   It's Greek To Me!! |
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 It's Greek To Me!! The mortgage industry is full of terms that are foreign to many people. The following glossary of terms should help you translate the mortgage language into English and help you make sense of the mortgage process. Appraisal An expert opinion on the value of a property Appraisal Methods Generally, there major methods - Cost approach, Income approach, Market Value (comparables) approach. Appreciation An increase in value of real estate. Annual Percentage Rate This is not the note rate applied for, but rather is a government mandated formula that shows the cost of the loan in a yearly rate by using the note rate plus certain other upfront costs ARM Loan Adjustable Rate Mortgage. Mortgage characterized by an interest rate that can adjust up or down at certain intervals based on a current index (commonly the 1 year T-Bill) plus a preset margin. Assumption of Mortgage The taking of title to property by a grantee, wherein he or she assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property: becoming a co-guarantor for the payment of a mortgage or deed of trust not. Balloon Mortgage characterized by level fixed payments for a predetermined time frame followed by either a refinance or adjustment in interest rate Capital Gains The tax paid upon certain types of real estate transactions. Contact accountant for specifics (see links for details) Cash to Close The amount needed from the borrower at closing. Consists of down payment, closing costs and prepaid items. This amount needs to be in the form of a cashier check made payable to the buyer. Closing Date Date stated on the purchase agreement that buyer and seller agree to finalize or close the transaction Closing Costs Various costs of setting up and funding the transaction - including closing fee, title insurance, appraisal fees, underwriting fee, mortgage registration tax etc. Condo/Town Home Property types that usually have the following characteristics: they are attached, have a homeowners association and dues, the outside maintenance is taken care of by the association, and common areas and amenities available to all owners in the association. Contract for Deed A contract ordinarily used in connection with the sale of property in cases when the seller does not wish to convey title until all or the buyer pays a certain part of the purchase price. Contract of Title A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record, which may affect the marketability of the title. Conventional Financing Standard, non-government financing. Counter Offer A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing from the original offer. Credit Bureaus Agencies that provide compilations of your credit history. The three main credit bureaus are Experian, Trans Union, and Equifax Credit Report Report provided by the credit bureaus which shows the history, current status, and profile of an individual Credit Scores The number generated by the credit bureaus which is a numerical representation of the subjects credit profile, range is from 450 on the low side to 900 being the highest score possible. Debt Ratios Ratio of debt to pretax income, often expressed as a front (housing payment only) or back (all debt) ratios. Ex- $5000 monthly income, $1400 housing payment, $1700 total debt would equal ratios of 28%/34%. Deed Written instrument which, when properly executed and delivered, conveys title. Discount Points One point equals one percent of the loan amount. Points are used to lower the interest rate. One point does not equate into lowering the interest rate one percent. Generally lowering the interest rate 1/8 will cost about 1/2 point, although this can vary based on daily pricing. Typically is tax deductible. (see Links for accountant advice) Down Payment Difference between loan amount and purchase price. Earnest Money Deposit Down payment made by a purchaser as evidence of good faith. Easement Created by grant or agreement for a specific purpose, or easement is the right, privilege or interest which one party has in the land of another. Example: right of way. Equity The interest or value which an owner has in real estate over and above the liens against the real property. Escrow The deposit of instruments and funds with instructions to a third neutral party (Escrow Agent) to carry out the provision of an agreement or contract: when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow. F.H.A. Loan - (federal Housing Administration) A loan which has been insured by the federal government guaranteeing its payment in case of default by the owner. FMHA Loan A loan by the federal government similar to FHA loan usually used for residential property in rural areas. Impound Account Account held by the lender for payment of taxes, insurance, or other periodic debts against real property. Joint Tenancy Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property. Lien A form of encumbrance which usually makes property security for the payment of a debt of discharge of an obligation. Example: Judgments, taxes, mortgages, deeds of trust, etc. Marketable Title Merchantable title; title free and clear of objectionable liens or encumbrances. |
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7025 E. Greenway Pkwy. Suite 100 Scottsdale, AZ 85254 BKBR #0105276 Direct: (480) 282-5851 Fax: (480) 240-4212 mbelmont@securitymortgagecorp.net |
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