Down payment (or downpayment) is a payment used in the context of the purchase of expensive items such as a car and a house, whereby the payment is the initial upfront portion of the total amount due and it is usually given in cash at the time of finalizing the transaction. A loan is then required to make the full payment.
Usually, owners of townhouses or condos are required to pay the homeowners association dues, to pay for services related to the property such as, landscaping, trash removal snow plowing, pool maintenance, and hazard insurance.
Home insurance, also commonly called hazard insurance or homeowner's insurance (often abbreviated in the real estate industry as HOI), is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory. It requires that at least one of the named insureds occupies the home.
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. Specifically, the interest rate is a percent of principal paid at some rate.
Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party. Check with your professional insurance agent to look into what kind of coverage do you need to protect yourself and visitors while they are on your property and using your property.
Any claim against a piece of property resulting from a debt or other obligation. You sometimes see this term in the phrase mechanic's lien where vendors perform work and provide products on home repairs and are not paid, thereby leaving a mechanic's lien on the property repaired. Check with your title company to see how to protect yourself.
Any asset which can be quickly converted into cash at little or no cost, or cash itself. Common investments that fall into this category are checking, savings, money market at banks, money markets at investment firms, cash in profit sharing accounts and good old green backs themselves.
Loan servcing involves the processing of loan payments, mailing of monthly loan statements, management and disbursement of escrow funds etc. Typically carried out by the company you make payments to. Always compare your annual recap of escrow payments to your loan statements to make sure all the payments are being made correctly by your loan servicer. If your loan servicing is SOLD and moved to another servicer, please make sure you get proper notice in writing and that you check balances in your escrow account to make sure all funds you have paid in monthly make it over to the new servicer.
The amount of a time set by the lender for a buyer to pay a mortgage. Standard loans have 30-year or 15-year terms.
The comparison of the amount owed on a mortgaged property to its fair market value. Many lenders have standard or mandatory loan to value ratios that you must have to qualify for the loan. Traditionally, the lower your loan compared to the value, the better your loan rate of interest may be, always check with your lender for all of your options.
An agreement between a lender and a borrower, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.
The amount of time the lender has guaranteed an interest rate to a borrower. There may be financial consequences and penalties if you do not honor the lock in period on your loan rate. Check with your lender for full details.
A deficiency that strongly impacts the usability and habitability of a house or a deficiency that may be very expensive to repair.
Once known as ''mobile homes,'' manufactured housing is any building which has been constructed off site, then moved onto a piece of real property. Please check with your lender to make sure you can get financing on this type of property.
The difference between the interest rate and the index on an adjustable rate mortgage.
Land whose value has been diminished due to some internal defect or external condition. In most cases, the cost to correct the flaw or condition is as much or more than the expected return from the property. Some things that can cause this kind of impact, are flood rezoning, toxic waste, runoff from toxic sites, neighboring property that has a direct and immediate impact on your property.
An umbrella organization that is made up of multiple, smaller home owner's associations. Often found in very large developments or condominium projects. You should always obtain copies of the full set of current rules and regulations when you are purchasing property within a development. If you are the seller, always request copies annually and attend their meetings to protect your property rights, otherwise a hand full of trustees are doing the work and they may not always be protecting your rights, but what works best for them. Documents like these should be reviewed by your legal council.
The date on which the principal balance of a financial instrument becomes due and payable.
A credit report derived from data obtained from multiple credit agencies. Since some creditors report to only one credit bureau, some lenders are now reviewing a merged credit score averaged from the three credit reporting bureau systems to get a fair feel for the credit worthiness of borrowers.
A traditional way of describing property, generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to its origin. Feel free to speak with a land surveyor to learn more about the terminology involved in doing surveys.
The accumulated land in and around a city or other municipality which falls under the political and economic influence of that entity.
The legal right to exploit and enjoy the benefits of any minerals located below the surface of a parcel of land. When you are purchasing land you should always investigate to make sure your mineral rights are still remaining with the property. Check with your legal advisor and title company on how to check the records.
A statement by one party in a transaction that is incorrect or misleading. Most misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, some are rendered through simple mistakes, oversights or negligence.
A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.
A financial institution that provides primary and secondary mortgages to home buyers.
A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.
Mortgage insurance, also known as mortgage guarantee, is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.
