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One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.
Related to the settlement/closing fee. This fee is standard in some states and is the closing attorney’s fee for witnessing the signing of the closing documents. For our comparison purposes, an attorney witness fee is considered to be a third party fee and may be included in the title insurance or closing fee by some lenders.
Commonly referred to as a “title opinion”. This fee is related to the title insurance required by the lender. It is a document issued by an attorney listing any liens or encumbrances that could affect the property that are a matter of public record. For our comparison purposes, the attorney opinion fee is considered to be a third party fee and may be included in the title insurance or closing fee by some lenders.
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.
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.
The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage.
A loan that does not have to be paid in full if the home is sold. Instead, the new owner can take over payments on the existing loan and pay the seller the difference between the sales price and the balance on the loan.
The transfer of a mortgage from one person to another.
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).
A public official who establishes the value of a property for taxation purposes.
The public record of taxable property.
The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.
The valuation placed on property by a public tax assessor for purposes of taxation.
An ARM (adjustable rate mortgage) is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.
To make it easier for consumers to compare mortgage loan interest rates the federal government developed a standard format, called an “Annual Percentage Rate” or APR, to provide an effective interest rate for comparison shopping purposes. Some of the costs that you pay at closing are factored into the APR for ease of comparison. Your actual monthly payments are based on the periodic interest rate, not the APR.
An increase in the value of a property due to changes in market conditions and other causes. The opposite of depreciation.
A person qualified by education, training, and experience to estimate the value of real property and personal property.
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience and analysis of the property.
In order to verify that the value of your home supports the loan amount you request, an appraisal will be ordered by the lender. The appraisal is generally performed by a professional who is familiar with home values in the area and may or may not require an interior inspection of the home. The fee for the appraisal is commonly passed on to the borrower by the lender. For our comparison purposes, the appraisal fee is a third party fee.
An analysis performed by a qualified individual to determine the estimated value of a home.
The process of applying for a mortgage. The term “application” generally refers to a form that is used to collect financial information from a borrower by a lender.
A specified income paid yearly or at other regular intervals, often on a guaranteed dollar basis.
To make it easier for consumers to compare mortgage loan interest rates, the federal government developed a standard format called an “Annual Percentage Rate” or APR to provide an effective interest rate for comparison shopping purposes. Some of the costs that you pay at closing are factored into the APR for ease of comparison. Your actual monthly payments are based on the periodic interest rate, not the APR.
A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.
A $100 loan administration fee will be charged if your Home Equity Line of Credit (HELOC) loan is renewed. Disclosure of this fee does not constitute a contractual agreement to renew your loan. Renewal of this loan will be at the full discretion of the lender, and will be determined by the lender at the end of your draw period.
To repay a mortgage with regular payments that cover both principal and interest.
The amount of time required to amortize the mortgage loan. The amortization is expressed as a number of months. For example, for a 30 year fixed rate mortgage, the amortization term is 360 months.
A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principals and shows the remaining balance after each payment is made.
A loan repayment plan, which enables the borrower to reduce his debt gradually through monthly payments of principal and interest.
A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Man-made amenities include swimming pools, tennis courts, community buildings and other recreational facilities.
A detailed analysis of your ability to afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home and the closing costs that you might expect to pay.
A person appointed by a probate court to administer the estate of a person who died intestate.
A fee charged by a lender to cover the administrative costs of processing your loan request. For our comparison purposes, this fee is typically a lender fee.
The period that elapses between the adjustment dates for an adjustable rate mortgage (ARM).
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
The original cost of a property, plus the value of any capital expenditures for improvements to the property, minus any depreciation taken.
An adjustable rate mortgage, commonly referred to as an ARM, is a loan type that allows the lender to adjust the interest rate during the term of the loan. Generally, these changes are determined by a margin and an index so that the interest rate changes, up or down, are based on market conditions at the time of the change. Most often these interest rate changes are limited by a rate change cap and a lifetime cap. If you apply for an adjustable rate mortgage, the lender is required to provide you with an ARM Program Disclosure which spells out the terms of the loan.
A payment by a borrower of more than the scheduled principal amount due, in order to reduce the remaining balance of the loan.
A sales contract signed by both seller and buyer that defines the terms of the sale.
A party’s consent to enter into a contract and be bound by the terms of the offer.
A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.
A fee related to the title insurance required by the lender. A public record search exam is done to insure that both you and the lender are aware of any liens or encumbrances that could affect the property. For our comparison purposes, an abstract exam fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
An estimate of the expected annual sales or new occupancy of a particular type of land use.
An auction in which the subject property is sold to the highest bidder regardless of the amount of the winning bid.
An owner who does not personally manage or reside at property owned.
The voluntary surrender of property, owned or leased, without naming a successor as owner or tenant.
Funds required by a lender in advance of processing 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.
An account in which money is held so that it can be applied to the monthly mortgage payments, as each payment comes due, during the period that an interest rate buy-down plan is in effect.
Check with your lending institution to find out what days it considers as business days under the Truth in Lending and Electronic Fund Transfer Acts. Usually excludes weekends and holidays.
Regulations established by local governments that control design, construction and materials used in construction. Building codes are usually based on standardized health and safety guidelines.
A category of income or expense data that you can use in a budget.
Sometimes called a “swing loan”, a bridge loan is generally a loan that is secured by a borrower’s current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
A violation of the terms of any legal obligation or agreement.
In good faith without fraud.
A single mortgage that is secured by more than one parcel of real estate.
A single policy that covers more than one piece of property (or more than one person).
A sum of cash paid to a seller by a buyer prior to the closing to show that the buyer is serious about buying the house. The binder deposit is deducted from the purchase price at closing and is not an additional cost. Sometimes referred to as earnest money.
Any mistake in your monthly statement as defined by the Fair Credit Billing Act.
A written instrument that transfers title to personal property.
A mortgage that requires payment to reduce the debt every two weeks instead of monthly. The 26 (sometimes 27) biweekly payments are each equal to one-half of the monthly payment that would be required with a standard 30 year fixed-rate mortgage. The result is a faster loan balance reduction with substantial savings in interest.
A survey of economic conditions, conducted in the Federal Reserve’s 12 regional banks, in preparation for Federal Open Market Committee meetings. Frequency: twice per quarter. Source: Federal Reserve.
Income before deducting taxes.
The final payment that is made at the maturity date of a balloon mortgage and pays the loan in full.
A short-term fixed-rate loan which involves smaller payments for a certain period of time and one large payment for the entire balance due at the end of the loan term.
A financial statement in a table form that shows assets, liabilities and net worth.
A contract to buy property that becomes effective if a prior contract fails to be agreed upon.
The replacement of excavated dirt into a hole, crevice or against a structure such as a foundation.
Economic indicator that measures the level of outstanding consumer installment debt. Can be used in conjunction with real sales to determine whether cash or credit is fueling growth. Frequency: monthly. Source: Federal Reserve.
A person or business that is owed money.
Health, life or accident insurance designed to pay the outstanding balance of a debt.
