|
| Abstract (Of Title) |
| A summary of the public records relating to the title to a
particular piece of land. If there are any title defects they
must be cleared before a buyer can purchase clear, marketable,
and insurable title. |
| Acceleration Clause |
| Allows the lender to speed up the rate at which
your loan comes due or even to demand immediate payment of the
entire balance of the loan should you default on you loan. |
| Adjustable Rate Mortgage (ARM) |
| A mortgage in which the interest rate is adjusted periodically
based on an index. Also known as the renegotiable rate mortgage,
the variable rate mortgage or the Canadian rollover mortgage. |
| Adjustment Interval |
| On an adjustable rate mortgage, the time between changes in
the interest rate and/or monthly payment, usually one, three
or five years. |
| Agreement of Sale |
| Known by various names, such as contract of purchase, purchase
agreement, or sales agreement according to location or jurisdiction.
A contract in which a seller agrees to sell and a buyer agrees
to buy, under specific terms spelled out in writing and signed
by both parties. |
| Amortization |
| Loan payment calculated to pay off the debt at the end of
a fixed period, including interest on the outstanding balance. |
| Annual Percentage Rate (APR) |
| The cost of credit as a yearly rate. The percentage results
from an equation considering the total amount financed, the
finance charges, and the term of the loan. Usually not the same
as the interest rate. |
| Appraisal |
| An estimate of the value of property, made by a professional
appraiser. |
| Appraisal Fee |
| The charge for estimating the value of property. |
| Asset |
| Property that can be used to repay debt, such as stocks and
bonds or a car. |
| Assumption |
| The agreement between buyer and seller where the buyer takes
over the payments on an existing mortgage from the seller. Assuming
a loan can usually save the buyer money since this is an existing
mortgage debt. |
| Automated Teller Machines (ATMs) |
| Electronic terminals through which customers may make deposits,
withdrawals, or other transactions as they would through a bank
teller. |
| Balloon (Payment) Mortgage |
| Usually a short-term fixed-rate loan which involves small
payments for a certain period of time and one large payment
for the remaining amount of the principal at a specific time. |
| Binder or "Offer to Purchase" |
| A preliminary agreement, secured by the payment of earnest
money, between a buyer and seller as an offer to purchase real
estate. 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 is forfeited
unless the binder expressly provides that it is to be refunded. |
| Billing Error |
| Any mistake in your monthly statement as defined by the Fair
Credit Billing Act. |
| Broker |
| An individual in the business of assisting in arranging funding
or negotiating contracts for a client but who does not loan
the money himself. |
| Building Line or Setback |
| Distances from the ends and/or sides of the lot beyond which
construction may not extend. The building line may be set by
a filed plat of subdivision, by restrictive covenants in deeds
or leases, by building codes, or by zoning ordinances. |
| Business Days |
| Find out from your institution to find out what days it counts
as business days under the Truth in Lending and Electronic Fund
Transfer Acts. |
| Buydown |
| When the lender and/or the home builder subsidizes the mortgage
by lowering the interest rate during the first few years of
the loan. While the payments are initially low, they will increase
when the subsidy expires. |
| Caps (Interest) |
| Consumer safeguards which limit the amount the interest rate
on an adjustable rate mortgage may change per year and/or the
life of the loan. |
| Caps (Payment) |
| Consumer safeguards which limit the amount monthly payments
on an adjustable rate mortgage may change. |
| Certificate of Title |
| A certificate issued by a title company or a written opinion
by an attorney that the seller has good marketable and insurable
title to the property which he is offering for sale. A certificate
of title offers no protection against any hidden defects in
the title which an examination of the records could not reveal.