A fee that is often included in mortgage payments that pays for mortgage insurance coverage. Sometimes you may also hear the terminology private mortgage insurance PMI
A policy that fulfills the obligations of a mortgage when the policy holder dies. This is typically purchased through the lender. Borrowers can also purchase a life policy protecting their dependents through their own insurance agent. This then allows the dependent the choice of either paying off the mortgage, or investing the money to assist in income that is now gone due to the death of the loved one. As always consult your financial advisor and look at both sides for the right choice for you.
The entity that lends money in a real estate transaction.
The entity that borrows money in a real estate transaction.
Any collection of buildings that are designed and built to support the habitation of more than four families. Financing and terms are different than single family residences when you are purchasing and financing multi-family units as they are typically considered investment property, requiring a larger down payment as well as shorter repayment terms.
A non profit professional association organized in 1982, dedicated to the advancement of professionalism in real estate appraisal.
An organization founded in 1956 which promotes standards of professionalism in its members.
The percentage of vacant properties in a given area that is the result of natural turnover and market forces.
Negative amortization is when the balance of a loan increases instead of decreases. This is usually due to a borrower making a minimum payment on an Adjustable Rate Mortgage during a period when the rate fluctuates to a high enough point that the minimum payment does not cover all of the interest.
A subsection of a municipality that has been designated by a developer, economic forces or physical formations. Clients are looking thoroughly to see what neighborhood they want to move into by doing online research. What makes your neighborhood inviting?
The evolution of neighborhood use and demographics over time. Economic fluctuations, municipal zoning changes and population shifts can effect the life cycle. Sometimes several people remodeling and updating their properties is enough to 'turn' the neighborhood into an attractive and viable solution for new purchasers.
The space in a development, outside of the common areas, that can be rented to tenants.
An architectural style dating from early American history typified by a two-story building with clapboard siding.
Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it. Do you really think that there is NO COST to you, last time I checked nothing is free, be careful.
A loan with no "points". The interest rate on such a loan will be higher than a loan with points paid. Also sometimes refers to a refinance loan where closing costs are included in the loan. Do a thorough comparison of loans with points and their rate and overall cost of funds and loans that have no points and their rate of interest. Try to estimate how long you feel you will have the loan to see what you overall cost of the loan really is.
The use of land for purposes contrary to the applicable municipal zoning specifications. Often occurs when zoning changes after a property is in use.
Any asset which can not be quickly converted into cash at little or no cost or penalties.
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
The interest rate stated on a mortgage note. Interest rates can be fixed or variable depending on your legal documents.
Formal written notice from a lender to a borrower that default has occurred. Check with your legal advisor/attorney on what action you should or should not taken when receiving notices like these.
The process of an assets value diminishing due to the development of more desirable alternatives or because of the degradation of its capabilities. An example of this would be a a roof, a water heater that has reached its lifetime limit, perhaps even wiring is worn out and beyond its normal life time.
A physical presence within and control of a property. Is there someone living in the property?
The percentage of properties in a given area that are occupied. This percentage (%) is very important in multi-family living such as condos or villa groups. Lenders want to lend in areas where more units are owner occupied vs. tenant occupied. Owner occupied units traditionally have better payment patterns than tenant occupied units.
An outlet with too many devices plugged into it, using a power strip or other device to multiply the outlets.
Buildings, structures or other amenities which are not located on a piece of property, but are necessary to maximize the use of the property or in some way contribute to the value of the property.
Designated parking spaces associated with a particular building or other structure which are not located on public streets. Many times you may have parking in the alleyway or other common areas.
Where no termites are currently active, but indications of past activity can be seen. Check this out with your local pest inspection company and home inspector service.
Buildings, structures or other amenities that are erected on a piece of property and contribute to its value. Sometimes included in this when assessing value for purchasing or selling real estate would be items like working deep wells, updated septic systems, electrical pulled to the property by provider and more.
Any land which has not had any significant buildings or structures erected on it. Most often used to describe desirable neighborhood features like parks.
An uncovered electrical connection. These should be always checked out by a licensed and experienced electrician to make sure the wiring is safe.
The amount of cash a home buyer initially invests in the home or has down based on the purchase price or appraised value.
The total amount of principal owed on a mortgage loan at the time of closing.
Refers to the total number of points paid by a borrower at closing. One point or one original fee is equal to 1% of the amount financed.
A transaction where the property owner provides all or part of the financing. Sometimes in order to make a property able to sell, the current owner will 'carry' a note and attached deed of trust for a portion or all of the sales proceeds. There can be tax benefits to do this as well as legal issues to be understood and explained by appropriate legal and tax advice.
