Title is a legal term for an owner’s interest in a piece of property. It may also refer to a formal document that serves as evidence of ownership or the history of ownership and documentation that affects the title during the period of ownership. Lenders perform title searches on a property for purchase transactions and refinances to verify the actual owner of the property. The title search will also determine whether there are any existing mortgages or liens against the property. Title defects or a clouded title refers to a situation in which there are problems identifying the rightful owners to the property or there are claims and liens on the property that have been resolved. Title insurance provides insurance coverage against losses resulting from unidentified liens or title defects. The title insurance may be in place to protect the property, the lender or both.
Provision or clause in a mortgage that allows the lender to demand payment of the entire principal balance and unpaid interest is due if certain conditions have occurred. Conditions will generally a default on the monthly payment, failure to pay real estate taxes, transfer of ownership in the property and others.
Money paid to the lender in addition to the established payment amount used directly against the loan principal to shorten the length of the loan and subsequently reduce interest charges over the life of the loan.
A mortgage that does not a have fixed interest rate and therefore has periodic adjustments to the interest rate. The rate will change periodically over the life of the loan based on changes in a specified index depending on the current market, which may cause the monthly payment to increase or decrease. These home loans will generally some limited protection against rapid and large interest rate movements with interest rate caps for the periodic rate changes as well as rate changes over the life of the loan. The interest rate on these loans is usually lower than a comparable fixed rate mortgage loan. Often, the interest rate is set by the lender as lower for an introductory period than rises even when rates remain stable; this is an introductory or teaser start rate.
The date that the interest rate changes on an adjustable-rate mortgage (ARM). Adjustable rate mortgages will have predetermined rate change time periods, they may change monthly, quarterly or yearly depending on the conditions or type of adjustable rate mortgage. The adjustment date is the actual time at which the interest rate will adjust. The significance is that the rate adjust based on an underlying index at a specific time.
The period elapsing between adjustment dates for an adjustable-rate mortgage (ARM). Adjustable rate mortgages will have predetermined rate change time periods, they may change monthly, quarterly or yearly depending on the conditions or type of adjustable rate mortgage.
An amount that provides a limit to the increase in an adjustable rate mortgage interest rate during a calendar year. An adjustable rate mortgage that has a present rate of 5.50% and contains an annual rate cap of 6.50%, cannot exceed that rate regardless of the change to the underlying index the loan is based on for that 12 month period.
An amount that provides a limit to the increase in an adjustable rate mortgage interest rate for the duration of the loan. An adjustable rate mortgage that has a present rate of 5.50% that contains a annual rate cap of 8.50% cannot exceed that rate regardless of the change to the underlying index the loan is based on throughout the term of the loan.
Adverse action is the same as a loan denial. Creditors, mortgage lenders and banks, must advise applicants in writing the reason for declining a borrowers request for credit. If the reason for denial is based on information contained in a credit report, the applicant is entitled to review without charge a copy of his or her credit report. Reasons for a mortgage loan denial may include insufficient income, derogatory credit, insufficient assets or funds to close or an incomplete application.
Amortization involves the payment of both principal and interest in periodic installments for the term of the loan. A fully amortizing loan has payments of specific periodic amounts of principal and interest that results in the gradual reduction of the loan balance until the loan is paid in full. Amortization more generally refers to the conditions of repayment of a debt such as a mortgage. An interest only mortgage would be a non amortizing loan since there is no scheduled reduction in principal. A balloon mortgage would be a partially amortizing loan since the loan payments will reduce the principal of the loan until the final balance is due at the balloon date or final payment date.
A table or schedule that reflects the number of loan payments due on a loan, the amount due on each monthly installment, the amount that is applied to principal on each payment, the amount applied to interest and the declining principal balance.
The length of time required to amortize the mortgage loan expressed as a number of months. For example, 360 months is the amortization term for a 30-year fixed rate mortgage.
The cost of credit on consumer loans, including mortgages, that measures the cost as a percentage rate per year. The annual percentage rate is intended to reflect the actual cost of credit to the borrower, including interest and certain other charges, expressed as a yearly rate and calculated over the life of the loan.
A written analysis prepared by a qualified appraiser and estimating value of a property. The appraisal determines the fair market value of the property based on current information and analysis. The data used to determine the fair market value usually involves analysis of the replacement cost of the property, expected future income from the property and sales of comparable properties in the area.
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property.
A fee generally paid by the buyer to determine the estimated value of the property.
