Homes With Marina,
where dreams come home...
Terms You Should Know
Appraisal
An estimate of property resulting from analysis of facts about the property; an opinion of value.
Annual Percentage Rate (APR)
The borrower's costs of the loan term expressed as a rate. This is not the interest rate.
Beneficiary
The recipient of benefits, often from a deed of trust; usually the lender.
Closing
Closing (also referred to as completion or settlement) is the final step in executing a real estate transaction.
Closing Disclosure (CD)
Closing Disclosure form designed to provide disclosures that will be helpful to borrowers in understanding all of the costs of the transaction. This form will be given to the consumer three (3) business days before closing.
Close of escrow
Generally the date the buyer becomes the legal owner and title insurance becomes effective.
Collateral
Something of value (in this case your home) that is held to ensure repayment of a mortgage/loan.
Commission
A percent of the sale price that is paid to the agents. The seller pays commission to both the buyer's and seller's agent.
Comparables
Homes in the area of interest that have recently sold that have similar features.
Contingencies
Conditions that must be met in order to close. Typically tied to a date, referred as a deadline. If the contingency is not satisfied the contract may be canceled.
Counteroffer
The response from the seller in regard to an offer.
Consummation
Occurs when the borrower becomes contractually obligated to the creditor on the loan, not, for example, when the borrower becomes contractually obligated to a seller on a real estate transaction. The point in time when a borrower becomes contractually obligated to the creditor on the loan depends on applicable State law. Consummation is not the same as close of escrow or settlement.
Debt to income ratio
A lender will evaluate whether a borrower's income is large enough to handle their payments on existing debts plus their new mortgage payments.
Deed of Trust
An instrument used in many states in place of a mortgage.
Deed Restrictions
Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.
Disbursement Date
The date the amounts are to be disbursed to a buyer and seller in a purchase transaction or the date funds are to be paid to the borrower or a third party in a transaction that is not a purchase transaction.
Down payment
A percent of the cost of the property that is paid up front as a part of the mortgage.
Down payment made by a purchaser of real property as evidence of good faith, a deposit or partial payment.
A right, privilege or interest limited to a specific purpose that one party has in the land or another.
Endorsement
A rider or attachment forming a part of the insurance policy expanding or limiting the coverage.
Escrow
It is a neutral party holding the earnest money deposit. It can also be referred to as the time period from when the contract is written and accepted by the seller to when the home actually closes.
Equity
The difference in the market value of a home versus what is owed on the home.
FHA
A mortgage that is financed through a private lender and insured by the Federal Housing Administration, often requiring a lower down payment and income to qualify.
Fixed rate
The interest rate will remain the same for the entire life of the mortgage.
Foreclosure
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.
Hazard Insurance
Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.
Home equity line of credit
A loan or line of credit that your lender may offer using the equity in your home as a collateral.
The process in which professional inspect the seller's home for issues that may not be readily apparent, and then creates a report for the buyer to review.
Home protection plan
A one-year service that covers the cost of repairs or replacements to items covered in the plan (such as stoves, dishwashers, A/C, heaters, etc.).
Hybrid
A loan that starts with a fixed rate period, then converts to adjustable rate.
Impounds
A trust type of account established by lenders for the accumulation of borrower's funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect security.
Legal Description
A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
Lien
A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deed of trust.
Loan Estimate (LE)
Form designed to provide disclosures that will be helpful to borrowers in understanding the key features, costs and risks of the mortgage loan for which they are applying. Initial disclosure to be given to the borrower three (3) business days after application.
Mortgage
The instrument by which real property is pledged as security for repayment of a loan.
Mortgage insurance
Insurance written in connection with a mortgage loan that protects the lender in the event the borrower cannot repay their loan. This is usually not required if the borrower has 20% or more of the down payment.
Mortgage note
A promise to pay sum of money at a standard interest rate during a specific term that is secured by a mortgage.
Multiple listing service (MLS)
The national list of real estate properties that are available for sale. These are the most reliable sources to receive up-to-date listing information.
PITI
A payment that includes Principal, Interest, Taxes, and Insurance.
Power of attorney
A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an "Attorney-in-Fact".
Pre-approval
The process in which a lender makes an initial evaluation of how much money a buyer might be qualified to borrow based on the preliminary financial information provided. This gives the seller more confidence in the buyer's ability to close escrow, but is not guarantee that the loan will be approved.
Principal
The underlying amount of the loan which is actually borrowed.
Property taxes
These are the taxes that are enforced by the city, town, county and state government entities. Sometimes they are included in the total monthly mortgage payment paid to the lender and sometimes they are paid directly by the home owner.
Recording
Filing documents affecting real property with the appropriate government agency as a matter of public record.
REO
Real estate owned properties or foreclosed properties currently owned by a financial institution such as the bank that made the loan to the previous owner.
Reverse mortgage
This is specifically for seniors and it allows them to convert the equity in the home into cash.
Settlement statement
Provides a complete breakdown of costs involved in a real estate transaction.
Short sale
A short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. In this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished.
Title
A legal document proving current and proper ownership of the property. Also referred as Title Deed, this document highlights the history of the property ownership and transfers.
Underwriting
The process in which the potential home buyer is evaluated for their financial ability to obtain and repay the loan. This normally includes a credit check and appraisal of the property.
VA loan
Special no down payment loans that are available to Americans who have served in the Armed Forces. These loans are issued by private lenders and are guaranteed by the Department of Veteran Affairs.
Read full blog post about VA loans HERE.