The state of property wherein the owner occupies at least some portion of the property. This can be pertinent in both residential and commercial properties.
The cement coat applied to block foundations.
A shared ownership in a piece of property. May be divided among two or more parties. Contact your attorney or title company to better understand options on property ownership so that you can be prepared to do proper estate planning as well as family planning on distributions and such.
A payment of less than the regular monthly amount. Usually, a lender will not accept partial payments. Check with the loan servicer of your loan to see what the process is in order to make continuous partial payments on your loan.
The limit on how much regular monthly payments on an Adjustable Rate Mortgage can change during one adjustment period. In simple terms, "How much can my monthly payment go up or down?" Always know your RISK when you sign on a loan document.
The limit on how much the interest rate on an Adjustable Rate Mortgage can change during any one adjustment period. If you are in an adjustable rate mortgage loan on your residence, please discuss this with your lender to see when you adjust, how much you can adjust per adjustment period, and what is the financial base that is used to determine your adjustment.
Owned items which are not permanently affixed to the land When purchasing or selling real estate, items indicated in your contract that are part of the transaction they may or may not have any financial value are items like: Stove, refrigerator(s), window air conditioning units, household furniture, dishwasher, dock, lawnmowers (riding or push), boats, tools, and more.
The primary domicile of a person or family.
A coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.
A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements. Many municipalities have electronic resources that they can print out for you to show your city properties and how they lie. County government offices also have access to land parcels and the records for buyer and sellers to access when they are anticipating selling or purchasing real estate.
A percentage of a mortgage amount (one point = 1 percent). Check with your tax advisor professional to find out what, if any, of your closing costs are taxable and reportable when you are purchasing and selling real estate.
The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with sellers. Sellers want to know at the very beginning that they have a ready, willing and able buyer.
This is such a CRITICAL piece in the negotiation of a contract on the purchase and sale of real estate. When buying you should not even GO SHOPPING for a home unless you know for a fact that you are qualified to purchase a home and how much money as well. When selling, you should get a letter from their lender that they are good for the loan based on all materials and documents supplied at that point including tax returns, paystubs, investment records and more. That way buyers and sellers don't get emotionally disappointed and frustrated if the loan does not go through or substantial changes have to be made in the contract.
Any building or portion thereof which is manufactured and assembled off site, then erected on a property.
Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized. Many clients find it extremely beneficial to pay extra each month on their monthly payments to save not only interest but to shorten considerably their loan length of time. Overall, anything you can do to pay down your principal is always in your favor in a normal traditional loan scenario.
A fee that may be charged to a borrower who pays off a loan before it is due. When you are applying for any loan make sure you ask and READ clauses within the document that address this issue and how the penalties, if any, are calculated.
The interest rate that banks and other lending institutions charge other banks or preferred customers. Many home equity credit lines of credit are based on a rate of interest that floats adjusted as Prime Rate floats up and down giving most of the rate risk to the borrower instead of offering fixed rate financing.
This is the amount of money that you originally borrowed from the bank or financial institution. Each month you pay a certain portion of this back based on your original term. On a residential loan, the typical period of time or amortized period is 30 years or 360 calendar months. You pay a portion of principal back each of those 360 months. This amount does not have any interest or other fees within it, it is strictly a portion of the principal you originally borrowed.
The outstanding balance of principal on a mortgage. Does not included interest due.
These are the FOUR most common elements that make up the traditional house payment. Principal, interest to the lender, real estate taxes and homeowner insusrance. The real estate taxes for the year are divided by 12 months to determine that portion of the payment. The homeowner insurance for the year is divided by 12 months to determine that portion of the payment. These four units added together compose the most common constituents of a monthly mortgage payment.
A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%. PMI insurance is priced on risk and overall exposure of the insurance company insuring the loan based on a risk factor. Consult with your professional lenders to determine what options you have to pay this off, or reduce your loan amount to avoid PMI insurance in general.
Any item which is owned or possessed.
A property tax (or millage tax) is a levy on property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state, a county/region, or a municipality. Multiple jurisdictions may tax the same property.
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. Outlining all the details of the transaction in a clear and concise manner in writing and signed and dated by both parties leads to a smooth and easy real estate closing and transaction. Hiring a professional real estate agent to assist with the purchase agreement contract is advisable.
Any building designed to accommodate four families or groups of people living under one building's rooftop.
