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Roy Wysack - Realtor, ABR, e-PRO, SFR
Keller Williams Realty - Plymouth/Canton
40600 Ann Arbor Road, Suite 100
Plymouth, MI 48170
Cell: 734.629.7222
Fax: 888.807.7832
Roy Wysack - Realtor, ABR, e-PRO, SFR Keller Williams Realty - Plymouth/Canton 40600 Ann Arbor Road, Suite 100 Plymouth, MI 48170 Cell: 734.629.7222 Fax: 888.807.7832 |
Glossary of Real
Estate Terms:
A B C
D E F
G H I
J K L
M N O
P Q R
S T U
V W X
Y Z
Adjustable Rate
An adjustable rate is an
interest rate that changes periodically, in relation to an index (usually the
prime rate). Payments may increase
or decrease accordingly.
Adjustment Date
An adjustment date is the date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period
The period that elapses between
the adjustment dates for an adjustable-rate mortgage (ARM).
Most states require agents to disclose who they represent, in writing, to all individuals they work with. Agents represent buyers as a Buyer’s agent, sellers as a Seller’s Agent, or both parties as a Dual Agent. Most of the time agents work for the sellers, the party that gave them the listing. Buyers therefore need to watch what they say to a seller’s agent, as it is the Agents responsibility to convey that information to the Seller.
Agent
A
Real Estate Agent is an individual licensed by the state to list, show, and sell
real estate in that state. Real
Estate Agents must work for a Real Estate Broker.
American National Standard
Z765-1996 –
In April, 1996 the American National Standards Institute (ANSI) adopted a standard for measuring single-family residential buildings. American National Standard Z765-1996 was developed through a process of consensus among a wide variety of participants. These included the American Institute of Architects, the Appraisal Foundation, the Building Owners and Managers Association, the Manufactured Housing Institute, the National Association of Realtors, Fannie Mae, Freddie Mac, HUD and others.
Amenities
Amenities are features that enhance and increase the value or desirability of a
property.
Amortize
To
pay a debt in installments until the total amount, including any interest, is
paid. Installments include
principal and interest.
During the first few years,
most of each payment is applied toward the interest owed.
During the final years of the loan, payment amounts are applied almost
exclusively to the remaining principal. Ask
your lender for an amortization statement of your loan.
A repayment method in which the
amount borrowed is repaid gradually though regular monthly payments of principal
and interest.
Each successive installment pays more toward the principal and less interest as
the payment schedule progresses.
Click here to do an amortization online.
Amortization Term
The amount of time required to
amortize the mortgage loan. The
amortization term is expressed as a number of months -- for example, for a
30-year fixed-rate mortgage, the amortization term is 360 months.
Annual Membership
An amount that may be charged
annually for having a line of credit available.
Often charged regardless of whether or not you use the credit.
Also referred to as a "participation fee."
Annual Percentage Rate (APR)
The cost of credit on an
annualized basis, expressed as a percentage.
Required to be disclosed by the lender under the
Federal
Truth in Lending Act, Regulation Z.
The APR includes up-front costs paid to obtain the loan, and is
therefore, usually a higher amount than the interest rate stipulated in the
mortgage.
Application
A form, referred to as a 1003
form, used to apply for a mortgage and to provide personal and financial
information regarding a prospective mortgagor and the proposed security, which
is required to approve your loan.
Application Fee
Fees that are paid upon
application.
An application fee may include charges for property appraisal ($200-$400)
and a credit report ($30-50).
Appraisal
An appraisal is an expert or
official valuation by a licensed appraiser to render an opinion of property
value as of a specific date. An
appraisal is required by most lenders to obtain a loan.
Appraiser
An appraiser is a person
qualified by education, training, and experience to estimate the value of real
property and personal property and is licensed by the state where they practice.
Appreciation
Appreciation is the increase in value of a property due to changes in market
conditions or other causes.
ARM
(Adjustable Rate Mortgage)
A
financing technique in which the lender can raise or lower the mortgage interest
rate according to a set index, such as six-month Treasury bills.
Assessment
An
official valuation of property for tax purposes.
Payments made by condominium or
cooperative owners for their share of building maintenance expenses.
Asset
An asset is anything of
monetary value that is owned by a person. Assets
include real property, personal property, and enforceable claims against others
(including bank accounts, stocks, mutual funds, and so on).
Assignment
Assignment is the transfer of a
mortgage from one person to another.
Assumption Clause
An assumption clause is a
provision in an assumable mortgage that allows a buyer to assume responsibility
for the mortgage from the seller. The loan does not need to be paid in full by
the original borrower upon sale or transfer of the property.
Assumption Fee
The fee paid to a lender
(usually by the purchaser of real property) resulting from the assumption of an
existing mortgage.
Assumption of Mortgage
The agreement of a purchaser to
become primarily liable for the payments on a mortgage loan.
Unless otherwise specified by the
lender, the seller may remain secondarily liable for payments.
Attorney – See
Real Estate Attorney
Balance Sheet
A balance sheet is a financial
statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage
A mortgage that has level
monthly payments that will amortize it over a stated term but requires a lump
sum payment to be due at the end of an earlier specified term.
Balloon Payment
A lump sum payment for the
unpaid balance of a loan due at a specific time.
Bankruptcy
A proceeding in a federal court
in which an entity debtor who owes more than its assets can relieve the debts by
transferring its assets to a trustee.
Before-Tax Income
Gross incomes before federal
and state taxes are deducted.
Beneficiary
The person designated to receive the assets or income from a trust, estate, or a
deed of trust.
Binder
A preliminary agreement, secured by the payment of an earnest money deposit,
under which a buyer offers to purchase real estate.
Biweekly Payment Mortgage
A mortgage that requires payments to reduce the debt every two weeks (instead of
the standard monthly payment schedule).
