|
ADJUSTABLE RATE MORTGAGE:
Also known as variable rate. These mortgages are generally long term commitments for money but
interest may fluctuate up or down on certain dates the life of the loan. |
| ASSUMABLE
MORTGAGE: Purchaser takes ownership to
real estate encumbered by an existing mortgage and assumes
responsibility as the guarantor for the unpaid balance of the mortgage. |
AMORTIZED LOAN:
A loan which is
paid off in equal installments during its term. |
| BALLOON PAYMENT:
The final payment of a mortgage
loan when it is larger then the regular payment.; it is usually
extinguishes the debt. |
| BUY DOWN:
Cash payments made at closing that
allows the borrower to the advantage of lower interest rates for a
specific period. |
| CAPITAL GAINS
TAX: The tax an the taxable profit derived from the sale of
a capital asset. The capital gain is the difference between the sale
price and the basis of the property, after making appropriate
adjustments for closing coasts, fixing up expenses, capital
improvements, allowable depreciation, etc. |
| CLOSING COASTS:
Expenses incurred in the closing of
a real estate or mortgage transaction. Purchasers expenses normally
include: cost of title examination, premiums for title policies,
attorney fees, lenders service fees, and recording charges. In
addition, the purchaser may have to place in escrow a sum of money to
cover accrued real estate taxes and insurant. |
| CONVENTIONAL
MORTGAGE: A loan neither insured by the FHA nor guaranteed
by VA. (most popular loan) |
| EQUITY:
The difference between the market value of property and the homeowner's
indebtedness (mortgage). |
| ESCROW PAYMENT:
That portion of the mortgagors monthly payment held in trust by
the lender to pay for taxes, hazard insurance, mortgage insurance,
lease payment, and other items as they become due, known as impounds in
some states. |
| EXCHANGE:
The trading of an equity in a piece of property for the equity of
another. |
| FIRM COMMITMENT:
A lender's agreement to make a loan
to a specific barrower on a specific property. A FHA or PMI agreement
to insure a loan on specific property, with a designated purchaser. |
| GRADUATED EQUITY OR
RAPID AMORTIZATION: Fixed
rates long term mortgage (25-40 years). The payment however, are
increased annually in negotiated amounts. The additional dollars are
allocated to the outstanding principal, there-by paying the mortgage
off earlier than planned(12-15 years). |
INVESTOR:
The holder of mortgage or the
permanent lender for whom the mortgage banker services the loan. Any
person or institutions that invests in mortgages.
|
| LEASE PURCHASE
AGREEMENT: Buyers makes a
deposit for the future purchase of the property with the right to lease
the property in the interim. |
LOAN COMMITMENT:
A written promise by a lender to make a loan under certain terms and
conditions. These include interest rate, length of the loan, lender fees,
annual percentage rate, mortgage and hazard
insurance and other special requirements. |
|
LOAN TO VALE RATIO:
The ratio of the mortgage loan
principal (amount borrowed) to the property's appraised value (selling
price). On a $100,000 home, with a mortgage loan principal of $80,000,
the loan to value ratio in 80%. |
|
M.G.I.C.:
"Magic" a vehicle to provide a mortgage to
barrowers with less then 20% available as a down
payment. Mortgage Guarantee Insurance Corporation sells
as insurance policy to the lender, paid for the
borrower, to protect the lender in the event of default.
M.G.I.C. allows the buyer to put down as little as 5%. |
|
MORTGAGE/DEED OF TRUST:
Pledge of real property to secure a debt by a written
instrument given by the mortgagor. Should be recorded in
the County Recorders Office. |
|
MORTGAGE:
The lender of money or the
receiver of the mortgage document.
NOTE:
A written promise to pay a certain amount
of money. |
ORIGINATION FEE:
A fee or charge for work involved in the evaluation,
preparation, and submission of a proposed mortgage loan. |
P.I.T.I.:
Principal, Interest, Taxes,
Insurance. Formula used in calculations of amount the
purchaser id qualified to borrow. Generally this figure
in 25%-28% of gross monthly income. |
|
POINT:
One percent of loan amount. |
|
PREPAYMENT PENALTY:
A fee paid to the mortgage for
paying the mortgage before it become due. Also known as
prepayment fee or reinvestment fee. |
|
PREPAYMENT PRIVILEGE:
The right a purchaser to pay all or part of a debt prior
to its maturity. The mortgage cannot be complied to
accept any payment other than those originally agreed
to. |
|
PRIVATELY INSURED MORTGAGE:
A conventional mortgage loan on which a private mortgage
insurance company protects the lender against loss. |
|
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 TRUST:
Junior mortgage or junior lien; an addition loan imposed
on property with a first mortgage. Generally at higher
interest rate and shorter terms then a first mortgage. |
STRAIGHT LOAN:
A loan with periodic payments of interest only; the
principal sum due in one lump sum upon maturity. |
|
TITLE:
Often used interchangeably with the word
ownership. It
indicates the accumulation of all rights in property;
the owners and others. |
|
TITLE INSURANCE:
An insurance policy which protect the insured against loss arising from
defects in a title. |