The increase in value of a home. Appreciation covers the increase in value of any asset from the rise fair market value of the asset.
Taxes on real property. An assessment can be the annual property taxes levied by the local municipality based on property value or local improvements on a property for sewer or water or charges by planned unit developments and condominiums for property maintenance.
The final payment due on a balloon mortgage. This payment will be a lump sum payment for the unpaid remaining principal balance on the loan.
A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term.
The period or number of days shown on a billing statement in which interest is billed. This is the period between periodic payment due dates on the mortgage loan.
A mortgage with payments due every two weeks, totaling 26 payments per year. These mortgage loans are scheduled to have level payments every two weeks rather than the once a month as is found with most mortgage loans. The biweekly payment schedule increases the total amount paid on the loan per year and reduces the total interest paid over the life of the loan as compared to a standard 30 year mortgage.
An individual or company that brings borrowers and lenders together for the purpose of loan origination. A mortgage broker is a person or business that acts as an intermediary between the lender and the borrower. A mortgage broker is technically an agent and not a principal in the loan transaction. A mortgage broker can help a borrower shop for a mortgage and facilitate the process of obtaining a home loan.
A method of lowering the interest rate on a mortgage, either temporarily or for the entire term of the loan. Often points are paid up front to make up the difference between the rate actually charged on the mortgage and the rate at which the buyer pays. The points or money advanced to reduce the rate are often paid by a seller or builder as an inducement to accept a transaction.
A provision of an adjustable-rate loan (ARM) that limits how much the interest rate or loan payments may increase or decrease. These can be lifetime payment cap, lifetime interest rate cap, periodic payment cap, and periodic interest rate caps.
The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.
A credit arrangement in which the borrower and lender agree on the total amount loaned and the number, amount and due dates of each payment; all proceeds are advanced at time of closing.
The meeting between the seller and buyer when the property legally changes hands. The loan agreement is signed or finalized, legal documents to secure the asset or home are signed, legal documents to secure the mortgage are signed and the funds involved are transferred.
Fees paid to effect the closing of a mortgage. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc. Closing costs will vary according to the area country and the lenders used.
The security offered by the borrower to secure his promise to pay a debt; the security may become the property of the lender. In the case of a home loan, the collateral for the loan is the home being financed. If the borrower fails to repay the funds or defaults on the loan, the asset pledged as security may be taken and sold by the lender to fulfill the obligation of the loan.
The servicing procedure followed to bring a delinquent mortgage loan current and to file the required notices to begin foreclosure if necessary.
The relationship of the outstanding balances of a first and second mortgage to the appraised value of the security used to determine the maximum lendable amount on real estate.
A lender’s offer to grant a mortgage loan outlining the terms, the amount of the loan, the interest rate and other conditions. The lenders commitment or agreement to make the home loan will usually involve the quoted rate along with a time period for which the commitment is valid. The commitment may have conditions attached that must be satisfied to obtain the final loan. It can also serve as a communication of the lender’s decision on the borrower’s application. Lenders will often provide written commitments letters stipulating any conditions to granting the loan as well as escape clauses that allow the lender to cancel the commitment based on such adverse material changes in the application or the borrower’s credit or financial position.
A loan, which meets all requirements to be eligible for sale to Fannie Mae or Freddie Mac.
A mortgage loan which is not insured or guaranteed by a government agency such as FHA or VA. Any fixed rate or adjustable rate mortgage that is not backed by federal insurance found in FHA and VA loans, these loans may be portfolio loans provided by banks and lenders or loans financed through the secondary market with Fannie Mae or Freddie Mac.
A short-term, interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as work progresses.
A report detailing an individuals credit history prepared by a credit bureau or credit reporting agency and used to aid in the determination of credit worthiness. A credit report lists the open and closed accounts of the consumer, the payment history, available credit on open accounts, high credit amounts, bankruptcies, judgments, name, last reported address, social security numbers and other data.
A credit score measures a consumer’s credit risk based on a statistical model. Credit scores are used for a variety of reasons including estimating an individual’s creditworthiness. The score is based upon present financial condition, experience, and past credit history, used to determine the credit standing and creditworthiness of a prospective borrower. Credit scores estimates the repayment risk of the applicant based on the application and the credit report. The credit score point scoring system assigns value to certain credit criteria such as number of open accounts, length of time credit has been granted, payment history, type of credit and much more.
The amount of money owed on a property, or other secured or unsecured loan balance, such as credit cards or car loans.