The 26 (or possibly 27) biweekly
payments are each equal to one-half of the monthly payment that would be
required if the loan were a standard 30-year fixed-rate mortgage, and they are
usually drafted from the borrower's bank account.
The result for the borrower is a
substantial savings in interest over the period of the loan.
Blanket Mortgage
The mortgage that is secured by a cooperative project, as opposed to the share
loans on individual units within the project.
An Association of Realtors in
your locality.
The Board of Realtors is a professional association of
real estate professionals designated as "Realtors" as opposed to real estate
sales agents. The Realtors meet to share real estate information, offer
support, and exchange expert knowledge.
They pay dues to share a Multiple Listing Service that is managed by the
Board. Realtors are bound to a code
of ethics published by their local board of Realtors, and Real Estate Agents are
not. The Board or Realtors regulates ethics and controls and monitors any
complaints about Realtors. You cannot be a "Realtor" unless you belong to a
Board. They have higher standards of practice for real estate agents than the
State has. The Board polices their members for compliance with the Code of
Ethics. Also see
National Association of Realtors (NAR).
Bond
A bond is an interest-bearing
certificate of debt with a maturity date.
An obligation of a government or business
corporation. A real estate bond
is a written obligation usually secured by a mortgage or a deed of trust.
Breach
A violation of any legal
obligation.
Bridge
Loan
A form
of second trust that is collateralized by the borrower's present home (which is
usually for sale) in a manner that allows the proceeds to be used for closing on
a new house before the present home is sold. Also
called a "swing loan."
Broker
A
broker is an independent business person who sets real estate office policies,
hires employees, determines their compensation, and supervises their activities.
A person who, for a commission or a fee, brings
parties together and assists in negotiating contracts between them.
Real Estate Brokers must be licensed by their state.
Buy-down Mortgage
A
temporary buy-down is a mortgage on which an initial lump sum payment is made by
any party to reduce a borrower's monthly payments during the first few years of
a mortgage. A permanent buy-down reduces
the interest rate over the entire life of a mortgage.
Buyer’s Agent
An
agent who represents the buyer in a real estate transaction and has a
Fiduciary Duty to the buyer only.
A buyer’s agent's commission is paid by the seller for all property
listed on the MLS, so it does not cost a buyer anything to sign a contract with
a buyer's agent. In the case of buying from a FSBO, as your buyer's agent,
I will negotiate that the commission (usually half of a normal listing
commission), be paid by the seller. Almost all FSBOs are happy to co-broke
with a buyer's agent this way.
A buyer’s market is very good
for buyers and bad for the
seller because there is more supply of homes for sale than there are buyers for
them. Obviously this drives the
price down and makes it hard for a seller to compete with other homes on the
market. The home that is priced below the
market for comparable homes will sell first. Besides selling for less,
sellers may even have to come up with other buyer incentives or pay a portion of
the closing costs (called 'financial concessions).
Call Option
A call option is a provision in
the mortgage that gives the mortgagee the right to call the mortgage due and
payable at the end of a specified period for whatever reason.
Cap
The maximum allowable increase,
for either payment or interest rate, for a specified amount of time, on an
adjustable rate mortgage.
Capital Improvement
Any structure or component
erected as a permanent improvement to real property that adds to its value and
useful life.
Cash Out
Receiving money back when
refinancing your present mortgage
Cash-Out Refinance
A refinance transaction in
which the amount of money received from the new loan exceeds the total of the
money needed to repay the existing first mortgage, closing costs, points, and
the amount required to satisfy any outstanding subordinate mortgage liens.
In other words, a refinance transaction
in which the borrower receives additional cash that can be used for any purpose.
Ceiling
The maximum allowable interest
rate over the life of the loan of an adjustable rate mortgage.
Certificate of Eligibility
A document issued by the
federal government certifying a veteran's eligibility for a Department of
Veterans Affairs (VA) mortgage.
Certificate of Reasonable Value
(CRV)
A document issued by the
Department of Veterans Affairs (VA) that establishes the maximum value and loan
amount for a VA mortgage.
Certificate of Title
A statement provided by a
Title Company or attorney stating that the
title to real estate is legally held by the current owner and is free from liens
or encumbrances.
Chain of Title
The history of all of the
documents that transfer title to a parcel of real property, starting with the
earliest existing document and ending with the most recent.
Change Frequency
The frequency (in months) of
payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
Clear Title
A title that is free of liens
and encumbrances, or other legal questions as to ownership of the property.
A title that is good and marketable.
Also see Title
Company and Title Insurance.
CLO
(Computerized Loan Origination)
A
computer network of major lenders that allows agents to initiate mortgage
applications in their office. HUD
has approved the procedure as long as 1) full disclosure is made of the fee; 2)
multiple lenders are displayed on the computer screen to give borrowers a basis
for comparison; 3) the fee charged is a dollar amount rather than a percentage
of the loan.
Closing
A
closing is a meeting at which a sale of a property is finalized by the buyer
signing the mortgage documents and paying closing costs.
Also called
"settlement."
Closing Cost Item
A
fee or amount that a home buyer must pay at closing for a single service, tax,
or product.
Closing costs are made up of individual
closing cost items such as origination fees and attorney's fees.
Many closing cost items are included as
numbered items on the HUD-1 statement.
Any fees paid by the borrowers
or sellers during the closing of the mortgage loan.
This normally includes an origination fee, discount points, attorney's
fees, charges for obtaining title insurance, surveying fees, recording fees,
deeds, affidavits, and any items which must be prepaid, such as taxes and
insurance escrow payments.
The final statement of costs
incurred to close on a loan or to purchase a home.
Also referred to as the HUD1.
Any conditions revealed by a
title search that adversely affect the title to real estate.
Usually clouds on title cannot be
removed except by a quitclaim deed, release, or court action.