A statistical system used to rate credit applicants according to various characteristics relevant to creditworthiness.
An institution that collects, maintains, stores and sells financial and publicly recorded information about the payment records of individuals applying for credit.
A record of an individual’s current and past debt repayment patterns. A credit history helps a lender to determine whether a borrower has a history of repaying debts in a timely manner. For our comparison purposes, the credit report fee is considered to be a third party fee.
A type of insurance, often bought by borrowers, that will pay off the debt if the borrower dies while the policy is in force.
A record of a person’s debt history, including all open and fully repaid obligations. A credit history helps a lender to determine whether a potential borrower has satisfactory history of repaying debts in a timely fashion.
A value given to an individual to reflect their current and past debt repayment patterns. A grade of “A” is considered to be the best.
An agency that gathers and keeps your credit record.
A lender may reduce the actual amount of the closing costs by a credit in order to offer more competitive fees.
A promise written into deeds, mortgages and other financial instruments that obligates or restricts the borrower. The violation of some covenants can result in foreclosure.
The fee associated with a lender sending documents to other parties involved in the loan, like an attorney or title company. For our comparison purposes, this fee is considered a third party fee.
An index that may be used to determine the interest rate changes of an adjustable rate mortgage (ARM). The Cost of Funds Index, or COFI as it is commonly called, is the weighted average of interest rates that Federal Home Loan banks have paid to their customers recently. Usually, the COFI for the 11th district of Federal Home Loan Banks is used and covers banks in California, Nevada, and Arizona. The index value is announced on the last working day of the month following the month listed.
Another person who signs your loan and assumes equal responsibility for it.
A corporation that holds the title to a cooperative project and grants occupancy rights to shareholders through leases or similar rental agreements.
A type of real estate ownership in which residents of a multi-unit property own shares of the corporation that owns the property. The ownership of these shares gives the owner the right to occupy a unit in the building.
A residential or mixed-use building wherein a corporation holds title to the property, sells shares of stock, representing the value of a single apartment, to individuals who then receive a lease, or similar agreement, as evidence of title.
An adjustable rate mortgage (ARM) that allows a borrower to convert their mortgage to a fixed rate loan for the remainder of the loan term if certain conditions are met.
A provision in some adjustable-rate-mortgages (ARM’s) that allows the borrower to change the ARM to a fixed-rate-mortgage at a specified period within the term of the loan.
A mortgage that is not insured or guaranteed by a government agency.
An oral or written agreement to do or not to do a certain thing for consideration.
A condition that must be met before a contract is legally binding. For example, a lender’s commitment to provide financing to a borrower may be contingent on receipt of an acceptable appraisal.
An index designed to measure consumer optimism. Includes a preliminary report at mid-month and final report near month-end. Frequency: semimonthly. Source: University of Michigan.
A company that prepares detailed reports used by lenders to determine a potential borrower’s creditworthiness. These agencies obtain data for these reports from a credit repository as well as from other sources. More Commonly referred to as credit bureaus.
Measures the change in the cost of living for most American families. Widely followed as an indicator of inflation of retail purchases. Frequency: monthly. Source: Federal Reserve.
A monthly survey of 5,000 households designed to measure Americans’ optimism about their current situation and the future. Frequency: monthly. Source: Conference Board.
Economic indicator that measures the total amount of spending in the U.S. on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume. Frequency: monthly. Source: Commerce Department.
A short term loan that is used to finance the construction of a new home. During the term of the loan the lender makes payments to the builder as the work progresses and the borrower makes interest payments on only the funds that have been disbursed to the builder. Typically, the construction loan is refinanced into a permanent loan after the home is completed.
A loan that does not exceed the maximum loan amount allowed for the most common mortgage investors. Loans that exceed this amount are referred to as “jumbo mortgages”. The cost of obtaining a jumbo mortgage is generally higher than the cost of obtaining a conforming mortgage.
A condominium complex that has registration desks, short-term occupancy, room service and daily cleaning services. Such properties are often operated as commercial hotels even though the units may be individually owned.
Changing the ownership of an existing rental complex building to the condominium form of ownership.
A form of real estate ownership in which each owner has title to a specific unit in a project and joint ownership in the common areas of the project.
The taking of private property for public purpose by a government under the right of eminent domain. Also, the determination that a building is not fit for use or is dangerous and must be destroyed.
Interest paid on the original principal balance, and on the accumulated and unpaid interest.
An abbreviated form of comparable properties. Comparables are used for comparative purposes in the appraisal process and are properties that are very similar to the property being appraised. They have been sold recently and have approximately the same size, location and features. Comparables help the appraiser determine the approximate fair market value of the subject property. Often just called “comps”.
In some western and southwestern states, a form of ownership under which property accumulated through joint efforts of husband and wife is presumed to be owned equally by them unless acquired as separate property of either spouse.
An alternative financing option that enables low to moderate income homebuyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low or moderate income family’s buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
The body of law based on general custom in England and used to a certain extent in the United States. Common law sometimes prevails unless superseded by other law.
Those areas of a property (usually a planned unit development or condominium project) that are used by all owners or tenants. Common areas may include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings and parking areas.
Charges against individual unit owners in a condominium complex, or planned unit development (PUD), for additional funds to repair, maintain, or improve the common areas of the project.
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a loan commitment.
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a small percentage of the price of the property or amount borrowed. Sometimes called points.
The process of bringing a delinquent debt current and the filing of the necessary notices to proceed with repossession or foreclosure when necessary.
Property pledged as security for a debt. The borrower risks losing the collateral if the debt is not repaid according to the terms of the loan contract.
A sharing of hazard insurance risk between the insurer and the insured, or others. A coinsurance clause states to what extent a loss will be covered based on the percentage of value insured.
A person who signs a promissory note along with the primary 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. Sometimes called a co-signer.
Any conditions such as encumbrances, liens or claims revealed by a title search that adversely affect the title to real estate. Clouds on a title often cannot be removed, except by a quitclaim deed release, or court action. Compare with clear title.
Also referred to as the HUD-1 or the settlement statement, this is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
The total of all the items that must be paid at closing related to your new mortgage.
A single fee that a home buyer must pay at closing. Closing costs are made up of individual closing cost items such as origination fees, escrow fees, underwriting fees and processing fees. Most closing cost items are included as numbered items on the HUD-1 Settlement Statement.
A meeting of the parties involved in a real estate transaction to finalize the process. In the case of a purchase, a closing usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the closing involves the borrower and the lender. Sometimes referred to as the settlement or the close of escrow.
A meeting of the parties involved in a real estate transaction to finalize the process. In the case of a purchase, the close of escrow usually involves the seller, the buyer, the real estate broker and the lender. In the case of a refinance, the close of escrow involves the borrower and the lender. Sometimes referred to as the settlement or closing.
A title that is free of clouds, liens, disputed interests or legal questions as to ownership of the property.
Economic indicator that reports the number of new civilian jobs created and the percentage of civilians in the job market who are unemployed. One of the most anticipated and closely watched economic indicators. Frequency: monthly. Source: Labor Department.