The issuer of a certificate of title is liable only for damages
due to negligence. |
| Closing |
| The meeting between the buyer, seller and lender where the
property and funds legally change hands. Also called settlement. |
| Closing Costs |
| Includes a loan origination fee, points, appraisal fee, title
search and insurance, survey, taxes, deed recording fee, credit
report charge and other costs assessed at settlement. The closing
costs usually are about 2 percent to 6 percent of the mortgage
amount. |
| Closing Day |
| The day on which the formalities of a real estate sale are
finished. The certificate of title, abstract, and deed are generally
prepared for the closing by an attorney and this cost charged
to the buyer. The buyer signs the mortgage, and closing costs
are paid. The final closing merely reiterates the original agreement
reached in the agreement of sale. |
| Cloud (On Title) |
| An outstanding claim which negatively affects the marketability
of title. |
| Collateral |
| Property offered to support a loan that can be seized if you
default. |
| Commission |
| Money paid to a real estate agent or broker by the seller
as compensation for finding a buyer and completing the sale. |
| Commitment |
| An agreement, often in writing, between a lender and a borrower
to loan money at a future date subject to the stated conditions. |
| Condemnation |
| A determination by a governmental agency that a particular
building is unsafe or unfit for use. |
| Condominium |
| Individual ownership of a unit and an individual interest
in the common areas and facilities which serve the project. |
| Construction Loan |
| A short term interim loan for financing the cost of construction.
The lender advances funds to the builder as the work progresses. |
| Contractor |
| A person who contracts to erect buildings. There are also
contractors for each phase of construction: heating, electrical,
plumbing, air conditioning, road building and others. |
| Conventional Loan |
| A mortgage not insured by FHA or guarantee by the VA or Farmers
Home Administration (FmHA). |
| Cooperative Housing |
| An apartment building or a group of dwellings owned by a corporation,
the stockholders of which are the residents of the dwellings.
It is operated for their benefit by their elected board of directors.
In a cooperative, the corporation or association owns title
to the real estate. A resident purchases stock in the corporation
which entitles him to occupy a unit in the building or property
owned by the cooperative. While the resident does not own his
unit, he has an absolute right to occupy his unit for as long
as he owns the stock. |
| Cosigner |
| Another person who signs your loan and assumes equal responsibility
for it. |
| Credit |
| The right granted by a creditor to pay in the future in order
to buy or borrow in the present; also, a sum of money owed to
a person or business. |
| Credit Bureau |
| An agency that keeps your credit record. |
| Credit Card |
| Any card used from time to time to borrow money or buy goods
or services on credit. |
| Credit History |
| The record of how you've borrowed and repaid debts. |
| Credit Ratio |
| The ratio, expressed as a percentage, which results when a
borrower's monthly payment obligation on long-term debts is
divided by his or her net income (FHA/VA loans) or gross monthly
income (Conventional loans). See Housing Expenses-to-Income
Ratio. |
| Credit-related Insurance |
| Health, life, or accident insurance designed to pay the outstanding
balance of debt. |
| Credit Scoring System |
| A statistical system used to rate credit applicants according
to various characteristics relevant to creditworthiness. |
| Creditor |
| A person or business from whom you borrow or
to whom you owe money. |
| Creditworthiness |
| Past and future ability to repay debts. |
| Debit Card (EFT Card) |
| A plastic card, looks similar to a credit card, that consumers
may use to make purchases, withdrawals, or other types of electronic
fund transfers. |
| Deed |
| A formal written instrument by which title to real property
is transferred from one owner to another. The deed should contain
an accurate description of the property being conveyed, should
be signed and witnessed according to the laws of the State where
the property is located, and should be delivered to the purchaser
at closing day. There are two parties to a deed: the grantor
and the grantee. (See also deed of trust, general warranty deed,
quitclaim deed, and special warranty deed.) |
| Deed of Trust |
| In many states, this document is used in place of a mortgage
to secure the payment of a note. |
| Default |
| Failure to repay a loan or otherwise meet the terms of your
credit agreement. |
| Deferred Interest |
| See Negative Amortization. |
| Delinquency |
| Failure to make payments on time. This can lead to foreclosure. |
| Department of Veterans Affairs (VA) |
| An independent agency of the federal government which guarantees
long-term, low- or no-down payment mortgages to eligible veterans. |
| Depreciation |
| Decline in value of a house due to wear and tear, adverse
changes in the neighborhood, or any other reason. |
| Disclosures |
| Information that must be given to consumers about their financial
dealings. |
| Discount Points |
| Prepaid interest assessed at closing by the
lender. Each point is equal to 1 percent of the loan amount
(e.g. two points on a $100,000 mortgage would cost $2,000). |
| Documentary Stamps |
| A State tax, in the forms of stamps, required on deeds and
mortgages when real estate title passes from one owner to another.
