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Property Auctions Glossary
- An amenity applies to non-monetary benefits of property ownership.
- The process of paying off a loan through specifically structured periodic payments is known as amortization.
- Annual Percentage Rate (APR)
- Annual percentage rate is an interest rate that is different from the note rate. It is commonly used to compare loan programs from different lenders.
- Application is a form in which all the information is recorded about borrower which is necessary for underwriting process.
- An appraisal is a professional estimate of the value of one’s property. Before a mortgage or loan is approved for a home, that home will also need to be appraised. This is important in order to make sure that the insurance or loan amount is equal to the value of the property.
- An individual may use his experience to prepare the appraisal estimate.
- A mortgage with an interest rate that may change, usually in response to changes in the treasury Bill rate or prime rate.
- Assumable Mortgage
- An Assumable Mortgage is basically buying a house and taking on the previous owner’s mortgage as it stood before the sale. So instead of taking out your own mortgage you assume the role of the previous owner and continue payment of their mortgage.
- Balloon Mortgage
- A Balloon Mortgage is taken by home buyers for a term of five to seven years, but payment is made on tenure of 30 years. This mortgage has a lower interest rate. At the end of your loan term you have to pay off outstanding balance. This means you have to refinance, sell your home or convert the balloon mortgage to a traditional mortgage at the current interest rate.
- Bankruptcy is a process where in a person legally declares he is not in a position to pay outstanding debts. It is a legal proceeding whereby an individual or a business can declare an inability to pay back debts.
- A borrower is a person who receives a loan from a lender and promises to pay him in a specified period of time.
- Building Code
- A building code is a set of rules that specify the minimum acceptable level of safety for constructed objects such as buildings and non-building structures.
- An estimate of the income and expenses needed to carry out programs for a fiscal year.
Cash reserveA cash reserve is an amount that a borrower has available after paying all transaction costs at closing. Some lenders require that a mortgagor have a reserve adequate to pay at least two mortgage payments.
Certificate of titleCertificate of title are documents that tells about the current owner of a piece of property. A Certificate of title also provides other information like the status of the property, including any existing easements or encumbrances on the land and buildings located on the property.
ClosingIn real estate business, closing is considered the last step. On the closing date, purchase contract is completed and ownership of property is transferred to the buyer.
Closing costsClosing costs are divided into two as non recurring closing costs and pre-paid items. Non-recurring costs are any items which are paid just once as a result of buying the property or obtaining a loan. Pre-paid recur over time, such as property taxes and homeowners insurance.
CommissionA broker or agent charges some fees when you buy or sell some securities or in real estate business.
CondominiumA condominium is a form of home ownership in which individuals units of a larger complex are sold, not rented. These units may be renovated apartments, townhouses or even commercial warehouses.
Conventional loanConventional loans are private sector loans. The loan amount is not guaranteed or insured by the federal government.
Credit reportCredit report contains information regarding a person’s credit history, other information like credit accounts, loans, bankruptcies and late payments etc. The prospective lender can have a look at it with the borrower’s permission, to determine his or her creditworthiness.
Debt to Income ratioIn Debt-to-income ratio, a bank or lender determines what you can afford in the way of a mortgage. By dividing all your monthly liabilities by your gross monthly income, you come up with a percentage.
DeedDeed means the legal document which conveys title to real property from one party, the grantor to another party, the grantee.
Deed-in-lieuIn the deed-in-lieu of foreclosure transaction, you give your ownership rights of the property to the lender and the lender then assumes full responsibility for selling the house.
DefaultDefault means you are not in a position to pay your monthly mortgage amount on time or otherwise meet the mortgage terms.
DelinquencyBorrower is not in a position to make timely mortgage payments under a loan agreement.
Down paymentPart of the payment made at the time of purchase, the balance to be paid later.
Earnest MoneyA deposit paid by a buyer to a seller to demonstrate intention to complete the purchase. If the offer is accepted it becomes the down payment amount and if the offer is rejected it is returned, or forfeited if buyer pulls out of the deal.
Energy improvement mortgage (EEM)A loan secured by real property that is made to an owner for the specific purpose of making energy efficient improvements to a home or building.
EquityThe value an owner has in real estate over and above the debt of the property. For example, if a homeowner owns a house valued at $100,000 and has a mortgage balance of $20,000, the homeowner’s equity is $80,000. Homeowner’s equity increases or decreases accordingly as the value of the house increases or decreases.
EscrowSomething of value, such as money or documents, put into the custody of a third party to be delivered upon the fulfillment of specified conditions. For example, a borrower places funds in escrow with a lender to pay taxes when they are due.
Fair Housing ActFair Housing Act prohibits housing discrimination on the basis of race, color, religion, sex, disability, familial status and national origin.
Fair Market valueIt means the price that a buyer could reasonably be expected to pay and seller could reasonably be expected to accept, if the business was for sale in the open market for a reasonable period of time, both buyer and seller being in possession of all pertinent facts, and neither being under any compulsion to act.
Fannie MaeFannie Mae is one of the primary purchasers of eligible loans from issuers. Fannie Mae securitizes these loans into mortgage-backed securities, and sells the securities to investors.
Fixed-rate mortgageA fixed rate mortgage is a long-term loan that you use to finance a real estate purchase, typically a home.
Flood InsuranceFlood Insurance means insurance company provides insurance coverage against property loss from flooding.
ForeclosureForeclosure is the legal process by which a borrower in default under mortgage is deprived of his or her interest in the mortgaged property. Foreclosure usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Ginnie Mae:Ginnie Mae is a Government National Mortgage Association, or GNMA, is a corporation wholly owned by the federal government and operating within the Department of Housing and Urban Development (HUD). Ginnie Mae was established in 1968, and pioneered the issuance of mortgage backed securities (MBS).
Good Faith Estimate:A good faith estimate must be provided by a mortgage lender or broker in the United States to a customer, as required by the Real Estate Settlement Procedures Act (RESPA). When you apply for a mortgage, the government requires your lender to give you a “Good Faith Estimate” (GFE) within three days of your application.