A tax that is required in some municipalities if a property changes hands or a new mortgage is obtained. The amount of this tax can vary with each state, city and county. For our comparison purposes, this fee is considered a tax or other unavoidable fee.
Anything tangible and owned, other than real estate. The same as personal property.
Term sometimes used to describe the frequency of payment or interest rate changes in an adjustable-rate-mortgage (ARM).
A history of all documents, including conveyances and encumbrances, that affect title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
A statement of opinion rendered by a title company or attorney, stating that a title to real property is legally held by the current owner.
A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA loan.
A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) loan.
A rarely used index that is used to determine interest rate changes for certain adjustable-rate mortgages (ARM) plans.
An instrument, issued by a bank or other financial institution, that is evidence of a type of savings deposit. Includes the institution’s promise to return the deposit, plus earnings at a specified interest rate within a specified period.
A refinance loan that provides the borrower with cash that exceeds the amount required to pay off existing mortgages on the home. This additional cash can be used by the borrower for any purpose.
Any component constructed as a permanent improvement to real property that increases its value and adds to its useful life.
The cost of an improvement made to extend the useful life of a property or to add to its value.
Refers to a provision of an adjustable rate mortgage (ARM) that limits how much the interest rate or payment can increase or decrease.
A contract provision that gives the right to terminate obligations upon the occurrence of specified events.
A provision in a home loan that gives the mortgagee the right to call the mortgage due and payable at the end of a specified time period for any reason.
A one-story, post-World War II style, ground-hugging house with a low, pitched roof.
A small, one-story, compact, early-twentieth-century house.
An agency of the federal government that provides services and guarantees residential mortgages made to eligible veterans of the military services.
A fee charged generally by the title company or attorney for the delivery of documents to your lender. For our comparison purposes, the delivery fee is considered to be a third party fee.
A process that allows a borrower to transfer the ownership of a property to the lender in order to avoid loss of the property through foreclosure.
A tax that is required in some municipalities if a property changes hands. The amount of this tax can vary with each state, city and county. For our comparison purposes, this fee is considered a tax or other unavoidable fee.
This document, referred to as a mortgage in some states, pledges a property to a lender or trustee as security for the repayment of a debt.
A plastic card which looks similar to a credit card, that consumers may use to make purchases, withdrawals, or other types of electronic fund transfers.
Economic indicator that measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard-goods. Monthly percent changes reflect the rate of change of such orders. Levels of, and changes in, Durable Goods Orders are widely followed as an indicator of factory sector momentum. Frequency: Monthly Source: Commerce Department.
A provision in a mortgage that allows the lender to demand repayment in full, if the borrower sells the property that serves as security for the loan.
Generally associated with home equity lines of credit, the draw period is the period of time that you can access funds from the line. After the draw period expires, a repayment period generally follows.
The portion of the purchase price of a property that the borrower will be paying in cash rather than included in the mortgage amount.
The rights of a widow in the property of her husband upon his death.
A tax levied by some local or state governments at the time the deeds and mortgages are entered into public record. For our comparison purposes, documentary stamps are considered to be a tax and other unavoidable fee.
Lenders will prepare some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement. This fee covers the expenses associated with the preparation of these documents. For our comparison purposes, the document preparation charges are considered to be a lender fee.
The interest rate that the Federal Reserve charges member banks for loans, using government securities or eligible paper as collateral. This provides a floor on interest rates, since banks set their loan rates a notch above the discount rate.
Fees that are collected by the lender in exchange for a lower interest rate. Each discount point is 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. Sometimes referred to as “points”.
Information that must be given to consumers about their financial dealings.
To pay out on the loan.
A gift of real property by will or last testament.
A decline in the value of real or personal property. The opposite of appreciation.
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.
An agency of the federal government that provides services and guarantees residential mortgages made to eligible veterans of the military services.
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.
Reports the number of existing homes sold, expressed on an annual basis. Can be combined with New Home Sales to determine the total volume of home sales, a strong indicator of future national mortgage origination volume. Frequency: monthly. Source: National Association of Realtors.
A person named in a will to administer an estate. Most Courts will appoint an administrator if no executor is named. (The feminine form is executrix)
A written contract that gives a licensed real estate agent the exclusive right to sell property for a specific time, but reserving the owner’s right to sell the property without the payment of a commission.
The report on the title of a property from the public records. Not as thorough as a full title search.
A fee associated with an inspection by a title company of public records and other documents to determine the chain of ownership of a property. For our comparison purposes, exam fee is considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
The legal expulsion of an occupant from real property. Usually exercised by a lessor against a lessee to recover possession of property.
The nature and extent of interest that an individual has in real property (degree of ownership). Also, the combined total of all real and personal property owned by an individual at the time of their death.
The portion of a borrower’s monthly mortgage payment that is held by the loan servicing company to pay for property taxes, hazard insurance, mortgage insurance and other items as they become due.
A periodic review of escrow accounts to determine if current monthly deposits balances will provide sufficient funds to pay property taxes, hazard insurance and other bills when they come due.
The account that funds are held in by the lender for the payment of real estate taxes and/or homeowner’s insurance. Can also refer to the account that funds are held in for the completion of repairs or improvements to a property that cannot be completed prior to closing.
Funds paid by one party to another to hold until a specific date when the funds are released to a designated individual. Generally, an escrow account refers to the funds a mortgagor pays to the lender along with their principal and interest payments for the payment of real estate taxes and hazard insurance. This is also referred to as impounds. The money is held by the lender to make payments when they are due. An escrow can also refer to funds that are held by a third party to ensure the completion of repairs or improvements that must be completed on the property but that cannot be done prior to closing.
An owner’s financial position in a property. Equity is the difference between the property’s value and the amount that is owed on mortgages.
The federal regulations that requires lenders to make credit equally available to all without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs or the fact that the applicant has exercised any right under the Consumer Credit Protection Act.
A person who signs ownership interest over to another party.
Additions to a title insurance policy for special coverage such as surveys, environmental and state particular endorsements that are not included in the standard insurance policy. For our comparison purposes, the fees for endorsements are considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
Anything that affects the title to a property such as a mortgage, judgment, or easement.
A property improvement or obstruction that physically intrudes upon the property of another.
Includes the unemployment rate, non-farm payroll, average work week and overtime. The non-farm payroll is probably the most watched number. Increases in these numbers can be an indication of pending “wage inflation”.
The right of a government to seize private property for public use upon payment of its fair market value. Eminent domain is the legal basis for condemnation proceedings.
A variety of systems and technologies for transferring funds electronically rather than by check.
As defined in the Equal Credit Opportunity Act, a person 62 or older.
Normal annual income, which may include overtime and bonuses, that is regular, consistent and guaranteed. A person’s salary is usually the prime source, but other income may qualify if it is significant, documented and stable.
An appraiser’s opinion of the physical condition of a structure. The actual age of a building may be longer or shorter than its effective age.
The industry within a certain geographic area that provides employment opportunities which are essential to support the community.
The continued use of another person’s property for a special purpose that can develop into permanent use if certain conditions are met.