The amount of stamps required varies with each State. |
| Down Payment |
| Money paid to make up the difference between the purchase
price and mortgage amount. Down payments usually are 10 percent
to 20 percent of the sales price on Conventional loans, and
no money down up to 5 percent on FHA and VA loans. |
| Due-On-Sale Clause |
| A provision in a mortgage or deed of trust that allows the
lender to demand immediate payment of the balance of the mortgage
if the mortgage holder sells the home. |
| Earnest Money |
| Money given by a buyer to a seller as part of the purchase
price to bind a transaction or assure payment. |
| Easement Rights |
| A right-of-way granted to a person or company authorizing
access to or over the owner's land. An electric company obtaining
a right-of-way across private property is a common example. |
| Elderly Applicant |
| As defined in the Equal Credit Opportunity Act,
a person 62 or older. |
| Electronic Fund Transfer (EFT) Systems |
| A variety of systems and technologies for transferring funds
electronically rather than by check. |
| Encroachment |
| An obstruction, building, or part of a building that intrudes
beyond a legal boundary onto neighboring private or public land,
or a building extending beyond the building line. |
| Encumbrance |
| A legal right or interest in land that affects a good or clear
title, and diminishes the land's value. It can take numerous
forms, such as zoning ordinances, easement rights, claims, mortgages,
liens, charges, a pending legal action, unpaid taxes, or restrictive
convenants. An encumbrance does not legally prevent transfer
of the property to another. A title search is all that is usually
done to reveal the existence of such encumbrances, and it is
up to the buyer to determine whether he wants to purchase with
the encumbrance, or what can be done to remove it. |
| Equal Credit Opportunity Act (ECOA) |
| Is a federal law that requires lenders and other creditors
to make credit equally available without discrimination based
on race, color, religion, national origin, age, sex, marital
status or receipt of income from public assistance programs. |
| Equity |
| The difference between the fair market value and current indebtedness,
also referred to as the owner's interest. |
| Escrow |
| Refers to a neutral third party who carries out the instructions
of both the buyer and seller to handle all the paperwork of
settlement or "closing." Escrow may also refer to
an account held by the lender into which the homebuyer pays
money for tax or insurance payments. |
| Fannie Mae |
| See Federal National Mortgage Association. |
| Farmers Home Administration (FmHA) |
| Provides financing to farmers and other qualified borrowers
who are unable to obtain loans elsewhere. |
| Federal Home Loan Mortgage Corporation (FHLMC) |
| Also called Freddie Mac, is a quasi-governmental agency that
purchases conventional mortgages from insured depository institutions
and HUD-approved mortgage bankers. |
| Federal Housing Administration (FHA) |
| A division of the Department of Housing and Urban Development.
Its main activity is the insuring of residential mortgage loans
made by private lenders. FHA also sets standard for underwriting
mortgages. |
| Federal National Mortgage Association (FNMA) |
| Also known as Fannie Mae. A tax-paying corporation created
by Congress that purchases and sells conventional residential
mortgages as well as those insured by FHA or guaranteed by VA.