A financial ratio used to measure a borrower’s ability to repay future debt especially the mortgage loan. A measure of creditworthiness computed by dividing the dollar amount of monthly debts by total gross monthly income, then converting the result to a percentage.
The legal document that is used to transfer the title from one owner to another.
The failure of a borrower to comply with the terms of a note or the provisions of a mortgage. The failure to meet the provisions of the mortgage involves the failure to meet the contractual obligations stipulated in the note. Default gives the mortgage holder the right to start foreclosure proceedings on the property for repayment of the unpaid loan amount.
Failure to pay the loan payments when due. Failure to make one or more months payments on time based on the loan payment schedule stipulated in the note.
Amount paid to the lender by the borrower to decrease the interest rate. One point is equal to one percent of the loan amount.
A portion of the sales price paid by a buyer and not financed with a mortgage loan.
A variety of indicators that measure the present state of the economy, such as the Consumer Price Index or the Gross Domestic Product (GDP), that may be used to predict where the interest rates may be heading in the coming months.
Any lien that may that affects the title or ownership of a property, such as existing loans, easements, past due taxes, mechanics liens or restrictions.
Federal law requiring lenders to make credit available equally without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
The difference between the current market value of a property and the total amount of outstanding liens against the property.
An account to pay the tax and insurance and other additional charges of your monthly mortgage payment. The account may be administered by a third party until predetermined, contractual conditions are met.
The portion of the monthly mortgage payment used to pay taxes and insurance premiums by the mortgage lender or designated loan servicer.
Federal act to ensure that credit bureaus are fair and accurate in protecting the individual’s privacy rights enacted in 1971 and revised in October 1997. The act prohibits disclosure of credit files, other than for specific purposes, such as employment, insurance and credit requests. Regulates rules for consumers rights to obtain a copy of their credit report and consumers rights rights to dispute inaccurate information.
A government-sponsored and supported institution that supports the secondary mortgage market by purchasing mortgages from lenders and reselling them as securities.
A federal agency that insures first mortgages, enabling lenders to lend at a high percentage of the sale price or accept lower lending standards.
A privately owned, governmnet supported, congressionally chartered company that is the nation’s largest mortgage investor.
A mortgage loan insured by the Federal Housing Administration. FHA home loans have less stringent standards regarding the borrowers credit history and down payment requirement.
The cost of interest and other charges involved in borrowing money. The total cost of credit including the interest charged, commitment fees, prepaid interest and other charges that are covered by the Truth In Lending Act.
A mortgage which has priority over all other voluntary liens against a certain property; used in states that secure loans against real property with a mortgage.
A mortgage loan in which the interest rate and monthly principal and interest payments remain the same for the life of the loan.
Deciding not to lock in the interest rate at the time of application, and instead to float with the market until a later date at which time you will ask the lender to lock in the interest rate in order to close on the mortgage loan.
The lender’s postponement of legal action when a borrower is delinquent. It is usually granted when a borrower makes satisfactory arrangements to bring the overdue mortgage payments up to date.
A legal procedure in which a mortgaged property is sold to pay the outstanding debt in case of default. The legal procedure starts with the borrower defaulting on the repayment terms of the home loan and the lender initiating a process in which they obtain court permission to take possession of the property and sell it to satisfy the outstanding mortgage debt.
A written statement from friends or family that explains gift funds given to a borrower to purchase a home, and states that no repayment is expected.
An estimate given to the borrower within three days of formal application that lists the costs they may incur at closing. This is a list of the mortgage lenders reasonable estimate of the closing costs on a specific home loan.
Insurance coverage that provides compensation to the insured in case of property loss or damage. See also homeowners insurance.
A loan, based on the borrower’s available equity in the home, that allows the borrower to withdraw and repay available loan proceeds on an ongoing basis. The home equity line of credit is usually a home loan in addition to the existing first mortgage and therefore the home equity line of credit is a second mortgage on the property.
The fee condominiums and planned unit developments assess monthly for maintaining common areas and service for the development.
An insurance policy required by mortgage lenders that protects the structure of the home. Includes the coverage for hazard insurance plus added coverage such as personal liability, theft away from the home, and other such coverage.
An insurance program through which participating builders provide homebuyers with a warranty on the workmanship and materials of a home, and warrants against major structural defects.
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller’s net proceeds and the buyer’s net payment at closing.
The amount of money received during a period of time. Mortgage loans are generally underwritten based on a borrowers pretax or gross monthly income.