A right of way giving persons, other than the owner, access to or over a property.
A sum of cash paid to a seller by a buyer prior to the closing to show that the buyer is serious about buying the house. The earnest money is deducted from the purchase price at closing and is not an additional cost. Sometimes referred to as a binder deposit.
An adjustable-rate mortgage (ARM) with monthly payments that are sufficient to liquidate the remaining principal balance over the amortization term.
FHLMC (Federal Home Loan Mortgage Corporation) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
Insurance that protects a homeowner from the cost of damages to a property due to flooding or high water. It is required by law that properties located in areas prone to flooding have flood insurance. The federal government determines whether an area is prone to flooding and considered to be in a flood plain.
An inspection to determine if a property is located in an area prone to flooding also known as a flood plain. The federal government determines whether an area is in a flood plain. Lenders generally rely on the flood certification to determine if flood insurance will be required in order to obtain a mortgage. For our comparison purposes, the cost of the flood certification is considered to be a third party fee.
A mortgage in which the monthly principal and interest payments remain the same throughout the life of the loan. The most common mortgage terms are 30 and 15 years. With a 30-year fixed rate mortgage your monthly payments are lower than they would be on a 15 year fixed rate, but the 15 year loan allows you to repay your loan twice as fast and save more than half the total interest costs.
The monthly payment due on a mortgage loan which includes both principal and interest.
A mortgage that is the first loan recorded in the public record and generally the primary loan against a property.
A lending institution’s agreement to give a loan to a specific borrower on a specific property.
A fee paid to a mortgage broker for finding a mortgage for a potential borrower.
The total dollar amount credit will cost.
A mortgage insured by the Federal Housing Administration (FHA). FHA loans are also known as government mortgages.
A mortgage for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the borrower’s default.
An unconditional, unlimited estate of inheritance that represents the greatest possible interest in land that can be enjoyed.
Absolute ownership of real property; the greatest possible interest a person can have in real estate.
Policy committee in the Federal Reserve System that sets short-term monetary policy objectives for the Fed. The committee is made up of the seven governors of the Federal Reserve Board, plus five of the 12 presidents of the Federal Reserve Banks.
An area of the U.S. Department of Housing and Urban Development (HUD) that insures low downpayment mortgages granted by some lenders. The loan must meet the established guidelines of FHA in order to qualify for the insurance.
Interest rate charged by banks, with excess reserves at a Federal Reserve district bank, to banks needing overnight loans to meet reserve requirements. The federal funds rate is the most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate, which are periodically changed by banks and by the Federal Reserve Board, respectively.
FNMA (Federal National Mortgage Association) One of the congressionally chartered, publicly owned companies that is the largest source of home mortgage funds.
The highest price that a willing, but not compelled, buyer would pay, and the lowest price that a willing, but not compelled, seller would accept.
A federal consumer protection regulation that controls the disclosure of credit information and establishes procedures for correcting mistakes in your credit file.
Economic indicator that measures the total volume of orders placed with U.S. factories. Also includes inventory and order backlog components, which can offer insight into inflation and growth in the manufacturing sector. Frequency: monthly. Source: Commerce Department.
The percentage interest rate that is shown on the actual loan note or document.
A home loan that is guaranteed by a third party.
A fixed-rate mortgage that involves scheduled payment increases over a specified period of time. The increase amount of the monthly payment is applied directly to the remaining principal balance.
A residential building designed for unrelated, persons with special needs. These homes provide long-term shelter and support services that are residential in nature.
The amount of money that is paid for the use of land when title to a property is held as a lease hold estate rather than a fee simple estate.
Measures aggregate economic activity available, encompassing every sector of the economy. Quarterly percent changes (at an annualized rate) in GDP reflect the growth rate of total economic output. GDP growth is widely followed as the primary indicator of the strength of economic activity. Frequency: quarterly. Source: Commerce Department.
The person conveying an interest in real property.
The person to whom an interest in real property is conveyed.
A technical term used in deeds of conveyance of property to indicate a transfer.
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created in 1968, GNMA assumed responsibility for the special assistance loan program formerly administered by FNMA. Commonly called Ginnie Mae.
A mortgage that is guaranteed by the Department of Veterans Affairs (VA) or, is insured by the Federal Housing Administration (FHA). Compare with conventional mortgage.
A written estimate of the closing costs the borrower will have to pay at closing. Under the Real Estate Settlement Procedures Act (RESPA), the lender is required to provide this disclosure to the borrower within three days of receiving a loan application.
A private, fenced-in housing development, sometimes employing security guards.
An apartment housing complex where the tenants have free access to a lawn or garden area.
Short-term financing, usually to cover a gap in time between a person’s purchase of a home and that person’s later receipt of funds, usually from the sale of their previous home. Sometimes called a bridge loan or swing loan.
An increase in monetary or property value.
Also referred to as the closing statement or the settlement statement, this is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
Median family income for a particular county or metropolitan statistical area, as estimated by the Department of Housing and Urban Development (HUD).
HUD, also known as the U.S. Department of Housing and Urban Development, insures home mortgage loans made by lenders meet minimum standards for such homes.
Economic indicator that measures the number of residential units on which construction is begun each month. Monthly percent changes reflect the rate of change of such activity. The level of housing starts is widely followed as an indicator of residential construction activity. Frequency: monthly. Source: Commerce Department.
A standard calculation performed by mortgage lenders to determine if a borrower qualifies for a specific loan type and amount. It is calculated by dividing the monthly housing expense (Principal, Interest, Taxes and Insurance) by the borrower’s monthly gross income. Also referred to as a front-end ratio or a top ratio.
Payments made to an association responsible for the maintenance of the common areas in a condominium or subdivision development.
A nonprofit association that manages the common areas of a condominium project or planned unit development (PUD). In a condominium development, the association has no ownership interest in the common elements. In a PUD, it holds title to the common elements of the project.
A type of insurance policy that covers repairs to certain parts of a home for an agreed upon period of time. It is typically provided by the contractor or seller as a condition of the sale.
Insurance that protects a homeowner against the cost of damages to property caused by fire, windstorms, and other common hazards. Also referred to as hazard insurance.
A complete and detailed inspection that examines and evaluates the mechanical and structural condition of a property. A complete and satisfactory home inspection is often required by the homebuyer. Compare with appraisal.
A loan secured by a subordinate mortgage on one’s principal residence, generally to be used for some non-housing expenditure. A traditional home equity loan provides lump-sum proceeds at the time the loan is closed.
A loan secured by real property, usually in a subordinate position, that allows the borrower to receive the loan proceeds in the form of multiple advances up to a limit that represents a maximum percentage of the borrower’s equity in a property.
Home Equity Conversion Mortgage (HECM) – Also referred to as a “reverse mortgage”, a Home Equity Conversion Mortgage is a special type of home loan that allows homeowners to convert the equity in their homes into cash that is paid to them in a lump sum or in a stream of payments. With this type of mortgage repayment not required until the borrower no longer uses the home as a principal residence.