This institution, which provides funds for one in seven mortgages,
makes mortgage money more available and more affordable. |
| FHA Loan |
| A loan insured by the Federal Housing Administration open
to all qualified home purchasers. While there are limits to
the size of FHA loans, they are generous enough to handle moderate-priced
homes almost anywhere in the country. |
| FHA Mortgage Insurance |
| Requires a small fee (up to 3 percent of the loan amount)
paid at closing or a portion of this fee added to each monthly
payment of an FHA loan to insure the loan with FHA. On a 9.5
percent $75,000 30-year fixed-rate FHA loan, this fee would
amount t o either $2,250 at closing or an extra $31 a month
for the life of the loan. In addition, FHA mortgage insurance
requires an annual fee of 0.5 percent of the current loan amount,
the more years the fee must be paid. |
| Finance Charge |
| The total dollar amount credit will cost. |
| Fixed-Rate Mortgage |
| A mortgage on which the interest rate is set for the term
of the loan. |
| Foreclosure |
| A legal procedure in which property securing debt is sold
by the lender to pay a defaulting borrower's debt. |
| Freddie Mac |
| See Federal Home Loan Mortgage Corporation. |
| General Warranty Deed |
| A deed which conveys not only all the grantor's interests
in and title to the property to the grantee, but also warrants
that if the title is defective or has a "cloud" on
it (such as mortgage claims, tax liens, title claims, judgments,
or mechanic's liens against it) the grantee may hold the grantor
liable. |
| Ginnie Mae |
| See Government National Mortgage Association. |
| Government National Mortgage Association (GNMA) |
| Also known as Ginnie Mae, provides sources of funds for residential
mortgages, insured or guaranteed by FHA or VA. |
| Graduated Payment Mortgage (GPM) |
| A type of flexible-payment mortgage where the payments increase
for a specified period of time and then level off. This type
of mortgage has negative amortization built into it. |
| Grantee |
| That party in the deed who is the buyer or recipient. |
| Grantor |
| That party in the deed who is the seller or giver. |
| Gross Monthly Income |
| The total amount the borrower earns per month, before any
expenses are deducted. |
| Guarantee |
| A promise by one party to pay a debt or perform an obligation
contracted by another if the original party fails to pay or
perform according to a contract. |
| Hazard Insurance |
| A form of insurance in which the insurance company protects
the insured from specified losses, such as fire, windstorm and
the like. |
| Home Equity Line of Credit |
| A form of open end credit in which the home serves as collateral. |
| Housing Expenses-to-Income Ratio |
| The ratio, expressed as a percentage, which results when a
borrower's housing expenses are divided by his/her net effective
income (FHA/VA loans) or gross monthly income (Conventional
loans). |
| HUD |
| U.S. Department of Housing and Urban Development. Office of
Housing/Federal Housing Administration within HUD insures home
mortgage loans made by lenders and sets minimum standards for
such homes. |
| Impound |
| That portion of a borrower's monthly payments held by the
lender or service to pay for taxes, hazard insurance, mortgage
insurance, lease payments, and other items as they become due.
Also known as reserves. |
| Index |
| A published interest rate against which lenders measure the
difference between the current interest rate on an adjustable
rate mortgage and that earned by other investments (such as
one- three-, and five-year U.S. Treasury Security yields, the
monthly average interest rate on loans closed by savings and
loan institutions, and the monthly average Costs-of-Funds incurred
by savings and loans), which is then used to adjust the interest
rate on an adjustable mortgage up or down. |
| Interest |
| A charge paid for borrowing money. |
| Interest Rate |
| The annual rate of interest on the loan, expressed as a percentage
of 100. |
| Investor |
| Money source for a lender. |
| Joint Account |
| A credit account held by two or more people so that all can
use the account and all assume legal responsibility to repay. |
| Jumbo Loan |
| A loan which is larger (more than $203,150) than the limits
set by the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation. Because jumbo loans cannot be
funded by these two agencies, they usually carry a higher interest
rate. |
| Late Payment |
| A payment made later than agreed upon in a credit contract
and on which additional charges may be imposed. |
| Lessee |
| A person who signs a lease to get temporary use of property. |
| Lessor |
| A company that provides temporary use of property usually
in return for periodic payment. |
| Liability on an Account |
| Legal responsibility to repay debt. |
| Lien |
| A claim upon a piece of property for the payment or satisfaction
of a debt or obligation. |
| Loan-To-Value Ratio |
| The relationship between the amount of the mortgage loan and
the appraised value of the property expressed as a percentage. |
| Lock Term |
| A lender's guarantee of an interest rate for a set period
of time. The time period is usually that between loan application
