party broker who
arranges transactions between borrowers and lenders by streamlining the application and
approval process and finding favorable terms for the buyer. |
| Mortgage Note: Signed promise to repay a mortgage loan in
regular monthly payments. |
| Multiple Listing Service (MLS): System in which
participating brokers agree to share commission on the sale of houses listed by any one of
them. |
| O |
| Offer (Offer-to-Purchase): Legally binding, written
contract that declares how much a buyer will pay for the house provided certain conditions
are met. |
| Open House: Opportunity for prospective buyers to view a
house for sale in a low-pressure atmosphere. |
| Origination Fee: Similar to a point; a supplemental fee
paid to lenders. |
| P |
| Payment Cap: Protective device included on some adjustable
rate mortgages that sets a maximum amount monthly payments may rise in any given year. |
| PITI: Principal, Interest, Taxes, and Insurance, the four
main parts of a monthly mortgage payment. |
| PMI: Private Mortgage Insurance, which protects the lender
in case of default by the borrower. PMI is often used to allow buyers to obtain financing
with less than a 20% down payment. |
| Points: One point equals one percent of the total mortgage
loan amount. Buyers often pay lenders a supplemental fee, calculated in points, to get a
better mortgage interest rate. |
| Pre-payment: Paying off an entire mortgage before the
scheduled date. |
| Pre-qualify: Informal determination by a lender or broker
of how large a mortgage a buyer can afford. |
| Principal: Money borrowed from a lender, not including any
fees or interest. |
| Private mortgage
insurance: A policy that provides protection for the lender in case of
default. |
| R |
| Rate cap: Protective device in some ARM's that sets a
maximum amount that interest rates may rise or decrease annually and over the life of the
loan. |
| Referral: One agent's recommendation of a potential buyer
or seller to another cooperating agent. |
| Refinancing: Applying for a new mortgage in order to gain
better terms - usually a lower interest rate. |
| Return on Investment: Value or profit gained as a result of
dollars spent, as in an improvement or addition. |
| Rollover loan:
A loan that is renewed at an established time at current market interest rates. |
| T |
| Title: Right of ownership and possession of a property. |
| Title Insurance: Policy that protects a buyer against
errors or omissions or defects in the title of a property. |
| V |
| VA Mortgage: Mortgage guaranteed by the Department of
Veterans Affairs and made available through banks and other lending institutions. Reserved
for active military personnel, veterans, or spouses of veterans who died of
service-related injuries. |
| W |
| Walk-through: Final inspection of a property's condition by
the buyer, usually to ensure that all conditions noted on the offer to purchase have been
met. |
| Z |
| Zoning: Local restrictions for neighborhood building and
land use. |
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