Insurance that protects a homeowner against the cost of damages to property caused by fire, windstorms, and other common hazards. Also referred to as homeowner’s insurance.
The principal balance of a loan remaining when the term of the loan is beyond the term of a lease.
A half bathroom in a home that contains a wash sink and a toilet, but no bathtub or shower stall.
The “to have and to hold” clause that defines the amount of the estate granted in the deed.
A geographic area reserved and defined by local ordinance for specific limited use. Zones are almost always subject to certain restrictions or conditions.
A property that is not occupied by the owner.
The Interest Rate/APR shown can change at any time without notice. A final interest rate offer will be made after you complete our online application and the information you provided is reviewed by us. The interest rate charged will vary with the Prime Rate as quoted by the Wall Street Journal, and is subject to increase.
The local government’s specifications for the use of property in certain areas.
A map of the local geographic area that defines current zoning designations and land use.
The minimum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage loan note.
The maximum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage loan note.
An arrangement where the property seller, borrower or other party deposits money to an account so that it can be released each month to reduce the borrower’s interest rate or monthly payments during a specified period of a loan.
The acts of an authorized local government establishing building codes, and setting regulations for property usage.
The cost of borrowing a lender’s money. Interest takes into account the risk and cost to the lender for a loan. The interest rate on a fixed rate mortgage depends on the going market rate and how many discount points you pay up-front. An adjustable rate mortgage’s interest is a variable rate made up of the index and the lender’s margin.
The rate at which interest accrues on a mortgage. Usually, it is also the rate used to calculate the monthly payments.
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.
A measurement of the rate of earnings from an investment, usually expressed as a percentage.
A document stating that insurance is only temporarily in effect. Because the coverage will expire by a certain date, a permanent policy must be obtained prior to the expiration date.
The internal rate of return on an investment. Typically takes into account all investment returns and their timing.
A property title that a title insurance company agrees to insure against defects and claims.
Borrowed money that is repaid in equal periodic payments. Cars and furniture are often paid for with installment loans.
The voluntary abandonment or surrender of some claim, right, or privilege.
The original, starting interest rate of a loan at the time of closing. This rate changes for an adjustable-rate mortgage (ARM). Sometimes called a teaser rate.
The packaging together of many mortgages for the purpose of selling them in the secondary market, usually by a mortgage banker who has originated the loans.
A fixed-weight measure of physical output of the nation’s factories, mines and utilities. Monthly percent changes in the index reflect the rate of change in output. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. Frequency: monthly. Source: Federal Reserve.
A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund. Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks, bonds, or mutual funds.
A promise contained in a contract.
An index of eleven indicators designed to forecast the strength of the economy six to nine months in the future. Frequency: monthly. Source: Commerce Department.
Usually defined as the upper-most level at which underground water is normally encountered in a particular area.
Real estate developed and improved to produce steady income.
A computer-generated report containing credit and legal information obtained from one of the main credit bureaus.
A fee charged by some lenders to cover the cost of wiring the mortgage funds to the appropriate parties, such as the title company or attorney, so that they are available for closing. For our comparison purposes, a wire transfer fee is considered to be a third party fee. However, some lenders may not charge for this service.
A fund set aside for future needs, such as an escrow or reserve account.
A contract created by actions, but not necessarily written or spoken.
A loan that includes the remaining balance on an underlying first loan. Instead of having separate first and second mortgages, a wraparound loan has both.
Form of agency that occurs when the words and actions of the parties indicate that there is an agency relationship.
A mortgage for veterans and service persons. The loan is guaranteed by the Department of Veterans Affairs (VA) and requires low or no down payment.
A loan that exceeds the maximum loan amount allowed by the most common mortgage investors. The cost of obtaining a jumbo mortgage is generally higher than the cost of obtaining a conforming mortgage. Also known as a non-conforming loan.
The percentage of all units or space that is not leased, not rented or is unoccupied.
Type of foreclosure proceeding used in some mortgage states that is handled like a civil lawsuit and conducted entirely under the direction of a court.
Land that is not currently being used.
A lien on the property of a debtor resulting from a judgment.
To move out of a premises.
A fee charged by a title company to search the public record for judgments filed against a property owner or borrower that could ultimately encumber the title of the property. For our comparison purposes, a judgment search fee is considered to be a third party fee. Some lenders will include this fee in the title insurance cost.
A document or contract that has legally binding force.
An agreement between two or more parties who invest in a property or business.
Having the right or privilege to use a portion of a fund, such as an individual retirement account (IRA).
A form of co-ownership that gives each tenant equal undivided interest and equal rights in the property, including the right of survivorship.
A situation whereby a creditor can demand full repayment from any and all borrowers. Each borrower is liable for the full debt, not just the prorated share.
Uniform Commercial Code.
A credit account held by two or more people so that all can use the account and all assume legal responsibility to repay.
Generally refers to the first mortgage when there is a wraparound mortgage.
Detailed process of evaluating a borrower’s loan application to determine the risk involved for the lender. Underwriting usually involves an in-depth analysis of the borrower’s credit history, as well as an examination of the value and quality of the subject property.
An independent stand from which merchandise is sold.
A fee charged by some lenders to cover the cost of the lender’s analysis of the risk associated with a loan. For our comparison purposes, an underwriting fee is considered to be a lender fee.
A payment sometimes required by a mortgage loan in addition to normal principal and interest.
An ownership right to use and occupy property that is shared among more than one owner. No single co-owner may have exclusive rights or possession to any part of the property.
A tax-deferred pension account designated for employees of unincorporated businesses or for persons who are self-employed.
Group of laws that are applicable to commercial transactions. Only a few of the laws have relevance to real estate transactions.
A fee, usually associated with a survey or title policy to obtain a plat of the property to verify that there are not encroachments or easements that would affect a lender’s desire to provide financing. For our comparison purposes, the lot drawing fee is considered to be a third party fee.
A loan that is not backed by collateral.
An index used to establish the interest rate of some adjustable rate mortgages (ARM). LIBOR is the London Inter-Bank Offered Rates. This is the interest rate at which the highest rated banks offer to lend to one another in eurodollars. LIBOR offers various maturities, including 1-month, 3-month, 6-month and 1-year, however, the 6-month index is most common for mortgages. LIBOR is quoted daily in the Wall Street Journal’s Money Rates.
A firm commitment to provide permanent long-term financing after a construction project is completed.
Written agreement in which a lender guarantees a specific interest rate if a loan closes within a set period of time. The lock-in may also specify the number of points to be paid at closing.
Real estate and other property of value which can be seen and touched.
The number of days that the lender will guarantee the interest rate offered for a loan. In order to hold the guaranteed interest rate for a loan, the loan closing must occur during the lock period.
The total value of property, income, or other taxable assets subject to taxation.
Written agreement in which a lender guarantees a specific interest rate if a loan closes within a set period of time. The lock-in may also specify the number of points to be paid at closing.
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee.