approval and loan closing. The lock-in protects you against
rate increases during that time. |
| Margin |
| The amount a lender adds to the index on an adjustable rate
mortgage to establish the adjusted interest rate. |
| Market Value |
| The highest price that a buyer would pay and the lowest price
a seller would accept on a property. Market value may be different
from the price a property could actually be sold for at a given
time. |
| Marketable Title |
| A title that is free and clear of objectionable liens, clouds,
or other title defects. A title which enables an owner to sell
his property freely to others and which others will accept without
objection. |
| Mortgage |
| A lien or claim against real property given by the buyer to
the lender as security for money borrowed. Under government-insured
or loan-guarantee provisions, the payments may include escrow
amounts covering taxes, hazard insurance, water charges, and
special assessments. Mortgages generally run from 10 to 30 years,
during which the loan is to be paid off. |
| Mortgage Commitment |
| A written notice from the bank or other lending institution
saying it will advance mortgage funds in a specified amount
to enable a buyer to purchase a house. |
| Mortgage Insurance |
| Money paid to insure the mortgage when the down payment is
less than 20 percent. See Private Mortgage Insurance or FHA
Mortgage Insurance. |
| Mortgage Insurance Premium |
| The payment made by a borrower to the lender for transmittal
to HUD to help defray the cost of the FHA mortgage insurance
program and to provide a reserve fund to protect lenders against
loss in insured mortgage transactions. In FHA insured mortgages
this represents an annual rate of one-half of one percent paid
by the mortgagor on a monthly basis. |
| Mortgage Note |
| A written agreement to repay a loan. The agreement is secured
by a mortgage, serves as proof of an indebtedness, and states
the manner in which it shall be paid. The note states the actual
amount of the debt that the mortgage secures and renders the
mortgagor personally responsible for repayment. |
| Mortgage (Open-End) |
| A mortgage with a provision that permits borrowing additional
money in the future without refinancing the loan or paying additional
financing charges. Open-end provisions often limit such borrowing
to no more than would raise the balance to the original loan
figure. |
| Mortgagor |
| The borrower or homeowner. |
| MSRP |
| Stands for Manufacturer's Suggested Retail Price. It represents
the manufacturer's recommended selling price for a vehicle and
each of its options. |
| Negative Amortization |
| Occurs when your monthly payments are not large enough to
pay all the interest due on the loan. This unpaid interest is
added to the unpaid balance of the loan. The danger of negative
amortization is that the homebuyer ends up owing more than the
original amount of the loan. |
| Net Effective Income |
| The borrower's gross income minus federal income tax. |
| Non-Assumption Clause |
| A statement in a mortgage contract forbidding the assumption
of the mortgage without the prior approval of the lender. |
| Open-End Credit |
| A line of credit that may be used over and over again, including
credit cards, overdraft credit accounts, and home equity lines. |
| Open-End Lease |
| A lease which may involve a balloon payment based on the value
of the property when it is returned. |
| Origination Fee |
| The fee charged by a lender to prepare loan documents, make
credit checks, inspect and sometimes appraise a property; usually
computed as a percentage of face value of the loan. |
| Overdraft Checking |
| A line of credit that allows you to write checks or draw funds
by means of an EFT card for more than your actual balance, with
an interest charge on the overdraft. |
| PITI |
| Principal, interest, taxes, and insurance. Also called monthly
housing expense. |
| Plat |
| A map or chart of a lot, subdivision or community drawn by
a surveyor showing boundary lines, buildings, improvements on
the land, and easements. |
| Points |
| See Discount Points. |
| Point-of-Sale (POS) |
| A method by which consumers can pay for purchases by having
their deposit accounts debited electronically without the use
of checks. |
| Power of Attorney |
| A legal document authorizing one person to act on behalf of
another. |
| Prepaids |
| Expenses necessary to create an escrow account or to adjust
the seller's existing escrow account. Can include taxes, hazard
insurance, private mortgage insurance and special assessments. |
| Prepayment |
| A privilege in a mortgage permitting the borrower to make
payments in advance of their due date. |
| Prepayment Penalty |
| Money charged for an early repayment of debt. Prepayment penalties
are allowed in some form (but not necessarily imposed) in 36
states and the District of Columbia. |
| Principal |
| The amount of debt, not counting interest, left on a loan. |
| Private Mortgage Insurance (PMI) |
| In the event that you do not have a 20 percent down payments,
lenders will allow a smaller down payment-as low as 5 percent
in some cases. With the smaller down payments loans, however,
borrowers are usually required to carry private mortgage insurance.