CMA (Comparative Market Analysis)
A
method of determining the value of a property by comparing the prices paid for
similar properties.
The analysis is normally done
by a real estate agent who has easy access to area sales records. A CMA is an
informal assessment of a property's market value compared to a professional
opinion that an licensed appraiser provides.
For a CMA, the price is established by comparing the property to similar
properties that have sold in the area within the past year.
Adjustments are then made to those selling prices by adding or
subtracting estimated costs of improvements, upgrades, or condition of the
property that is compared, comparing to cost per square foot calculations, and
also comparing to State Equalized Valuations of similar properties.
Homeowners may find some
pricing information by visiting their county courthouse, but without experience
in the housing market, adding and subtracting value based on the homes features
or condition may prove difficult for the novice.
For instance, features like central air or in-floor heat can add a lot of
value to a home compared to one that doesn’t have those features.
Likewise, improvements like decks, updated cabinets, plumbing, and so on
have a lot of value and should be a major consideration when pricing your home.
Finally, the condition of a home has a lot of weight in determining the actual value. Professional inspectors look more closely at mechanical items like the furnace and A/C, and will look at the foundation, windows, roof and other features to check for the condition.
A
written standard of ethical conduct embraced by the NATIONAL ASSOCIATION OF
REALTORS®, a trade organization of more than 700,000 members representing all
branches of the real estate industry.
See more at Board of Realtors.
Collateral
An
asset, such as a car or a home, that guarantees the repayment of a loan.
The borrower risks
losing the asset if the loan is not repaid according to the terms of the loan
contract.
Co-Maker
A
co-maker is a person who signs a promissory note along with the borrower.
A co-maker's signature guarantees that
the loan will be repaid, because the borrower and the co-maker are equally
responsible for the repayment. Also see
endorser.
Collection
The efforts used to bring a delinquent mortgage current and to file the
necessary notices to proceed with foreclosure when necessary.
Commission
Compensation paid to a real estate agent (usually by the seller) for services
rendered in connection with the sale, exchange, or lease of property.
Commission is typically 6 percent of the sales price, and is split 4
equal ways to the Listing Broker, the Listing Agent, the Selling Broker, and the
Selling Agent. A single ‘Broker’ that
lists and sells the property can theoretically collect
the entire commission, as there is no one else to split it with.
Commitment Letter
A
formal offer by a lender stating the terms under which it agrees to lend money
to a home buyer. It is also known as a
"loan commitment."
Common Areas
Those portions of a building, land, and amenities owned (or managed) by a
planned unit development (PUD) or condominium project's homeowners' association
(or a cooperative project's cooperative corporation) that are used by all of the
unit owners, who share in the common expenses of their operation and
maintenance. Common areas include
swimming pools, tennis courts, and other recreational facilities, as well as
common corridors of buildings, parking areas, means of ingress and egress, etc.
Community Home Improvement Mortgage Loan
An
alternative financing option that allows low- and moderate-income home buyers to
obtain 95 percent financing for the purchase and improvement of a home in need
of modest repairs. The repair work can
account for as much as 30 percent of the appraised value.
Community Property
In
some western and southwestern states, a form of ownership under which property
acquired during a marriage is presumed to be owned jointly unless acquired as
separate property of either spouse.
Comparables
An
abbreviation for "comparable properties"; used for comparative purposes in the
appraisal process. Comparables are
properties like the property under consideration; they have reasonably the same
size, location, and amenities and have recently been sold.
Comparables help the appraiser determine
the approximate fair market value of the subject property.
Condominium (Condo)
Individual ownership of a portion of a building, with common areas shared by all
owners.
Maintenance fees called "assessments" are paid to the condominium
association to maintain, repair, or improve the property.
Condominium Conversion
Changing the ownership of an existing building (usually a rental project) to the
condominium form of ownership
Conforming Loan
A conforming loan is a mortgage
loan that conforms to regulatory limits such as loan-to-value ratio, term, and
other characteristics. A conforming
loan is generally, a mortgage loan under $203,150.
Qualifying ratios and underwriting methods are standardized to a large
degree.
Construction Loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Consumer Reporting Agency (or
Bureau)
An organization that prepares
reports that are used by lenders to determine a potential borrower's credit
history.
The agency obtains data for these
reports from a credit repository as well as from other sources.
A condition that must be met
before a contract is legally binding. For
example, home purchasers often include a contingency that specifies that the
contract is not binding until the purchaser obtains a satisfactory home
inspection report from a qualified home inspector.
A legally enforceable agreement between two or more parties.
A promise or a set of promises for the breach of which the law gives a
remedy, or the performance of which the law in some way recognizes as a duty,
including but not limited to a note, promissory note or provisions of any trust
deed.
Contract of
A Contract of
Conventional Loan
A
fixed-rate, fixed term loan that is not insured by the government.
Convertibility Clause
A
provision in some adjustable-rate mortgages (ARMs)
that allows the borrower to change the ARM to a fixed-rate mortgage at specified
timeframes after loan origination.
Convertible ARM
An
adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage
under specified conditions.
Co-operative (Co-op)
An
arrangement in which a corporation made up of residents owns a building.
The buyer owns a proprietary lease, rather than real property, and a
corresponding number of shares in the corporation.
Corporate Relocation
Arrangements under which an employer moves an employee to another area as part
of the employer's normal course of business or under which it transfers a
substantial part or all of its operations and employees to another area because
it is relocating its headquarters or expanding its office capacity.
Cost
of Funds Index (COFI)
An
index that is used to determine interest rate changes for certain
adjustable-rate mortgage (ARM) plans.
It represents the weighted-average cost of savings, borrowings, and
advances of the 11th District members of the Federal Home Loan Bank of
Counter Offer
A
counter offer is a new offer as to price, terms, and conditions, made in
response to a prior, unacceptable offer.
