Adjustable Rate Mortgage(ARM)
A mortgage in which interest and payment rates vary periodically, based on a
specific index, such as 30-year Treasury bills or the Cost-of-Funds index.
Money credited to either/both buyer and seller at closing, including real estate
taxes, price adjustment based on disclosures in the inspection, etc.
A licensed person who represents the seller(and/or buyer) and who provides
market assessment, sales or buying strategy, recommends various services and
sources important to the seller or buyer.
A method by which monthly mortgage payments are equalized over the life of the
loan despite the fact that the proportion of principal to interest changes.
Professional and unbiased written opinion of property's value based on recent,
comparable sales, quality of construction, current condition and style of
A municipal or country official who determines the value of properties for the
purpose of taxation.
Assumption of Mortgage
The buyer assumes liability for an existing mortgage held by the seller, subject
to approval by the lender.
A short-term mortgage, generally at a fixed rate of interest, to be paid back in
predetermined, equal monthly payments, with a large, final payments for the
balance of the loan paid at the end of the term.
A person licensed to represent home buyers or sellers for a contracted fee. Most
real estate offices are managed by a broker who employs licensed sales agents to
sell the properties.
A limit on the total amount an interest rate can be increased. (See ARM.)
The final settlement at which time the title is transferred from seller to
buyer, accounts are settled, new mortgages signed and all fees and expenses
dispersed or satisfied.
All fees, taxes, charges, commissions and other costs paid by buyer and/or
seller at the closing.
Personal property pledged as the security for a debt. The mortgage is usually
the collateral for the property itself.
A previously agreed upon percentage of the home's sale price paid to the listing
and selling agent(s).
Most popular home financing form not insured by FHA or guaranteed by VA.
Available from many lenders at varying rates, terms and conditions.
A report outlining the credit history of an individual which includes current
and previous debts, payment amounts, late payments and past due amounts and
other related information on every credit source the individual has used.
A legal "instrument" that conveys the title to a property from seller buyer.
Statement concerning the condition of the property for sale and the surrounding
The buyer's payment to the seller at the time the sales contract has been
mutually agreed to, or at closing, for the percentage of the total purchase
price required by the buyer's mortgage loan.
Money paid by the buyer at the time an official offer to purchase is submitted
to the seller, intended to demonstrate the good faith of the buyer to complete
the purchase. Earnest money applied against the purchase price; however, it may
be forfeited if the buyer fails to complete the purchase under the terms of the
The difference between the sale price of a property and the mortgage on the
A third party account used to retain funds including the property owner's real
estate taxes, buyer's earnest money or hazard insurance premiums.
FHA Insured Mortgage
The federal Housing Administration makes available through banks and other
lender, insured mortgages with low down payment requirements.
A mortgage that has a set interest rate and is basically unaffected by interest
Free and clear Title
Title to a property which is free from any mortgage, lien, or other encumbrance.
Graduated Payment Mortgage
This mortgage offers low initial monthly payments which increase at a
pre-determined rate, then cap at a final level for the duration of the mortgage.
Often confused with "Homeowner's" insurance, it's designed to compensate for
specific hazards including fire and wind. An "all-risk home owner's policy"
provides more complete coverage.
A formal survey of a home's structure, mechanical systems and overall condition,
generally performed by a licensed professional inspector.
A hazard insurance policy covering at the very least the appraised value of a
house and property.
The predetermined charge or fee paid to a lender by the borrower for the use fo
An agreement between owner and tenant specifying a portion of monthly rent,
during a specified period, to be credited toward purchase of property.
The actual price at which a property is sold.
The price that is established by existing economic conditions, property
location and market style and size preferences.
A legal claim received by the lender on a property as security for the loan made
to a buyer to facilitate the purchase.
The amount the borrower pays the lender to compensate the lender for the use of
money to purchase the borrower's home. This is tax deductible interest.
Most likely to occur with ARMs when monthly payments are not sufficient to cover
interest cost. Additional interest is added to principal balance and the
borrower may end up owing more than at the initiation of the loan.
Similar to a point, this fee is a supplemental fee paid by buyers to lenders.
A limit on the amount monthly payments on an adjustable rate mortgage can
increase or decrease at each adjustment period.
A single percent of the loan principal, often charged by the lender in addition
to various fees and interest.
A fee included in the mortgage agreement requiring borrower to pay in the event
the loan is paid before the due date.
An informal estimate of the "financing potential" of a prospective borrower.
The amount of money borrowed against which interest and possibly fees will be
charged. (A second meaning: one of the parties to a contract.)
Proportionate division of expense based on days or time occupied or used by the
seller and/or buyer.
Ability of a borrower to satisfy a lender's mortgage approval requirements.
The process of applying for a new mortgage to gain better terms or use of
The Real Estate Settlement Procedures Act requires a precise listing of all
closing costs for both sellers and buyers.
This term relates to all legal and financial transactions required to finalize
the contract between buyer and seller, at the conclusion of which closing takes
A legal document that defines the property, right of ownership and possession.
An insurance policy that protects the buyer against errors, omissions or any
defects in the title.
The Department of Veterans Affairs has made guaranteed mortgages available
through banks and other lending institutions to active military personnel,
veterans, or spouses of veterans who died of service-related injuries.
The inspection by the buyer, usually in the company of the buyer's real estate
sales agent, to ensure that all conditions noted in the offer-to-purchase, and
all seller-related contingencies have been met. This inspection is most often
completed immediately prior to the official act of closing, after the seller has
vacated the premises.
Protection provided to the purchaser regarding the condition of appliances and
pictures. Often, new homes have more extensive warranties also covering the