A ratio used by lenders to calculate the loan amount requested as a percentage of the value of a home. To determine the loan to value ratio, divide the loan amount by the home’s value. The LTV ratio is used to determine what loan types the borrower qualifies for as well as the cost and fees associated with obtaining the loan.
A fee charged to a borrower by a lender so that another company will assume responsibility for verifying the amount of real estate taxes due and that taxes have been paid over the life of the loan. For our comparison purposes, a tax service fee is considered to be a third party fee, however, some lenders may not charge for this service.
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.
Fees that we consider to be taxes and other unavoidable fees include State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose. If you see a tax or recording fee in the fee comparison table that is listed by some of the sites and not others, don’t assume that you won’t have to pay it. It probably means that the lender who doesn’t list the fee hasn’t done the research necessary to provide accurate closing cost information nationwide. Contact one of the sites directly for more information or talk to your real estate agent or attorney for guidance.
The process by which a mortgage lender creates a mortgage secured by real property.
Type of joint tenancy that provides the right of survivorship and is available only to a husband and wife. Compare with tenancy in common.
Type of joint tenancy without the right of survivorship. Compare with tenancy by the entirety and with joint tenancy.
A written offer from a lender to provide financing to a borrower. The commitment letter states the terms under which the lender agrees to provide financing to the borrower. Also called a commitment letter.
Borrowed money that is usually repaid with interest.
Third party fees are usually fees that the lender will collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee and a title company or an attorney is paid the title insurance fees. Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees. Typically, you’ll see some minor variances in third party fees from lender to lender since a lender may have negotiated a special charge from a provider they use often or chooses a provider that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third party fees such as the flood certification fee, the tax service fee or courier/mailing fees.
An asset that is easily converted into cash.
An agreement by a financial institution to extend credit up to a certain amount for a certain time to a specified borrower.
On an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the term of the loan.
On an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the term of the loan.
A company that specializes in examining titles to real estate and issuing title insurance.
A certificate to verify there are no claims by one person on the property of another as security for money owed.
A fee charged by a title company or attorney in some states to cover the cost of searching the public record to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title. For our comparison purposes, a title examination fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
A loan secured by real estate. An encumbrance against a property for money due. The lien can be voluntary such as a mortgage or involuntary such as a judgment.
An insurance policy that protects the lender (and sometimes the property owner as well) against loss due to disputes over the ownership of a property and defects in the title that were not found in the search of the public record. For our comparison purposes, the title insurance cost is considered to be a third party fee.
See London Inter-bank Offered Rate.
An examination of the public title records to determine the legal ownership of a property, and to ensure that there are no liens, encumbrances or other claims outstanding.
Legal responsibility to repay debt.
This is the total of all the items that must be paid at closing related to your new mortgage. Since the exact charges for some of these items cannot be obtained until the time of closing, the figure may only be an estimate.
An insurance policy that offers protection against claims that a property owner’s negligence resulted in bodily injury or property damage to another party.
A standard calculation performed by mortgage lenders to determine if a borrower qualifies for a specific loan type. It is calculated by dividing the monthly housing expense (Principal, Interest, Taxes and Insurance plus all other monthly debt obligation) by the borrower’s monthly gross income. Also referred to as a back end ratio or a bottom ratio.
A person’s financial obligations including both long-term and short-term debt, as well as any other amounts that are owed to others.
Equity that results from a buyer giving an existing property as trade for all, or part of, the down payment on the subject property.
Any legal method by which the ownership of property changes hands.
A person or company that provides temporary use of property usually in return for periodic payment.
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee. May also be referred to as an Intangible Tax.
A person or company that signs a lease to get temporary use of property.
An index used to establish interest rates for adjustable rate mortgages. It is based on the interest rate paid to private investors by the US Government to obtain funding for the national debt and other expenses. Sometimes called T-bills, they are available in denominations of 3-months, 6-months and 1-year. The 3-month and 6-month Treasury bills are auctioned every Monday, and the 1-year Treasury bills are auctioned on Tuesday. The resulting figures are released to the public the next day. This index can have either a weekly or a monthly value.
Fees that are kept by the lender to cover some of their expenses and to meet their profitability goals. Typically fees such as origination fees, points, processing/administration fees, underwriting fees and document preparation fees are lender fees. This is the area of fees that you should compare very closely from lender to lender before making a decision.
Negotiable, long-term U.S. Government debt obligation with a maturity of ten years or longer, issued in minimum denominations of $1,000.
The bank, mortgage broker, or financial institution providing the loan funds to a borrower.
An index that is used to determine interest rate changes for some adjustable-rate mortgage (ARM) programs. It is often based on the U.S. Treasury’s daily yield curve.
A legal property description that is sufficient to locate and identify the property without verbal testimony.
A way of holding title to a property wherein the mortgagor does not actually own the property, but instead has a long-term recorded lease on it.
An intermediate U.S. Government security with a maturity of 1 to 10 years. Denominations range from $1,000 to $1 million or more. The notes are sold by cash subscription, in exchange for outstanding or maturing government issues, or at auction.
An index used to establish interest rates for adjustable rate mortgages. It is based on the yields of actively traded 1-year, 3-year, or 5-year Treasury Securities adjusted to constant maturities. The Treasury Security indices are calculated by the U.S. Treasury and reported by the Federal Reserve Board. These indices have either a weekly or a monthly value. The weekly indices are released on Monday afternoon for the previous week. Monthly values for these indices are generally available on the first Monday of the following month.
A creative financing option that allows homebuyers to lease a home with an option to buy. Each month’s rent payment consists of principal, interest, taxes and insurance, plus an extra amount that is deposited into a savings account created for a down payment.
Also known as Regulation Z, this federal regulation requires a lender to provide borrowers with a disclosure estimating the costs of the loan including your total finance charge and the Annual Percentage Rate (APR) within three business days of the application for a loan. This act is designed to provide consumers with a standard method of comparing the financing costs from lender to lender.
A written contract between a property owner and a tenant that expresses the conditions under which the tenant may possess the real estate for a specified period of time and rent.
A type of adjustable-rate mortgage (ARM) that has one interest rate for the first few years (typically 5 or 7), and a different rate for the remainder of the amortization term.
A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.
The penalty a borrower must pay when a payment is made after the stated due date.
A property installment selling agreement whereby the purchaser may occupy and use the land, but no deed is given by the seller until a specified part of the sales price has been paid.
The business of buying land that is not currently needed for use.
Any part of the surface of the earth.
Undue delay or negligence in asserting one’s legal rights.
Savings and Loan Association.
A fee charged by New York title companies or attorneys to cover the cost of searching the public record for court orders against the current owner or proposed purchaser that could affect the title of the property. The tax records are searched as well. For our comparison purposes, the NY Tax & Title Search fee is considered to be a third party fee.
A set of rules and regulations that will guarantee compliance with the law, if followed.
To apply for an on-line mortgage, an applicant is asked to provide personal and financial data about themselves. In order to help you compare one site to another, we have estimated the number of questions that must be answered to complete an application at each site.
Formal written notice to a borrower that a default on a loan has occurred and that legal action may be taken.