A counter offer terminates an original offer.
Covenant
A
clause in a mortgage that obligates or restricts the borrower and that, if
violated, can result in foreclosure.
Credit
An
agreement in which a borrower receives something of value in exchange for a
promise to repay the lender at a later date.
Credit Bid
A bid made by the beneficiary in full or partial satisfaction of the contract or
contracts which are secured by the trust deed. Such credit bid may only include
an amount up to the full amount of the contract or contracts secured by the
trust deed, less any amount owing on liens or encumbrances with interest which
are superior in priority to the trust deed and which the beneficiary is
obligated to pay under the contract or contracts or under the trust deed,
together with the amount of other obligations provided in or secured by the
trust deed and the costs and expenses of exercising the power of sale and the
sale, including the trustee's fees and reasonable attorney fees actually
incurred.
Credit History
A record of an individual's open and fully repaid debts. A credit history helps
a lender to determine whether a potential borrower has a history of repaying
debts in a timely manner.
Credit Limit
The maximum amount that you can borrow under a home equity plan.
Credit Report
A report of an individual's credit history prepared by a credit bureau and used
by a lender in determining a loan applicant's creditworthiness.
Credit Repository
An organization that gathers, records, updates, and stores financial and public
records information about the payment records of individuals who are being
considered for credit.
CRS
(Certified Residential Specialist)
A
professional designation awarded to experienced agents who complete an advanced
course of study in residential real estate and demonstrate proficiency in sales
and production. CRS Designees are members of the Residential Sales Council, a
not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®.
Debt
An amount owed to another.
Debt Service
The total amount of credit
card, auto, mortgage or other debt upon which you must pay.
Deed
A deed is the legal document
conveying title to a property.
Deed-in-Lieu
A deed given by a mortgagor to
the mortgagee to satisfy a debt and avoid foreclosure.
Deed of Trust
The document used in some
states instead of a mortgage; title is conveyed to a trustee.
Default
Failure to make mortgage
payments on a timely basis or to comply with other requirements of a mortgage.
Delinquency
Failure to make mortgage
payments when mortgage payments are due.
Deposit
A sum of money given to bind
the sale of real estate, or a sum of money given to ensure payment or an advance
of funds in the processing of a loan.
Depreciation
A decline in the value of
property; the opposite of appreciation.
Disclosure
Reveals what previously was private knowledge.
Any statement of fact that is required by law.
Discount Points (or Points)
The amount paid either to
maintain or lower the interest rate charged. Each point is equal to one percent
(1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal
$2,000).
A domain name is the text name
corresponding to the numeric IP address of a computer on the Internet.
A domain name must be unique. Internet
users access a website using the domain name.
Every time a visitor accesses a page on the Internet, they are
downloading the contents of that page.
Down
Payment
The down payment is a percentage of the purchase price the buyer pays in cash
and does not finance with a mortgage.
Dual
Agent
An
agent representing both the Buyer and the Seller in a real estate transaction.
In almost every state, dual agency is illegal and unethical without the written
consent of both the buyer and the seller.
Due on
A clause in a mortgage
agreement providing that, if the mortgagor (the borrower) sells, transfers, or,
in some instances, encumbers the property, the mortgagee (the lender) has the
right to demand the outstanding balance in full.
Earnest Money
A
buyer's partial payment to the seller as a show of good faith in completing the
transaction.
Easement
A
right of way giving persons other than the owner access to or over a property.
Effective Age
An
appraiser's estimate of the physical condition of a building.
The actual age of a building may be
shorter or longer than its effective age.
Effective Gross Income
Normal annual income including overtime that is regular or guaranteed.
The income may be from more than one source.
Salary is generally the principal
source, but other income may qualify if it is significant and stable.
Effective Interest Rate
The cost of credit on a yearly
basis expressed as a percentage. Includes up-front costs paid to obtain the
loan, and is, therefore, usually a higher amount than the interest rate
stipulated in the mortgage note. Useful in comparing loan programs with
different rates and points.
A claim against a property by
another party which usually affects the ability to transfer ownership of the
property.
Endorser
A person who signs ownership
interest over to another party.
Contrast with co-maker.
Equal Credit
A federal law that requires
lenders and other creditors to make credit equally available without
discrimination based on race, color, religion, national origin, age, sex,
marital status, or receipt of income from public assistance programs.
Escrow
The closing of a real estate transaction through a
neutral third party who holds funds and/or documents for delivery after specific
conditions have been met. For
example, the deposit by a borrower with the lender of funds to pay taxes and
insurance premiums when they become due, or the deposit of funds or documents
with an attorney or escrow agent to be disbursed upon the closing of a sale of a
real estate transaction.
Escrow Analysis
The periodic examination of escrow accounts to determine if current monthly
deposits will provide sufficient funds to pay taxes, insurance, and other bills
when due.
Escrow Company
See Title and Escrow Company
Estate
The ownership interest of an individual in real property.
The sum total of all
the real property and personal property owned by an individual at time of death.
Equity
The difference between the
current market value (appraised value) of the house and the amount of the unpaid
mortgage.
Examination of Title
The report on the title of a
property from the public records or an abstract of the title.
Exclusive Listing
An
exclusive listing is a written agreement in which the seller appoints only one
agent to market the property for a specific period of time. If the owner sells
the property himself, he is not required to pay a commission.
Exclusive Right of
A
written agreement between an agent and a property owner stating that the owner
will pay a commission to the agent if the property is sold during a specific
time period--whether or not the agent is responsible for the sale.
Fair
Credit Reporting Act
A
consumer protection law that regulates the disclosure of consumer credit reports
by consumer/credit reporting agencies and establishes procedures for correcting
mistakes on one's credit record.