Typically there are two key lending ratios for qualifying people for loans and the overall credit/income worthiness of the borrower(s) applying for a home mortgage. The first one is called the front end ratio which is the ratio of a borrower's monthly housing costs to gross monthly income. The second one is referred to as the back end ratio which compares all of the current and anticipated monthly debt to the gross monthly income. This helps identify to the borrowers and the lender the overall financial snapshot of the borrower and how much they have going out NET with relationship to their GROSS monthly household income.
A legal document which transfers any ownership an individual has in a piece of property. Often used when the amount of ownership is not known or is unclear.
A structural element of the roof, sloping from the peak to the outer walls. Rafters should be spaced to support the weight of your roof along with other outside nature items such as ice, snow and such. Consult with a professional builder versed in all aspects of construction when you are building or remodeling your home or commercial buildings.
An architectural style of a single family residence. Traditionally it is all under one level of a lower leveled rooftop, one level living with very little if any stairs. This style is very popular in the western United States. This style does take up a larger land footprint and can be depending on your builder's cost estimate, more expensive than a two story since you are going UP not OUT to increase your overall square footage of living space.
A guarantee from a lender of a specific interest rate for a period of time. Traditionally a rate lock is for a specified period of time and there may be financial consequences to the lender and the buyer if the loan is not closed and delivered to the 'market' on time. Paying attention to rate locks is important as you work your way through the closing process with your real estate agent and your banking lender.
Any land which has not been developed or improved of any sort.
A piece of land and any improvements or fixtures located on that land. Buying and selling real estate is an exciting time in the life of residents. Hiring a professional real estate agent to assist is critical to help manage the overall process.
A licensed professional who facilitates the buying and selling of real estate
A federal law requiring lenders to give full disclosure of closing costs to borrowers.
Land, improvements and appurtenances, and the interest and benefits thereof.
A real estate agent or broker who is a member of the NATIONAL ASSOCIATION of REALTORSÂ®. This Association works very hard to protect the real estate industry as a whole and the benefits that millions of homeowners enjoy because of the efforts of its members and volunteers throughout the country.
An electrical outlet to plug into. There are various types used for indoors and outdoors with various forms of grounding as well. Please consult with a licensed electrician on your electrical questions and concerns.
A local government employee whose role it is to keep records of all real estate transactions within the jurisdiction. Traditionally, this is a county government position that is either elected or appointed.
The filing of a real estate transaction with the appropriate government agent (normally the RECORDER of DEEDS office in the county where the real estate is located within). A real estate transaction is considered final when it is recorded. The Recorder of Deeds office will typically give your documents a Book and Page Number that identifies the document available for general public review.
A new loan to pay off an existing loan. This is done typically to gain a lower interest rate or convert equity into cash. Many people use the equity they have built up in their primary residence to use toward the down payment or purchase of a second vacation home, investment property or other long term asset purchases.
Where air from a furnace or air conditioning system enters the room.
Any company or agency that assists corporate employees in relocating from one place to another. Services may include hiring and coordinating real estate agents, moving companies, utilizes and the like.
The amount of principal, interest and other costs that has not yet been repaid.
The amount of time remaining on the original amortization schedule for a loan repayment. In other words, how much longer do I have to make this payment?
An activity designed to improve the value or desirability of a property through rebuilding, refurbishing, redecorating or adding on to it.
A plan to repay delinquent payments, agreed upon between a lender and borrower, in an effort to avoid foreclosure.
An account, or fund, setup for the replacement of short life items, such as carpeting, in the common areas of a cooperative property. This would be very acceptable to have in an area like a small condo group or subdivision and you are putting money aside for road repairs, snow removal and items such as that.
A piece of property whose highest and best use is the maintenance of a residence.
A type of credit that allows the borrower/customer to make charges against a predetermined line of credit. The customer then pays monthly installments on the amount borrowed, plus interest.
The structural member of a roof where the rafters join at the top.
An agreement giving a person the first opportunity to buy or lease a property before the owner offers it for sale to others.
The degree of slope in a roof.
An area outside of an established urban area or metropolitan district. If you want to add a bit of humor, you can refer to the city mouse and the country mouse.
The actual price a property sells for, exclusive of any special financing concessions.
An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently.
An economic principal that dictates the price of a good or service through the interaction of supply and demand. When an item is scarce, its price tends to rise, given a constant demand. Real Estate is a classic example of scarcity.
A loan secured by the equity in a home, when a primary mortgage already exists.