The interest rate used as a base rate to determine the rate on adjustable rate loans. The index will be some measure of market based interest rates that the mortgage lender uses as a reference to calculate the total interest rate on the adjustable rate mortgage. The rate you pay directly related to a particular interest-rate index. The rate on an adjustable rate mortgage that is determined by the movement, either up or down, of this index rate plus a margin.
The amount paid for borrowing money. It is the money paid for the use of money expressed as a percentage rate. The interest rate is the cost of borrowing funds and the return for loaning funds.
A home loan that contains a provision tom make monthly mortgage payments of only the interest due. The home loan will defer payment of principal for specifued period of time. The borrower will then be obligated to make regular monthly mortgage payments of interest and principal to cover the remaining balance of the loan.
The interest charged by a lender for the use of money, expressed as a percentage. Cost of credit determined by the lender on a home mortgage loan.
A qualifying ratio used in underwriting a residential mortgage loan, which computes the percentage of monthly income, required to meet the monthly housing expense. See debt to income ratio.
A loan with a dollar amount that exceeds the statutory size limit purchase by Fannie Mae or Freddie Mac. Also referred to as non conforming loans. Mortgage lenders usually charge a higher interest rate on jumbo home loans and have stricter lending standards on these loans.
The penalty assessed for late or delinquent payments on a mortgage loan. The penalty a borrower must pay when a payment is made a stated number of days, usually 15, after the due date. Late payments are based on a percentage of the outstanding balance or monthly mortgage payment.
An interest rate charged among banks in London for short-term loans denominated in a specific currency. A common index for debt securities including some mortgages. This is a key interest rate in international lending and has impact on U.S rates as well.
A monetary claim against property. The lien is a creditors claim against the property to secure payment of a debt. A lien encumbers the borrowers property used as collateral or security up to the amount of the debt or loan and guarantees the mortgage lenders right to collect the payment of the home loan through legal means by using the value of the property to satisfy the debt.
Type of loan in which the borrower may draw on funds at any time, up to an established maximum limit; the borrower may borrow, repay, and borrow again, any and all of the credit extended; a revolving loan. The line of credit has a note and mortgage commiting the bank or mortgage lender to a specified loan amount for the borrower for a predetermined amount of time. The line of crddit may be reviewed by the lender and may be withdrawn at the lenders option.
A mortgage lender fee that is charged when applying for a mortgage loan.
A mortgage banking function which includes the receipt of payments, customer service, escrow administration, investor accounting, collections and foreclosures.
The ratio of mortgage amount to appraised value or sales price of real property. Mortgage lenders establish loan to value ratios to determine the percentage value of the property the lender ios willing to finance with a home mortgage. Used by lenders to determine maximum loan amounts set by secondary market investors and/or government insuring agencies.
A procedure where a lender agrees to lock-in a specific interest rate on a mortgage loan request for a specified period of time. See rate lock.
A cash asset or an asset that is easily converted into cash. Liquid assets can be sold quickly or converted into cash without a change in value.
A predetermined percentage which is added to the current interest rate on any adjustable loan index by the lender to determine the interest rate. The margin is a constant value that will not change over the life of the loan, the index will rise and fall with market interest rates.
The date on which the principal balance of a loan becomes due.
A change to the terms of a mortgage. Modification involves a legal change to the terms of the note or repayment schedule of the home loan.
A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency. See private mortgage insurance.
The borrower in a mortgage agreement. The loan borrower who pledges their property as security or collateral fo the home loan.
An increase in the outstanding mortgage balance that occurs when the amount of interest due is greater than the borrower’s monthly payment and the difference is added to the mortgage principal. Negative amortization can be found on adjustable rate mortgages that have a provision to cap the paymnet increases but do not cap the interest rate increases. In this situation, the monthly mortgage payments do not cover all the interest charges that are owed and the additional unpaid interest is added to the loan balance.
A loan that is not eligible to be purchased by Fannie Mae or Freddie Mac. A jumbo loan is non conforming as are subprime loans. The interest rates charged on non-conforming mortgages are higher than that found on conforming loans due to a variety of factors most importantly, these home loans are less marketable than conforming loans which can be sold more readily in the secondary market.
A legalcontract the is evidence of a debt and its terms. A legal document that obligates a borrower to repay a debt to a lender at a stated interest rate during a specified period of time.
The interest rate stated on the note. The interest rate agreed on the written instrument that acknowledges a debt and contains the terms of repayment.