Fair
market value
The highest price that a buyer, willing but not compelled to buy, would pay, and
the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae (Federal National Mortgage Association)
Fannie Mae purchases home mortgages, thus serving as a source of funds for
mortgage lenders. It is a privately owned corporation whose shares are traded on
the
FHA
(Federal Housing Administration)
A
federal agency established to improve housing standards and conditions.
The FHA provides mortgage insurance to
approved lending institutions.
FHA Loan
More appropriately termed "FHA
Insured Loan." A loan for which the Federal Housing Administration insures the
lender against losses the lender may incur due to your default.
First Mortgage
A first mortgage is a mortgage
which is in first lien position, taking priority over all other liens (which are
financial encumbrances).
Fixed Rate
An interest rate which is fixed
for the term of the loan.
Payments as well are fixed at one
amount.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A
federally chartered corporation established to purchase mortgages in the
secondary, or resale, market. Freddie
Mac's policies are designed to serve the needs of savings and loan associations.
It is subject to oversight by the
FSBO
The acronym FSBO is pronounced
"fizzbo" and is “For
Good Faith Estimate
A disclosure required under the
Real Estate Settlement Procedures Act (RESPA) that must be given to all mortgage
loan applicants at the time of application. The disclosure is an estimate of all
settlement charges likely to be incurred at closing.
A written estimate of closing costs which a lender must provide you
within three days of submitting an application.
Grace Period
A period of time during which a
loan payment may be paid after its due date, but not incur a late penalty.
Such late payments may be reported on your credit report.
Gross Income
For qualifying purposes, the
income of the borrower before taxes or expenses are
deducted.
Guaranty
A
pledge made by one person (the guarantor) to ensure that another person (the
obligor) will fulfill an obligation to a third party (the
obligee).
Hazard Insurance
A contract between purchaser
and an insurer, to compensate the insured for loss of property due to hazards
(such as fire, hail damage, etc.), for a premium.
Home Equity Line of Credit
A loan providing you with the
ability to borrow funds at the time and in the amount you choose, up to a
maximum credit limit for which you have qualified. Repayment is secured by the
equity in your home. Simple interest (interest-only payments on the outstanding
balance) is usually tax-deductible. Often used for home improvements, major
purchases or expenses, and debt consolidation.
Home Equity Loan
A fixed or adjustable rate loan
obtained for a variety of purposes, secured by the equity in your home. Interest
paid is usually tax -deductible. Often used for home improvement or freeing of
equity for investment in other real estate or investment. Recommended by many to
replace or substitute for consumer loans whose interest is not tax-deductible,
such as auto or boat loans, credit card debt, medical debt, and education loans.
Your lender will require that you have a homeowner’s insurance policy (sometimes
called hazard insurance) in effect at settlement. The policy protects against
physical damage to the house by fire, wind, vandalism, and other causes. This
insures that the lender’s investment will be secured even if the house is
destroyed. If you are buying a condominium, the hazard insurance may be part of
your monthly condominium fee; you may still want homeowner’s insurance for your
furnishings and valuables.
Estimated cost: $300 to $1,000 (depending on the value of the home and the
amount of coverage; you can estimate the cost to be about $3.50 per $1,000 of
the purchase price of the home).
A Home Warranty is a limited
insurance plan that covers expenses for most repairs to major systems and
appliances in your home for one year after closing.
A home warranty may or may not be provided by the Seller, but the Buyer
can purchase one provided the house qualifies. Sellers
and Real Estate Agents like to sell a home with a home warranty so that they
don’t have to deal with buyers if something goes wrong in the house after the
sale. And sellers like the plans
too, because it offers a sense of security in their purchase.
Some of the items and
components that are typically covered are:
Air Conditioning
Dishwasher
Doorbells
Furnace or Boiler
Garage Door Opener
Garbage Disposal
Microwave
Plumbing
Range and Oven
Refrigerator
Trash Compactor
Washer and Dryer
Water Heater
Water Softener
Hosting refers to a service provided by companies or individuals that store
websites and other data on computers called Internet Servers.
Internet Servers enable others to view and access the websites and data
on the Internet.
HUD (
A
federal department active in a variety of national housing programs including
urban renewal and public housing.
A form utilized at the closing
of a real estate transaction. The
statement itemizes the costs associated with the closing for.
both
the purchaser and the seller. The
form is used universally by mandate of HUD, the Department of Housing and Urban
Development. Click
here for more information
Hyperlinks are special words or
pictures that automatically move you to another place when you click on the
hyperlink with your mouse. The
FSBO-CD®
uses hyperlinks extensively to simplify how you access information on the
Internet, and move within the CD-ROM itself.
We believe that hyperlinks are fun to use, simplify navigation, help you
learn complex subjects, and help too keep you organized.
Improvements
Additions intended to increase the value of a property.
"The Federal Networking Council (FNC) agrees that the following language
reflects our definition of the term "Internet".
"Internet" refers to the global information system that --
(i) is logically linked together by a globally
unique address space based on the Internet Protocol (IP) or its subsequent
extensions/follow-ons;
(ii) is able to support communications using the Transmission Control
Protocol/Internet Protocol (TCP/IP) suite or its subsequent extensions/follow-ons,
and/or other IP-compatible protocols; and
(iii) provides, uses or makes accessible, either publicly or privately, high
level services layered on the communications and related infrastructure
described herein."
In laymen’s
terms, the Internet is a system of networked computers that can be anywhere in
the world. The computers can
communicate and exchange information with each other.
Obviously, the Internet is
a valuable tool to use for
property searches and research of all kinds.
Every year, the Internet grows in popularity and resources, especially
for the FSBO market. Statistics
vary, but the NAR reports that 76% of potential home buyers use the Internet to
search for homes, and the number is growing.
Other studies report that as many as 85% of home buyers use the Internet
to look for homes whether they are working with or without a Realtor.