An economic marketplace where mortgage bankers buy and sell existing mortgages.
A loan that is backed by collateral. In the case of a mortgage loan, the collateral is the house.
The property used as collateral for a loan.
Two residences which share a common wall.
A financial institution which collects mortgage payments from borrowers and applies the appropriate portions to principal, interest and any escrow accounts.
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.
The covering on outside walls beneath the siding or exterior finish such as stucco.
Also called drywall, the gypsum board commonly used on interior walls.
Garden hose pipe connection.
The lumber used around the foundation to support exterior wall framing.
A property designed and built to support the habitation of one family.
The underside of a cornice at the eaves.
A textured plaster exterior (and occasionally interior) wall finish.
A vertical framing piece in a wall, generally 2x4 lumber in interior walls.
A residential development that is created from a piece of land which has been subdivided into individual lots.
A term which indicates a property which is being appraised.
A basin into which water drains and from which the water is pumped out.
A specific map of a piece of property which includes the legal boundaries and any improvements or features of the land. Surveys also depict any rights-of-way, encroachments or easements.
The method whereby a home owner develops equity in a property, either during the purchase or throughout its life, by personally constructing improvements rather than paying to have them built. Donna has done this on at least eight properties, and YES, you do sweat while you are working that hard on something you love.
Any property which is not taxed.
The right to occupy a building or unit.
A form of holding title, whereby there are two or more people on title to a property, ownership does not pass on to the others upon the death of one individual.
When a lender uses a third party to originate and package loans for sale to the secondary market (Fannie Mae, Freddie Mac)
A specific document which serves as proof of ownership.
An organization which researches and certifies ownership of real estate before it is bought or sold. Title companies also act at the facilitator ensures all parties are paid during the real estate transaction.
A policy which insures a property owner should a prior claim arise against the property after the purchase has been completed. This also covers a lender should a question of ownership arise.
The process whereby the TITLE COMPANY researches a properties title history and ensures that no outstanding claims exist. Have the title research tell you who owns what since when, and that helps you know if you are getting clear title to your property.
Any means by which the ownership of a property changes hands. This can be done with items such as general warranty deeds, quitclaim deeds and such. See your local title company or attorney for more details and specifics for your references needed.
Taxes payable when title passes from one owner to another.
A bend in water pipe used to help prevent sewer gases from coming up into the property.
A fiduciary that holds or controls property for the benefit of another.
A federal law requiring full disclosure by lenders to borrowers of all terms, conditions and costs of a mortgage.
A style of architecture typified by exposed stone, wood and brick construction. Similar in style to English manor homes.
A piece of land which has been improved, but not to the full extent of its potential.
Any property which has no outstanding claims or liens against it.
Developed in 1986 by the Ad Hoc Committee on Uniform Standards and copyrighted in 1987 by The Appraisal Foundation, USPAP forms the guidelines followed by every licensed and certified real estate appraiser in the United States. The purpose of these Standards is to establish requirements for professional appraisal practice, which includes appraisal, appraisal review, and appraisal consulting. The intent of these Standards is to promote and maintain a high level of public trust in professional appraisal practice.
The span of time over which a property can be used or can provide benefits to its owner.
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).
The current percentage of vacant properties in a given area, regardless of why they are vacant.
An exception to municipal zoning regulations granted for a specific time period to allow for non-conforming use of the land.
A pipe allowing gas to escape.
Having the right to use a portion of a fund such as an IRA. Typically vesting occurs over time. If you are 100% vested, you have a right to 100% of the fund.
The successor to the Veteran's Administration, this government agency is responsible for ensuring the rights and welfare of our nation's veterans and their dependents. Among other duties, the VA insures home loans made to veterans.
An expression of electric force, or pressure. One volt being the force needed to move one amp against one ohm resistance.
A process whereby an appraiser examines a property in preparation for estimating its value. Also, the process of inspecting a property for any damage prior to that property being bought or sold.
An affidavit given to stipulate the condition of a property. The person giving the warranty assumes liability if the condition turns out to be untrue.
An expression of amount of electrical power. Volt times amps equals watts.
A term used to indicate the normal damage inflicted on a property through every-day use.
Material used around windows and doors to prevent drafts.
Drainage hole that allows water to escape.
A municipal zoning category wherein a building or other fixture may abut the property line.
A specific area within a municipality or other jurisdiction which conforms to certain guidelines regarding the use of property in the zone. Typical zones include single-family, multi-family, industrial, commercial and mixed