Real Estate A to Z
Amortization: The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.
Balloon Payment: The final lump sum payment that is due at the termination of a balloon mortgage.
Closing: This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands. In Arizona, a transaction is “closed” when the documents are recorded.
Deed in Lieu: Short for "deed in lieu of foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.
Exclusive listing: A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
FHA Mortgage: A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.
Grantor: The person conveying an interest in real property
HELOC: Home Equity Line of Credit.
Inventory: Number of properties on the market for sale
Joint tenancy: Ownership of property by two entities
Location: The three most important aspects of real estate
Mortgage Insurance Premium: The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
Negative Amortization: Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.
Origination Fee: On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called "discount points." One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.
Personal property: Any property that is not real property. (refrigerator, pictures hanging on the wall)
Quit Claim Deed: A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
RESPA: Real Estate Settlement and Procedures Act. A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
Seller Carryback: An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.
Title Policy: Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
Underwriting: is the process a lender uses to determine if the risk (especially the risk that the borrower will default ) of offering a mortgage loan to a particular borrower is acceptable. Most of the risks and terms that underwriters consider fall under the three C’s of underwriting: credit, capacity and collateral.
Vesting: How the property is titled (owned)