The FSBO-CD®
is designed to
work seamlessly with the Internet as many of the hyperlinks automatically take
the user to websites.
A ‘SEARCH’ on the Internet for
more information about a topic.
Go to your favorite search engine such as
www.yahoo.com, www.msn.com,
www.google.com, or
www.askjeeves.com, and type in your
search words. The result will be a
list of websites you can click on to get more information.
For more information on search engines,
click here.
Index
A number, usually a percentage,
upon which future interest rates for adjustable rate mortgages are based.
Common indexes include the Cost of Funds
for the Eleventh
Inspection
An
examination of a property by the buyer, agent, title insurance company, or other
interested party.
Interest Rate
The periodic charge, expressed
as a percentage, for use of credit.
Jumbo Loan
Mortgage loans over $203,150. Terms and underwriting requirements may vary from conforming loans.
Lawyer – see Real Estate Attorney
Lien
A
charge or claim by one party on the property of another as security for the
payment of a debt.
Listing
A
written agreement between a property owner and a real estate broker authorizing
the broker to find a buyer.
Listing Agent
A
Listing Agent is the agent who represents the seller.
Loan to Value Ratio (LTV)
A ratio determined by dividing
the sales price or appraised value into the loan amount, expressed as a
percentage. For example, with a sales
price of $100,000 and a mortgage loan of $80,000, your loan to value ratio would
be 80%. Loans with an LTV over 80% may
require Private Mortgage Insurance, defined below.
Lock or Lock In
A commitment you obtain from a
lender assuring you a particular interest rate or feature for a definite time
period. Provides protection should
interest rates rise between the time you apply for a loan, acquire loan
approval, and, subsequently, close the loan and receive the funds you have
borrowed.
Margin
An amount, usually a
percentage, which is added to the index to determine the interest rate for
adjustable rate mortgages.
Market Value
The price a property will command on the open market.
A statutory lien created in
favor of contractors, laborers and material-men who
have performed work or furnished materials in the erection or repair of a
building.
Minimum Payment
The minimum amount that you
must pay, usually monthly, on a home equity loan or line of credit.
In some plans, the minimum payment may be "interest only," (simple
interest). In other plans, the
minimum payment may include principal and interest (amortized).
MLS
(Multiple Listing Service)
A
means by which agents are informed of the properties offered for sale by other
agents. A
group of real estate brokers who share their listing agreements with one another
in order to find buyers for listed properties more quickly than they could on
their own.
Mortgage
A
legal document pledging property to the lender as security for the payment of a
loan.
Mortgage Banker
Originates mortgage loans,
loaning you their funds and closing the loan in their name.
Mortgage Broker
As do mortgage bankers, takes
loan application and processes the necessary paperwork. Unlike a mortgage
banker, brokers do not fund the loan with their own money, but work on behalf of
several investors, such as mortgage bankers, S and L's, banks, or investment
bankers.
Mortgage Insurance (MIP or PMI)
Insurance purchased by the
borrower to insure the lender or the government against loss should you default.
MIP, or Mortgage Insurance Premium, is paid on government-insured loans (FHA or
VA loans) regardless of your LTV (loan-to-value).
Should you pay off a government-insured
loan in advance of maturity, you may be entitled to a small refund of MIP.
PMI, or Private Mortgage Insurance, is
paid on those loans which are not government-insured and whose LTV is greater
than 80%. When you have accumulated
20% of your home's value as equity, your lender may waive PMI at your request.
Be advised that PMI is NOT life
insurance which pays off the mortgage in case of death.
Mortgage Loan
A loan which utilizes real
estate as security or collateral to provide for repayment should you
default on the terms of your loan.
The mortgage or Deed of Trust is your
agreement to pledge your home or other real estate as security.
Mortgage Pre-approval
It is very important that potential buyers get pre-approved in writing from their lending institution. Pre-approval means that their lender will guarantee them a mortgage of a certain amount of money if certain conditions are met, such as the home appraising for at least the amount of the loan, and that the property has clear title.
Mortgagee
The lender in a mortgage loan
transaction.
Mortgagor
The borrower in a mortgage loan
transaction.
Multiple Listing Service (MLS)
A MLS is a database of property
that is for sale in a region that is covered by a Board of Realtors that
maintains the database. Individual
real estate companies and agents become members of the Board and have access to
the MLS so they can show their clients property in the database.
Individuals and FSBO’s usually cannot list their property in the MLS,
it’s usually just for Realtors; however, ‘some’ Multiple Listing Services will
allow your listing for a fee. Use
search keyword “Board of Realtors” to find out about your local MLS.
NATIONAL ASSOCIATION OF REALTORS
®
A
trade organization composed of residential and commercial Realtors, who are
brokers, salespeople, property managers, appraisers, counselors and others
engaged in all aspects of the real estate industry.
The mission of NAR is to create and
monitor ethics of Realtors. Members
are pledged to a strict Code of Ethics and Standards of Practice, which governs
their conduct. The NAR is
Negative Amortization
Amortization in which the
payment made is insufficient to fund complete repayment of the loan at its
termination. Usually occurs when the
increase in the monthly payment is limited by a ceiling.
The portion of the payment which should be paid is added to the remaining
balance owed. The balance owed may
increase, rather than decrease over the life of the loan.
Offer
A
proposal to purchase property at a specified price and terms.
If a Real estate agent has a
client that may be interested in your house, the agent may approach you for a
one party listing wherein you ‘cooperate’ and pay the agent a commission.
The agent will ask you to sign an agreement that allows them to show the
property and that you will pay a commission of a specified amount if they sell
it. The agreement will also state
that the agent represents the buyer.
Also see “Buyer’s Agent”.
In another scenario, the agent
may already be a “buyer’s agent” and have a client that will pay them a
commission for finding them your home.
