| ADJUSTABLE RATE MORTGAGE:
Also known as variable rate. These mortgages are generally
long term commitments for money but interest rates may
fluctuate up or down on certain dates during the life
of the loan.
AMORTIZED LOAN: A loan which is paid off in regular
installments of principal and interest during the term
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.
BALLOON PAYMENT: The final payment of a mortgage loan
when it is larger than the regular payment; it usually
extinguishes the debt.
BUY DOWN: A payment to the lender from the seller causing
the lender to reduce the interest rate during the early
years of the loan; usually the first 1 to 5 years of
the loan.
CAPITAL GAINS TAX: The tax on the taxable profit derived
from the sale of a capital asset. The capital gain is
usually the difference between the cost and selling
price of the property, less certain deductible expenses,
i.e. closing costs, fixing up expenses, capital improvements,
allowable depreciation.
CLOSING COSTS: Expenses incurred in the closing of
a real estate or mortgage transaction. Purchasers expenses
normally include: cost of title examination, premiums
for title properties, survey, attorneys' fees, lender
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 insurance.
CONVENTIONAL MORTGAGE: A mortage or Deed of Trust not
obtained under a governmental insured program such as
FHA or VA.
EQUITY: The difference between the market value of
property and the homeowner's indebtedness (mortgage).
ESCROW PAYMENT: That portion of the mortgagor's monthly
payment held in trust by the lender to pay for taxes,
hazard insurance, mortgage insurance, lease payments,
and other costs on behalf of the owner/mortgagor as
they become due.
EXCHANGE: A reciprocal transfer of real property which
has certain tax advantages over a sale.
FIRM COMMITMENT: Loan approval by a lender.
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.
LEASE WITH OPTION TO PURCHASE (Lease Purchase Agreement):
A lease under which the lessee has the right to purchase
the property in the future, and to lease the property
in the interim. The price and terms of the purchase
must be set forth for the option to be valid. May require
lessee to make a deposit for the future purchase of
the property.
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-VALUE RATIO(LTV):
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 is 80%.
M. G. I. C./"Magic": Mortgage Guarantee Insurance Corporation
is one of several private companies that provide mortgage
insurance. Usually used when less than 20% is available
for a down payment.
Mutliple Listing Service (MLS): A marketing organization
composed of member brokers who agree to share their
listing agreements with one another in the hope of procuring
ready, willing and able buyers for their properties
more quickly than they could on their own. Most multiple
listing services accept exclusive-right-to-sell or exclusive
agency listings from their member brokers.
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 Recorder's Office.
MORTGAGEE: The party lending the money and receiving
the mortgage.
MORTGAGOR: The borrower in a mortgage agreement.
NOTE: A written promise to pay a certain amount of
money.
ORIGINATION FEE: A fee made by a lender for making
a real estate loan. Usually a percentage of the amount
loaned, such as one percent.
P. I. T. I.(Principal, Interest, Taxes, Insurance):
Used to indicate what is included in a monthly payment
on real property. Principal, interest, taxes and insurance
are the four major portions of a typical monthly payment.
POINT: One percent of loan amount.
PREPAYMENT PENALTY: A fee paid to the mortgagee for
paying the mortgage before it becomes due. Also known
as prepayment fee or reinvestment fee.
PREPAYMENT PRIVILEGE: The right given a purchaser to
pay all or part of a debt prior to its maturity. The
mortgagee cannot be compelled to accept any payment
other than those originally agreed to.
PRIVATELY INSURED MORTGAGE: A conventional mortgage
loan on which a private mortgage company protects the
lender against loss.
SECOND MORTGAGE / SECOND TRUST: Junior Mortgage or
Junior Lien; an additional loan imposed on property
with a first mortgage. Generally at a higher interest
rate and shorter terms than 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 has the right to possess or to sell the property.
TITLE INSURANCE: An insurance policy which protects
the insured (purchaser or lender) against loss arising
from defects in a title to a specifically described
parcel of real property. |