Origination fees were established as charges by the mortgage lender to cover the costs of handling the mortgage application along with the credit and income evaluation involved in processing a home loan request. The amount lenders charge to borrowers to prepare documents and to process and close the loan. the origination fee is stated in the form of points. One point equals one percent of the loan amount.
May be required on new loans to determine if there is an infestation of termites or other pests in the home, generally reserved for FHA loans.
Money paid by the borrower to the lender for interest that accrues between the closing date and the end of the month.
The interest rate that banks charge to their preferred customers. A benchmark from which a bank computes an appropriate rate of interest for a loan contract. Changes in the prime rate influence changes in other rates, including mortgage interest rates.
Acronym for items included in a monthly mortgage payment: principal, interest, taxes and insurance. Each monthly mortgage payment generally includes payment towards the loan principal, interest accrued, plus any contribution to the escrow account for taxes and insurance.
An amount equal to one percent of the principal amount of the mortgage. Points are fees paid to the mortgage lender to obtain the home loan. Points will reduce the amount of the loan available in a refinance transaction. For a purchase transaction, points will increase the amount of funds needed to close the loan. Points are usually paid to receive a specific interest rate, the more points paid the lower the interest rate on the home loan.
A fee paid to the mortgage lender or servicer for paying a loan earlier than the scheduled maturity date. The length and amount of the prepayment penalty will be codified in the note.
The original face amount of the loan. The balance on the loan amount, excluding interest.
Insurance that protects a mortgage lender against loss in the event of default by a borrower. The protection covers only a certain percentage of the loan amount, approximately 25% on average. The mortgage insurance premium is paid by the borrower. Private mortgage insurance may be paid monthly as part of the monthly mortgage payment or paid by the mortgage lender via an increased interest rate referred to as lender paid PMI.
A government levy based on the market value of the property. The tax assessed on the property by the local government (e.g. city, county, village or township) for the various services provided to the property owner. Services may include police and fire department, garbage pick up and snow removal.
A document that lists the price, conditions and terms under which the buyer is willing to purchase a property.
Calculations used to determine if a borrower can qualify for a mortgage. They consist of two separate calculations that compare a borrower’s debt payments and gross monthly income. The front-end ratio measures a housing expense as a percent of income ratio and the back-end ratio measurers total debt obligations as a percent of income ratio.
A deed transferring ownership of a property but does not make any guarantee of clear title.
With most ARMs, any periodic adjustment in the interest rate changes the payment. Adjustment periods tend to reflect the period of the index of the most popular ARMs; currently, annual adjustments are the most common.
Can be used to refer to a safeguard that protect the interest rate during the application and processing period, similar to a rate or loan lock. Also used to describe the maximum rate change allowed either per rate adjustment period or over the life of the loan on an adjustable rate mortgage.
A commitment issued to a borrower by the mortgage lender guaranteeing the specified interest rate offer to borrowers. Until a mortgage loan interst rate is locked, the rate may chnage with market conditions. The oposite of rate loack is a loan where the rate is floating.
An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
The amount paid to the real estate firm by the buyer or seller for services rendered.
A consumer protection law that requires lenders to give borrowers advance notice of closing costs. The Federal law requires mortgage lenders to give home loan borrowers an estimate of total charges prior to the loan settlement. The law provides for regulations regarding the good faith estimates of closing costs, prohibits kickbacks and establishes guidelines for escrow accounts.
Charged by the county recorder’s office for the filing of documents or details of a legal document to make them a matter of public record, such as the deed, a mortgage note, or satisfaction of a mortgage.
Paying off one loan from the proceeds of a new loan using the same property as security. The new loan will have different terms than the original with either a different term, interest rate or loan amount.
A stage of the foreclosure process where the homeowner has an opportunity to stop the foreclosure by paying money that is owed to the lender.
The amount of principal that has not yet been repaid. The unpaid loan balance that is still due and payable.
A mortgage, which provides seniors with funds from the equity in their homes. Reverse mortgages require the property to have substantial level of equity. The loan can be established to provide monthly payments to the borrower. Generally, no payments are made on a reverse mortgage until the borrower moves or the property is sold. The loan is essentially repaid by the value of the property. The final repayment obligation is designed to not exceed the proceeds from the sale of the home. The reverse mortgage is reserved for applicants 62 and older. The most common FHA insured loan is known as a HECM.