In this case, the agent will collect their commission from the buyer and
not you, the seller. Without a
Buyer’s agency agreement, A Realtor won’t take the time to show your home.
Open
House
The common real estate practice of showing "For
Origination Fee
A
fee charged by a lender to cover certain processing expenses for establishing
and processing a new mortgage loan.
It is generally computed as a percentage of the loan and may be tax
deductible.
Owner
of Record
The
person named in the public record as the owner of a property or mortgage.
Parent Corporation
A corporation which owns 80% or more of every class of the issued and
outstanding stock of another corporation or, in the case of a savings and loan
association, 80% or more of its issued and outstanding guaranty capital.
PITI
Principal, interest, taxes and
insurance, which comprise a monthly mortgage payment.
Points
A one time charge paid to the
lender for issuing a loan. The
amount paid either to maintain, or lower the interest rate charged.
Each point is equal to one percent (1%)
of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).
Also see Discount Points.
Buyers that have an approval
letter from a bank that says the bank will loan them the amount of money stated
in the letter for a home that appraises for the value stated in the letter.
Pre-Approved buyers are good because you won’t be holding up a sale for
someone that wants your home only to find out after going to the bank that they
do not qualify for the loan necessary to buy it.
Get a pre-approval letter in writing, and make sure the buyer is good for
the down payment required by the lender.
Prepayment Penalty
A fee paid to the lending
institution for paying a loan prior to the scheduled maturity date.
Principal
The
principal is the amount of debt, not including interest.
It is the face value of a mortgage.
Private Mortgage Insurance (PMI)
Private Mortgage Insurance is
additional payment required on new loans by Lenders if the mortgage debt is
below 80% of the home's appraised value. The
insurance protects the lender if the mortgagor defaults on the loan.
If buyers stay below this debt/equity ratio by making at least a 20% down
payment, they are not required to pay PMI and their monthly payment will be less
on the mortgage. For more
information on PMI, click here…
http://www.ftc.gov/bcp/conline/pubs/alerts/pmialrt.htm
Purchase agreement
A purchase agreement is a
signed document stating the purchaser's agreement to buy and the seller's
agreement to sell a specified property under stated terms and conditions.
Qualified Buyer
A
qualified buyer is a buyer who has demonstrated the financial ability to afford
the asking price of a home.
Pre-qualifying with a lender can expedite the home buying transaction.
Qualifying Ratios
Comparisons of a borrower's
debts and gross monthly income.
The ratio of your fixed monthly expenses to your gross monthly income,
used to determine how much you can afford to borrow.
The fixed monthly expenses would include
PITI along with other obligations such as student loans, car loans, or credit
card payments.
A
legal document transferring ownership of a property from one party to another.
Rate
Cap
A
limit on how much the interest rate can change, either at each adjustment period
or over the life of the loan.
Real
estate attorneys specialize in real estate law and are knowledgeable about your
state disclosure requirements and other specific matters pertaining to real
estate. State law does not require
a lawyer to close your real estate transaction, but you should retain a real
estate attorney if you are buying or selling.
Your attorney will review your paperwork, contracts, Title Insurance, and
advise you on other matters regarding your transaction.
A
person licensed by the state to sell Real Estate.
Salespersons are required to be licensed through an employing broker.
The salesperson does all regulated real estate business in the name of
(and under the direct supervision of) the employing real estate
broker, and only the employing broker can pay the
salesperson a commission.
Definition from the website of
the National Association of Realtors (www.realtor.org):
The term REALTOR® is
a registered collective membership mark that identifies a real estate
professional who is a member of the NATIONAL ASSOCIATION OF REALTORS®
and subscribes to its strict Code of Ethics.
Code of Ethics
The Code establishes time-honored and baseline
principles that come from the collective experiences of REALTORS®
since the Code of Ethics was first established in 1913. Those principles can be
loosely defined as:
·
Loyalty to clients;
·
Fiduciary (legal) duty to
clients;
·
Cooperation with competitors;
·
Truthfulness in statements and
advertising; and non-interference in exclusive relationships that other REALTORS®
have with their clients.
Realtors are bound to a code of
ethics published by their local board of Realtors, and Real Estate Agents are
not. The Board or Realtors regulates ethics and controls and monitors any
complaints about Realtors. You cannot be a "Realtor" unless you belong to a
Board. They have higher standards of practice for real estate agents than the
State has. There are real estate agents that are not Realtors. They do not
have to operate at a higher level of ethics than the State requires. Realtors
are forced to operate at a much higher level than the State requires. Realtors
may sit on a Board of Ethics and make decisions regarding ethics involved in the
business.
Refinance
Obtaining
a new loan to pay off an existing loan. Refinancing is a popular practice when
interest rates drop.
Residential Sales Council
A
not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®.
The Council awards the Certified Residential Specialist (CRS) Designation, to
experienced members who have completed an advanced course of study in
residential real estate.
Right to Rescission
The legal rights to void or
cancel your mortgage contract in such a way as to treat the contract as if it
never existed. Right of rescission is not applicable to mortgages made to
purchase a home, but may be applicable to other mortgages, such as home equity
loans.
Search Engine
Search Engines are used to find information and websites on the Internet
using “search words” or “keywords” that you type in the search box.
Security Interest
An interest that a lender takes
in the borrower's property to assure repayment of a debt.
A seller’s market is good for
the seller, and means you can get top dollar for your home because there is more
demand than supply. This can be
caused by the excitement of a new development, great economic conditions in your
area, and so on. Home prices
are firm and many homes sell quickly.
Some listed homes may sell before reaching the MLS.
Some homes may receive multiple offers and even sell for more than the
asking price. If you are in a red
hot market, you can get top dollar, and you do not need to accept a bad offer;
you can afford to wait for a better one.
Selling Agent
The
Selling Agent is the agent who obtains a buyer.
