See Rural Housing Service.
See Real Estate Settlement Procedures Act.
The cancellation of a contract by the operation of a law or by mutual consent. In some circumstances, borrowers have the right to cancel a transaction within three business days after closing.
The process of paying off any existing mortgages on a home with a new mortgage loan.
The entering in a book of public record the details of a properly executed legal instrument that affects title to real property, thereby making it a part of the public record.
The public official who keeps records of transactions that affect real property in a specific geographic area (usually a county). Often known as a County Recorder or County Clerk.
The annual rate of interest for a loan. Also called the interest rate.
Reverse annuity mortgage.
A naturally appearing radioactive gas found in some buildings, that, in sufficient concentrations, may cause health problems.
A fee associated with obtaining a precise measurement of a piece of property by a licensed surveyor. The survey is typically a written map of the property showing locations of buildings and boundaries. In some states a survey is required by a title company to issue a title insurance policy. For our comparison purposes, a survey fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
A housing development that is created by dividing a large parcel of land into many individual lots for sale.
A meeting of parties involved in a real estate transaction to finalize the process. In the case of a purchase, the settlement usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the settlement involves the borrower and the lender. Sometimes referred to as the closing or the close of escrow.
A company that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer may or may not be the original lender.
The collateral offered to a lender in exchange for a loan. When a lender provides a mortgage, you provide your home as the security. This means that if payments are in default, the lender has the right to take title to the property.
A person who is licensed to make real estate transactions while under the supervision of a broker licensed by the state.
A fiduciary who holds property in trust for another to secure performance of an obligation or act
A legal written instrument evidencing a person's lawful possession of a property.
The loan term is the number of months that you will make monthly payments. If the loan term is the same as the payment calculation term, you will pay the loan in full during the loan term and no balance will be due. If the payment calculation term is greater than the loan term, a balance or "balloon payment" may be due at the end of the loan term.
The acquisition of a piece of land, usually through condemnation.
Adding on to a certain period of time.
An economic indicator that measures the output per hour of work for non-farm business production. Can be used in conjunction with the rate of change in GAP to determine whether economic growth is likely to be inflationary. A separate component measures unit labor costs, an important indicator of future inflation. Frequency: quarterly. Source: Labor Department.
The actual balance, excluding interest, of a mortgage loan. Also refers to the amount of the monthly mortgage payment that will be applied to the actual balance.
Any amount that is paid to reduce the principal balance, not interest, of a loan before the due date.
Expenses of property ownership or expenses incurred while obtaining a mortgage that must be paid in advance. Prepaids typically include real estate taxes and hazard insurance.
Fees that are collected by the lender in exchange for a lower interest rate. Commonly called discount points, each point is equal to 1% of the loan amount. For our comparison purposes, a discount point is considered to be a lender fee. To determine if it is wise to pay discount points to obtain a lower rate, you must compare the up front cost of the points to the monthly savings that result from obtaining the lower rate.
(P)rincipal, (I)nterest, (T)axes, and (I)nsurance is a reference to the total monthly payment required to repay a mortgage in accordance with its term as well as monthly escrow payments for taxes and insurance.
Credit given, evidenced by a written obligation with property as collateral.
A decree made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.
An element of risk or danger.
The cost of the use of money.
A form of contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy. The periodic payments are known as insurance premiums.
A regularly scheduled periodic payment that a borrower agrees to make to a lender.
An increase in the amount of money or credit available relative to the amount of goods or services available. Inflation causes an increase in the general price level of goods and services. Over prolonged periods, inflation can reduce the purchasing power of a dollar, making it worth less.
A published interest rate used to establish the interest rate offered on an Adjustable Rate Mortgage (ARM). Some of the most common indices are treasury bills, treasury securities, London Inter-Bank Offering Rates (LIBOR) and the Cost of Funds Index (COFI).
An impound refers to the funds a mortgagor pays to the lender along with their monthly principal and interest payments for the payment of real estates taxes and hazard insurance. This is also referred to as an escrow account. The money is held by the lender to make payments when they are due.
Having inadequate cash to meet current obligations. Real property is considered an illiquid investment because of the time and effort required to convert it to cash.
The loss of money, or anything else of value, due to a breach of legal obligation or contract.
The legal process in which a borrower's ownership of a property is dissolved due to default. Typically, the property is sold at a public auction and the proceeds are used to pay the loan in full.
A term that describes the interest rate for a loan that has not yet been guaranteed by a lender. If the lender has not yet guaranteed or locked the interest rate, it is floating and could change prior to closing.
Personal property or improvements that become real property when attached to the land or building in a permanent manner.
Fair Market Rent
The amount that a property would command if it were currently available to rent or lease.
The front outside wall of a building.
Funds required by a lender in advance of the processing of a loan request. Generally a deposit is collected to cover the costs of an appraisal and credit report and may or may not be refundable.
The failure to make payments on debts when they are due.
A breech of the agreement with a lender such as the failure to make loan payments in a timely manner.
The written instrument that conveys a property from the seller to the buyer. The deed is recorded at the local courthouse so that the transfer of ownership is part of the public record.
An obligation to pay another.
In a closing statement or settlement, an item that is charged to a buyer or seller. Compare with credit.
An unsecured bond or note.
The amount recoverable by a person who has been injured in any manner through the act or default of another.
A process that allows a borrower to obtain a lower interest rate on a mortgage by paying points to a lender. A temporary buydown will reduce the interest rate paid during the first few years of the loan. A permanent buydown reduces the interest rate over the entire life of the loan.
A detailed plan of income and expenses estimated over a specified period of time. Budgets provide guidelines for managing costs and profits.
A state-licensed agent who, for a commission or a fee, represents property owners in real estate transactions.
An interest-bearing certificate that serves as evidence of a debt with a maturity date. Typically, bonds represent obligations of a government or business corporation. A real estate bond is a written obligation, usually secured by a mortgage or deed of trust.
An agreement between a buyer and seller to purchase real estate. A binder, also known as an offer to purchase or a sales contract, secures the right to purchase real estate upon agreed terms for a limited period of time. If the buyer changes his mind or is unable to purchase, the earnest money that was paid is forfeited unless the binder expressly provides that it is to be refunded.
An improvement that increases property value as opposed to repairs or replacements that simply maintain value.
To transfer personal property through a will or last testament. Compare with devise.
The person designated to receive the benefits resulting from certain acts.
A court proceeding in which a debtor, who owes more than his assets, can relieve the debts by transferring his assets to a trustee.
A person, company, or corporation that, through formal court proceeding, is relieved from the payment of all debt after the surrender of some or all assets to a court-appointed trustee.