An option for the borrower in a home loan to cancel the loan agreement within three business days of executing the loan agreement. This is a Federal law giving the applicant the legal right to void or cancel the mortgage contract and considers the contract as if it never existed. Right of rescission does not apply to mortgages made to purchase a home, but may be applicable to other mortgages, such as home equity loans and refinance transactions.
An offer to purchase that has been signed by both the buyer and the seller. A firm contract that outlines all details of the property transaction. The contract will reflect the buyer and seller agreeing to the terms of the sale.
An additional mortgage on property. A subordinated lien created by a mortgage loan over the amount of the existing first mortgage. In case of a default the first mortgage must be paid before the second mortgage. Second loans are more risky for the lender and usually carry a higher interest rate.
A mechanism for buying and selling existing mortgage loans. The market where lenders and investors buy and sell existing mortgages or mortgage-backed securities, thereby providing funds for additional mortgage lending.
The act of billing, collecting payments and recording the relevant paperwork for a mortgage. A mortgage banking process which includes the collection of mortgage payments, customer service, escrow administration, investor accounting, collections, and foreclosures.
A document required by the Real Estate Settlement Procedures Act (RESPA). The settlement statement is also referred to as a closing statement is essentially an accounting of funds from a real estate transaction. It is an itemized statement of services and charges relating to the closing of a property transfer. The buyer has the right to examine the settlement statement 1 day before the closing. This is called the HUD 1 Settlement Statement.
A loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.
Subordination is the process of moving a lien from higher priority to a lower position. The subordination agreement is a contract by which an encumbrance is made subject to a junior encumbrance; a lender with a loan in second position agrees to stay in second position on the property, even when the loan in first position has been rewritten or refinanced.
These are loans where the borrower has less than perfect credit or some other qualification restriction that may prevent them from qualifying for a conforming loan. An industry term to used to describe loans with less stringent lending and underwriting terms and conditions. Due to the higher risk, sub-prime loans charge higher interest rates and fees.
A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Surveys are conducted by licensed surveyors and are normally required by the lender in order to confirm that the property boundaries and features such as buildings, and easements are correctly described in the legal description of the property.
A debt attached or obligated to be paid on a property for failing to pay real estate taxes.
A charge by the mortgage lender required to assure that all tax billings are paid on the right tax parcel. FHA and VA do not allow the borrower to pay the tax service fee on mortgage loans.
The period of time during which a loan is repaid. Maturity of the home loan expresed generally in either months or years.
The right to ownership in real estate, which is transferred by a deed. Title is generally referring to the written evidence of ownership in real estate.
Insurance coverage that compensates the insured for any loss caused by legal defects of title.
The process of verifying property ownership and checking all the records relating to the title to see that it doesn’t have any liens or claims against it that would keep it from being transferred.
Fees a buyer or seller pays a municipality to for the cost of recording a transfer of ownership.
State and local taxes charged for the transfer of real estate. Usually equal to a percentage of the sales price. These taxes are imposed by the municipality, not all states or local muncipalities impose a transfer tax.
Federal law passed by Congress in 1969 that requires mortgage lenders to disclose certain terms regarding the extension of credit. The act obligates a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan. The act further requires mortgage lenders to disclose in writing the total finance charge on the home loan, the conditions under which the charges are imposed, the method of calculating the finance charges and must reflect the finance charge as an annual percentage rate.
The process of verifying data and evaluating a loan application to determine the risk involved. Underwriting involves an analysis of the borrower’s ability and willingness to repay the debt and the value of the property.and the application of criteria specified by a lender. The evaluation may include a review of the potential borrower’s credit history, a judgment of the property value, employment history, monthly income, financial assets as well as other factors.
A loan that is not secured by any form of collateral. An assignment of collateral, that would be found on mortgage loans to secure the property as collateral, does not exist with an unsecured loan.
Fees charged to homeowners by the lender or mortgage broker at the time of closing a mortgage loan. Upfront charges may include points, broker’s fees, processing fees, and other charges.
A home loan guaranteed by the Department of Veterans Affairs. The Veteran’s Administration insures the lender against losses that may incur due the applicants default. Available only to veterans possessing a Certificate of Eligibility.
An interest rate that changes periodically in relation to a predetermined index. Payments on a loan may increase or decrease as a result of the changing index. Adjustable rate mortgages and home equity lines of credit are variable rate loans. See also Adjustable Rate Mortgage.
In regards to real estate this a special exemption of a zoning law to allow the property to be used in a manner different from an existing law.