A selling agent may represent the buyer, or may be a subagent of the
seller.
Servicing a Loan
The ongoing process of
collecting your monthly mortgage payment, including accounting for and payment
of your yearly tax and/or homeowners insurance bills.
Single Party Listing
Staging
The idea is called "staging",
"fluffing", "home styling", "sprucing up", or just simply "interior decorating".
It is an approach to tastefully presenting a home for sale or rent to
maximize its appeal, environment, and, of course, the price.
Staged homes are generally known to show better, sell or rent faster, and
at a higher asking price.
Subagent
A
salesperson who works for an agent.
Survey
A
print showing the measurements of the boundaries of a parcel of land, together
with the location of all improvements on the land and sometimes its area and
topography.
The title is the written
evidence that proves the right of ownership of a specific piece of property.
The evidence one has of right to possession of land.
Title Company – Title and Escrow
Company
A Title and Escrow Company does
the paperwork and calculates settlement costs for real estate transactions.
They also conduct a title search looking for liens and encumbrances
(clouds on the title), and verifies ownership by the seller.
They also provide the title insurance.
Title Companies do not offer legal advice, but many are owned by lawyers
or work closely with selected lawyers, a perfect candidate for help with your
legal requirements and paperwork.
Title Companies also hold all funds and make disbursements at closing.
Title companies have FSBO kits
that they give to home sellers for free.
The kits tell you things you need to know about your sale and how the
Title Company can help you. They
also give you free forms like purchase agreements and so on.
Your local Title Company may even be able to provide you with plat maps,
and a list of street addresses and phone numbers of all your neighbors.
Visit your local Title Companies, compare fees, and see how they can help
you FSBO.
There are local customs and variations to what is covered in
Title Insurance, and who pays the fees, so check with the Title Company for
specifics that apply to your area.
Also see “Title Insurance” and
“Escrow”.
An insurance policy that
protects against losses arising from title defects, such as forged or misfiled
documents. Title insurance is
protection for lenders and home buyers against financial loss resulting from
legal defects in the title. For
instance, if you buy a piece of property and at a later date another person
proves ownership of it, the insurance will pay your losses (some
exclusions apply).
When a property is mortgaged the lending institution has a separate title
policy to protect its interests. Some
examples of problems that can arise with titles include:
§
Heirs with claims against the
property
§
A forged deed or other fraud
§
Public record errors
§
Undisclosed liens or
encumbrances
§
Public or private easements
There are local customs and
variations to what is covered in Title Insurance, and who pays the fees, so
check with the Title Company for specifics that apply to your area.
Title
Search
An
examination of the public records to determine whether the current title is
clear or defective. A
title search is a close examination of all public records that involve title to
a specific property. The search is
conducted to verify that there are no liens or other claims against the property
other than those scheduled to be erased at closing if done for a purchase.
A title search verifies that all former
owners have formally given up their rights to the property.
Title searches typically include documents filed during the previous
30-years. The person conducting the
search looks at items such as past owners and deeds, wills, trusts, mortgages,
judgments, and other liens.
Town
House
Also known as a row house.
Generally refers to a type of dwelling having two floors, with the living
area and kitchen on the first floor, and the bedrooms on the second.
Town houses share a common wall between
units.
Transaction Coordinator
A specialist responsible for
completing and verifying all of the contracts, disclosures, and other paperwork
required to close real estate transactions.
Transaction coordinators are not attorneys or real estate brokers.
Transaction Fee
A fee which may be charged each
time you draw on a home equity credit line.
Taxes that may be payable when
the title passes from one owner to the next.
Trust Deed or Deed of Trust
An executed deed that conveys trust property to a trustee (or trustees) to
secure the performance of a contract or contracts.
This does not include a trust deed that encumbers, in whole or in part, trust
property located in
Trust Property
Any legal, equitable, leasehold or other interest in real property which is
capable of being transferred, whether or not it is subject to any prior
mortgages, trust deeds, contracts for conveyance of real property or other liens
or encumbrances.
Trustee
One that holds legal title to property in order to administer it for a
beneficiary.
An individual, association or corporation, or the successor in interest
thereto, to which trust property is conveyed by trust deed.
The trustee's obligations to the trustor,
beneficiary and other persons are as specified in the Revised Statutes, together
with any other obligations specified in the trust deed.
Trustor
The person conveying trust property by a trust deed as security for the
performance of a contract or contracts, or the successor in interest of such
person.
Truth-in-Lending Act
A federal law requiring a disclosure of credit terms using a standard format.
This is intended to facilitate comparisons between the lending terms of
different financial institutions.
Underwriting
The process of verifying data
and approving a loan.
An acronym for "Uniform
Resource Locator," this is the address of a resource on the Internet.
World Wide Web URLs begin with http://
VA
(Veterans Administration)
A
federal agency designed to help veterans enter the housing market, guaranteeing
mortgage loans with no down payment to qualified veterans.
Variable Rate
An interest rate that changes
periodically in relation to an index.
Payments may increase or decrease accordingly.
VA Loan
A
loan guaranteed by the
Virtual
Virtual tours are a method of showing your property on a website with 360 degree
pictures.
.
Walk-Through
A
final inspection of a property before it changes ownership.
Websites are sets of
interconnected web pages located on an Internet Server and available to Internet
users. Websites
may include a collection of text, images, sound, video, data files, and
hyperlinks to other websites.
Websites are identified and accessed by their unique URL or Uniform
Resource Locator. Typing in a URL
in your web browser program (like Microsoft Internet Explorer) is much like
dialing a unique phone number on your telephone.
The URL takes you to a website, the telephone
number takes you to a phone.
Websites may be prepared and maintained by a person, group,
or organization.
copyright 2008 Roy Wysack - Portions copyright diyWEBworks - all rights reserved