An interest rate provided by low-risk investments such as high grade bonds or secured first mortgages.
The interest rate stated on a mortgage note. Also called nominal rate or face interest rate.
A technique in which a seller deeds property to a buyer, who simultaneously leases the property back to the seller.
An agreement between a buyer and seller to purchase real estate. A sales contract, also known as an offer to purchase or a binder, 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.
The written agreement signed by the borrower at closing that contains the promise to repay the loan. The note also contains the terms of the loan, such as interest rate, payment, and term.
A state specific form that may need to be filed, disclosing everything about the sale of the home.
A fee for a licensed notary public to certify your signature on the loan documents.
A fee charged by a title company or attorney in some states to perform a check of the title records that verifies the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title. For our comparison purposes, a search and exam fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
Any assets that cannot easily be converted into cash.
A fee charged by a title company in some states to perform a check of the public record to verify that the buyer is purchasing a home from the legal owner and there are no liens, overdue assessment, or other claims that would adversely affect the transfer of title. In addition, a search is performed to insure that there are no issues that a survey would show that could affect the property. For our comparison purposes, a search and survey fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
A fee charged by a title company or attorney in some states to cover the cost of searching the public record to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue assessments, or other claims filed that would adversely affect the transfer of the title. For our comparison purposes, a search fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
A home used by the owners only occasionally or seasonally, primarily for recreational purposes.
A residential mortgage on a dwelling that is designed to house more than four families, such as an apartment complex.
A loan that has a lien position subordinate to the first mortgage.
The person who receives funds from a lender in exchange for a security interest in the property. Commonly known as the borrower.
The buying and selling of existing mortgages, primarily residential first mortgages.
The person or company who provides the loan funds to the borrower.
A loan that is backed by collateral.
A tax charged by some state or local governments that is paid to the state when a mortgage is obtained. For our comparison purposes, the mortgage tax is considered to be a tax and other unavoidable fee.
The lender’s right to take property that has been offered as security.
A fee or tax charged by some state and local governments when a mortgage is obtained. For our comparison purposes, the mortgage registration fee is considered to be a tax and other unavoidable fee.
An arrangement in which the owner of a property provides financing.
A type of term life insurance often bought by mortgagors. In the event that the borrower dies while the policy is in force, the debt is automatically repaid by insurance proceeds. Not to be confused with mortgage insurance.
A fee charged by a title company, closing agent or attorney to act as a representative and agent for the lender to perform the closing of a real estate transaction.
Also referred to as the HUD-1 or the closing statement, this is the document that provides line by line detail of the financial details related to a specific real estate transaction such as the fees paid by the seller and the buyer for a purchase transaction or the fees paid by the borrower for refinances.
Amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (PMI) company.
The process used to determine the monthly payment required to repay the remaining principal balance of a loan in fairly equal installments, over the remaining term of the loan at the current interest rate.
Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. The borrower usually pays the cost of the insurance and is most often required if the loan amount is more than 80% of the home’s value. Sometimes referred to as private mortgage insurance.
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee.
A company that originates mortgages for resale in the secondary mortgage market.
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another. For our comparison purposes, these fees are considered to be a tax or other unavoidable fee.
The legal document used by a borrower to pledge their property as security in order to obtain a loan. In some areas of the country, the mortgage is called a “deed of trust”.
A type of adjustable-rate mortgage (ARM) that allows for the interest rate to increase according to a specified schedule. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan. Sometimes called a step-rate mortgage.
The monthly payment required to pay back your equity loan is calculated in accordance with the program you selected. In the case of the 15 year fixed rate or balloon loan, the monthly payment will not change during the term of the loan. If you choose our equity line of credit, the monthly payment is calculated based on the balance due.
Any mortgage or other lien that has a lower priority than that of the first mortgage.
A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and United States Treasury bills.
A fee charged by a title company to issue an insurance policy without requiring that a full survey be completed. For our comparison purposes, a survey affidavit fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
A type of savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions may apply to the withdrawal of funds.
Contribution to the construction of a property in the form of labor or services, instead of cash.
Actions by the Federal Reserve System to influence the cost and availability of credit, with the goals of promoting economic growth, full employment, price stability and balanced trade with other countries.
Sometimes called a bridge loan, a swing loan is generally a loan that is secured by a borrower’s current residence to obtain the funds needed to purchase a new home if the current residence will not be sold prior to the purchase of a new home.
A credit report that contains information from at least three credit repositories. Any duplicate entries are combined to provide a concise summary of a your credit.
Usually, a loan amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product.
The date on which the principal balance of a financial instrument becomes due and payable.
A homeowners’ association sometimes formed in a large condominium project or planned unit development (PUD) that is made up of representatives from associations covering specific areas within the project.
The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period.
A tax charged by some state or local governments at the time of transfer of real estate title from one owner to another particularly for high valued properties. For our comparison purposes, this fee is considered to be a tax or other unavoidable fee.
The fee charged for professional property management. Usually set at a fixed percentage of total rental income generated by the managed property.
Activities required to compensate for wear and tear on a property.
Modified Accelerated Cost Recovery System.
A mortgage that exceeds the maximum loan amount for the most common mortgage investors. The cost of obtaining a non-conforming mortgage is generally higher than the cost of obtaining a conforming mortgage. Also known as a jumbo loan.
A refinance loan is an amount that pays off the existing mortgage balance on the property and does not provide the borrower with any cash at closing.
Reports the number of new single-family homes sold, expressed on an annual basis. Can be combined with Existing Home Sales to determine the total volume of home sales, a strong predictor of future national mortgage origination volume. Frequency: monthly. Source: Commerce Department.
The total value of all of a person’s or company’s assets, minus all liabilities.
For our comparison purposes, the net closing costs are the total closing costs quoted by a lender, less any credit or rebate that is offered.
The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance.
A gradual increase in mortgage debt that occurs when the periodic monthly payment is not sufficient to cover the monthly principal and interest due. The amount of the deficit is added to the remaining principal balance to create negative amortization.
A lessee with a presence and established reputation in most of the United States. These tenants are typically well-known and usually have better credit than local tenants.
An organization of Realtors®, devoted to encouraging professionalism in real estate activities.
This prices-paid index gives insight into inflation in the manufacturing sector. A reading above 50% generally indicates that the manufacturing sector is expanding, and below 50% signifies contraction. Frequency: monthly. Source: National Association of Purchasing Management.
A fee charged by title companies in some states to cover the cost of searching the public record for court orders against the current owner or proposed purchaser that could affect the title of the property. For our comparison purposes, the name search fee is considered to be a third party fee.
A real property purchase transaction in which the seller provides the financing.
One of our goals is to provide you with apples to apples comparison of all the fees charged by our top lenders to obtain a loan. Fees listed as other fees cannot easily be compared to any standard fee type and should be evaluated and compared separate from the standard fees.
A fee charged by a lender as a way to cover processing expenses or to increase their profitability for originating a mortgage loan. Most commonly, the origination fee is expressed as a percent of the loan amount. For our comparison purposes, the origination fee is considered to be a lender fee.