Private mortgage insurance will require an initial premium payment
of 1.0 percent to 5.0 percent of your mortgage amount and may
require an additional monthly fee depending on your loan's structure.
On a $75,000 house with a 10 percent down payments, this would
mean either an initial premium payment of $2,025 to $3,375,
or an initial premium of $675 to $1,130 combined with a monthly
payment of $25 to $30. |
| Q-form |
| A Q-form is series of questions that you complete in order
to request a loan. What does the Q stand for? You choose - quality,
quick, qualification, questionnaire. Our unique Q-forms have
been designed by LendingTree specifically for the Internet to
make your experience as easy as possible. |
| Quitclaim Deed |
| A deed which transfers whatever interest the maker of the
deed may have in the particular parcel of land. A quitclaim
deed is often given to clear the title when the grantor's interest
in a property is questionable. By accepting such a deed the
buyer assumes all the risks. Such a deed makes no warranties
as to the title, but simply transfers to the buyer whatever
interest the grantor has. |
| Real Estate Broker |
| A middle man or agent who buys and sells real estate for a
company, firm, or individual on a commission basis. The broker
does not have title to the property, but generally represents
the owner. |
| Real Estate Settlement Procedures Act
(RESPA) |
| RESPA is a federal law that allows consumers to review information
on known or estimated settlement costs once after application
and once prior to or at settlement. The law requires lenders
to furnish information after application only. |
| Realtor |
| A real estate broker or an associate holding active membership
in a local real estate board affiliated with the National Association
of Realtors. |
| Recision |
| The cancellation of a contract. With respect to mortgage refinancing,
the law that gives the homeowner three days to cancel a contract
in some cases once it is signed if the transaction uses equity
in the home as security. |
| Recording Fees |
| Money paid to the lender for recording a home sale with the
local authorities, thereby making it part of the public records. |
| Refinancing |
| The process of the same mortgagor paying off one loan with
the proceeds from another loan. |
| Renegotiable Rate Mortgage (RRM) |
| A loan in which the interest rate is adjusted periodically.
See Adjustable Rate Mortgage. |
| Restrictive Covenants |
| Private restrictions limiting the use of real property. Restrictive
covenants are created by deed and may "run with the land,"
binding all subsequent purchasers of the land, or may be "personal"
and binding only between the original seller and buyer. The
determination whether a covenant runs with the land or is personal
is governed by the language of the covenant, the intent of the
parties, and the law in the State where the land is situated.
