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ARM - Adjustable Rate Mortgage. A mortgage whose interest rate changes periodically based on an index. Amortization- The Gradual repayment of a mortgage by equal installments. APR-Annual Percentage Rate-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. Appraisal -A professional opinion of the market value of a property. Assessed Value- The valuation placed upon property by a public tax assessor for purposes of taxation. Cap Rate- A provision of an ARM limiting how much the interest rate or mortgage payments may increase. Clear Title- A title or ownership that is free of liens and legal claims as to ownership of the property. Contingency- A condition that must be met before a contract is legally binding. Convertible ARM- An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions. Deed- The legal document conveying title to a property. Discount points- A loan fee paid at the time a loan is closed. A point equals 1% of the amount borrowed. Earnest Money- A deposit given to the seller to show that a prospective buyer is serious about buying the house. FHA-Loan- A mortgage that is insured by the Federal Housing Administration. Hazard Insurance-Insurance to protect the homeowner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards. Loan Commitment- An agreement by a lender to make a loan. Usually formally stated in a letter to the borrower. Lock-In - A written agreement guaranteeing the home buyer a specified interest rate provided the loan is closed within a set period of time. The Lock in usually specifies the number of points to be paid at closing. MLS- Multiple Listing Service-A network that contains listings of all area homes on them market by members of the MLS. All area members of MLS have access to the regulary updated information. Mortgage Insurance Premium- The fee paid by a borrower to FHA or a private insurer for mortgage insurance. As a normal rule, MIP refers to FHA insured loans, while PMI (private mortgage insurance) refers to private insurers. Origination Fee- A fee paid to a lender for processing a loan application; it is stated as a percentage of the mortgage amount, or as points. PITI- Stands for principle, interest, taxes, and insurance-the components of a monthly mortgage payment. Prequalification- The process of determining how much money a prospective home buyer will be eligible to borrow, before a loan is applied for. 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. Settlement Sheet- The balance sheet at closing which determines the seller's net proceeds and the buyer's net closing costs. Title- A legal document establishing the right to ownership of a property. Title Insurance- Insurance to protect the lender or buyer against loss arising from disputes over ownership of a property. Title Search- A check of the title records to ensure that the seller is the legal owner of the property, and that there are no liens or other claims outstanding. 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 otehr charges. Underwriting- The process of evaluating a loan application to determine the risk factor involved for the lender. VA Loan- A loan that is guaranteed by the Veterans Administration. |