Total amount of principal owed on a loan before any payments are made.
A lease which may involve a balloon payment based on the value of the property when it is returned.
An agreement between a buyer and seller to purchase real estate. An offer to purchase, also known as a binder 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.
A buyer’s expression of willingness to purchase a property at the seller’s specified price.
Percentage of currently rented units in a building, neighborhood, complex, or city.
A person or company who has engaged to perform some obligation.
A person or company whose favor an obligation is entered into.
The PMAC Survey is a composite diffusion index of manufacturing conditions in the Chicago area. Readings above 50% indicate an expanding factory sector.
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
A collection of legal documents that are filed with the local government registry so that the public will know what liens, encumbrances or judgments may affect any piece of real estate.
A gathering at a pre-announced public location to sell property to satisfy a mortgage that is in default.
Taxes based on the assessed value of the home, paid by the homeowner for community services such as schools, public works, and other costs of local government. Sometimes paid as a part of the monthly mortgage payment.
A written promise to pay a specified sum to specified person over a specified period of time.
Measures the average level of prices of a fixed basket of goods received in primary markets by producers. Monthly percent changes reflect the rate of change in such prices. Changes in the PPI are widely followed as an indicator of commodity inflation. Frequency: monthly. Source: Labor Department.
A fee charged by a lender to cover the administrative costs of processing a loan request. For our comparison purposes, a processing or administration fee is considered to be a lender fee.
Insurance provided by a private company to protect the mortgage lender against losses that might be incurred if a loan defaults. The cost of the insurance is usually paid by the borrower and is most often required if the loan amount is more than 80% of the home’s value. Sometimes referred to as mortgage insurance.
The outstanding balance of principal on a loan. Principal does not include interest or fees.
The payment required to repay a mortgage in accordance with its terms. Sometimes referred to as “P&I”.
The interest rate that banks charge to their best customers for short-term loans. Changes in the prime rate can influence changes in other interest rates.
A monetary penalty charged by a lender if all or part of a loan is paid off before it is due.
Procedure to determine how much money a potential homebuyer will be eligible to borrow prior to actually applying for a loan.
A process in which the lender allows a borrower to avoid foreclosure by selling the property for less than the amount that may be owed to the lender.
A written legal instrument that authorizes another person to act on one’s behalf. A power of attorney can grant either complete or limited authority.
A fee charged by title companies in some states to review the registration of a public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the individual parcels. For our comparison purposes, the plat registration fee is considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
A fee charged by title companies in some states for obtaining a map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements. This drawing is required to obtain title insurance. For our comparison purposes, the plat drawing and conservation fee is considered to be a third party fee. Some lenders may include this fee in the cost of the title insurance.
A housing project that includes common property that is owned and maintained by a homeowners’ association for the benefit and use of the individual unit owners.
Any and all property that is not real property.
Economic indicator that measures the total income of all Americans from all sources, and is reported both before and after taxes. Also reports personal spending and personal savings. The level of spending can be used as an indicator of consumer optimism. Frequency: monthly. Source: Commerce Department.
On an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase during a single adjustment period.
On an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase during a single adjustment period.
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM). The payment change date usually occurs in the month immediately after the adjustment date.
A loan payment that is not great enough to cover the scheduled monthly payment on a mortgage.
A single freestanding retail site, often adjacent to a mall or larger shopping center.
A mortgage agreement in which the principal amount loaned is increased because personal property as well as real property serve as security.
The monthly principal and interest payment required when repaying a mortgage in accordance with its terms.
A deed that transfers, without warranty, whatever interest or rights a grantor may have at the time the transfer is made. Often used to remove a possible cloud on the title.
A method used by appraisers to estimate how much it would cost to reproduce an improvement.
A lender who specializes in home mortgage finance under the rules established by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
Calculations performed by lenders to determine your ability to repay a loan. The first qualifying ratio is calculated by dividing the monthly PITI by the gross monthly income. The second ratio is calculated by dividing the monthly PITI and all other monthly debts by the gross monthly income.
A square-shaped land area, 24 miles on each side. Frequently used in the government rectangular survey method of land description.
An agency within the United States Department of Agriculture that provides financing to farmers and other qualified borrowers buying property in rural areas, who are unable to obtain loans elsewhere.
In joint tenancy, the right of surviving joint tenants to acquire the interest of a deceased joint tenant.
The right to enter or leave specific property or premises.
A contract provision that requires a property owner to give another party the first opportunity to purchase or lease the property before it is offered to others.
A credit agreement (typically a credit card) that allows a customer to borrow against a pre-approved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due.
See Home Equity Conversion Mortgage (HECM).
Some administrators of 401(k) and 403(b) plans allow for loans against the funds you have accumulated in these plans.
Employer-sponsored investment plans that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by private corporations. 403(b) plans are provided by non-profit organizations.
Measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Frequency: monthly. Source: Commerce Department.
An amount set aside from net operating income for replacement of short-lived common property in cooperative housing projects such as condominiums.
An agreement between a lender and a borrower, made to help the borrower repay delinquent installments.
An insurance policy that protects a landlord against loss of rent or value due to natural casualties that renders the premises unsuitable for use, and therefore excuses the tenant from paying rent.
The number of payments left to be made on a loan before it is fully amortized (paid in full).
The amount of principal owed on a loan that has not yet been fully repaid.
The fee charged to release a lien to free real estate from a mortgage.
A loan granted to cover the costs of repairing or improving an existing property. Sometimes also used to acquire property with the intent to improve it.
A fee charged by the local government to record mortgage documents into the public record so that any interested party is aware that a lender has an interest in the property. For our comparison purposes, a recording fee is considered to be a tax or other unavoidable fee.
A fee charged by the title company in some states to review documents, to assure they meet the state standards prior to being recorded. For our comparison purposes, a recordation exam is considered to be a third party fee and may be included in the title insurance fee by some lenders.
This fee is charged by title companies or attorneys in some states and covers the cost of removing your current lender’s lien from your property title when you refinance. For our comparison purposes, a reconveyance fee is considered to be a third party fee and may be included in the title insurance fee by some lenders.
A real estate broker or associate who is an active member of a local real estate board that is affiliated with the National Association of Realtors.
Land and anything permanently affixed to the land, including structures, trees, minerals, and the interest, benefits and rights thereof.
A consumer protection law that requires mortgage lenders and brokers to give borrowers advance notice of closing costs in the form of a Good Faith Estimate.
A person licensed to negotiate the purchase and sale of real estate on behalf of buyers and sellers.
Same as interest rate.
An agreement by a lender to guarantee the interest rate offered for a mortgage provided that the loan closes within the specified period of time.
A fixed-rate mortgage (FRM) that includes a clause allowing the borrower the option to reduce the interest rate one time (without refinancing) during the first few years of the loan term.
The maximum amount that an interest rate can change, either at an adjustment period or over the entire life of the loan. Commonly associated with an adjustable rate mortgage (ARM).
Once described a low, one-story house typical of the western United States. The term is now used to describe just about any one-story home.
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