Restrictive covenants that run with the land are encumbrances
and may affect the value and marketability of title. Restrictive
covenants may limit the density of buildings per acre, regulate
size, style or price range of buildings to be erected, or prevent
particular businesses from operating or minority groups from
owning or occupying homes in a given area. (This latter discriminatory
covenant is unconstitutional and has been declared unenforceable
by the U.S. Supreme Court.) |
| Reverse Annuity Mortgage (RAM) |
| A form of mortgage in which the lender makes periodic payments
to the borrower using the borrower's equity in the home as security. |
| Security |
| Property pledged to the creditor in case of a default on a
loan; see collateral. |
| Security Interest |
| The creditor's right to take property or a portion of property
offered as security. |
| Service Charge |
| A component of some finance charges, such as the fee for triggering
an overdraft checking account into use. |
| Servicing |
| All the steps and operations a lender perform to keep a loan
in good standing, such as collection of payments, payment of
taxes, insurance, property inspections and the like. |
| Settlement Costs |
| See Closing Costs. |
| Shared Appreciation Mortgage (SAM) |
| A mortgage in which a borrower receives a below-market interest
rate in return for which a lender (or another investor such
as a family member or other partner) receives a portion of the
future appreciation in the value of the property. May also apply
to mortgages where the borrower shares the monthly principal
and interest payments with another party in exchange for a part
of the appreciation. |
| Special Assessments |
| A special tax imposed on property, individual lots or all
property in the immediate area, for road construction, sidewalks,
sewers, streetlights, etc. |
| Special Lien |
| A lien that binds a specified piece of property, unlike a
general lien, which is levied against all one's assets. It creates
a right to retain something of value belonging to another person
as compensation for labor, material, or money expended in that
person's behalf. In some localities it is called "particular"
lien or "specific" lien. Also see lien. |
| Special Warranty Deed |
| A deed in which the grantor conveys title to the grantee and
agrees to protect the grantee against title defects or claims
asserted by the grantor and those persons whose right to assert
a claim against the title arose during the period the grantor
held title to the property. In a special warranty deed the grantor
guarantees to the grantee that he has done nothing during the
time he held title to the property which has, or which might
in the future, impair the grantee's title. |
| Survey |
| A measurement of land, prepared by a registered land surveyor,
showing the location of the land with reference to known points,
its dimensions, and the location and dimensions of any building. |
| Tax |
| As applied to real estate, an enforced charge imposed on persons,
property or income, to be used to support the State. The governing
body in turn utilizes the funds in the best interest of the
general public. |
| Term |
| The period of time between the beginning loan date on the
legal documents and the date the entire balance of the loan
is due. |
| Term Mortgage |
| See Balloon Payment Mortgage. |
| Title |
| A document that gives evidence of an individual's ownership
of property. |
| Title Insurance |
| A policy, usually issued by a Title Insurance company, which
insures a homebuyer against errors in the title search. The
cost of the policy is usually a function of the value of the
property, and is often borne by the purchaser and/or seller. |
| Title Search |
| An examination of municipal records to determine the legal
ownership of property. Usually is performed by a title company. |
| Trustee |
| A party who is given legal responsibility to hold property
in the best interest of or "for the benefit of" another.
The trustee is one placed in a position of responsibility for
another, a responsibility enforceable in a court of law. |
| Truth-in-Lending |
| A federal law requiring disclosure of the Annual Percentage
Rate to homebuyers shortly after they apply for the loan. |
| Two-Step Mortgage |
| A mortgage in which the borrower receives a below-market interest
rate for a specified number of years (most often seven or 10
years), and then receives a new interest rate adjusted (within
certain limits) to market conditions at that time. The lender
sometimes has the option to call the loan, due within 30 days
notice at the end of seven or 10 years. Also called "Super
Seven" or "Premier" mortgage. |
| Underwriting |
| The decision whether to make a loan to a potential homebuyer
based on credit, employment, assets, and other factors and the
matching of this risk to an appropriate rate and term or loan
amount. |
| VA Loan |
| A long-term, low-or no-down payment loan guaranteed by the
Department of Veterans Affairs. Restricted to individuals qualified
by military service or other entitlements. |
| VA Mortgage Funding Fee |
| A premium of up to 2 percent (depending on the size of the
down payment) paid on a VA-backed loan. On a $75,000 30-year
fixed-rate mortgage with no down payment, this would amount
to $1,406 either paid at closing or added to the amount financed. |
| Variable Rate Mortgage (VRM) |
| See Adjustable Rate Mortgage. |
| Verification of Deposit (VOD) |
| A document signed by the borrower's financial institution
verifying the status and balance of his/her financial accounts. |
| Verification of Employment |
| A document signed by the borrower's employer verifying his/her
position and salary. |
| Wraparound |
| Results when an existing assumable loan is combined with a
new loan, resulting in an interest rate somewhere between the
old rate and the current market rate. The payments are made
to a second lender or the previous homeowner, who then forwards
the payments to the first lender after taking the additional
amount off the top. |
| Zoning Ordinances |
| The acts of an authorized local government
establishing building codes, and setting forth regulations for
property land usage. |
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