ImmovableProperty.com
International Immovable Property / Real Estate Listings
ImmovableProperty.com
International Immovable
Property / Real Estate Listings
Answers
| How much of a property can I afford? | ||||||
| Let's say you make
$40,000 a year. The maximum amount available for a
monthly mortgage payment at 28 percent of gross income would be $933. However, according to the lenders the total debt payments each month should not exceed 36 percent, which comes to $1200. Also you may want to visit our mortgage center. Back to Top |
||||||
| What is an "Acceleration"? | ||||||
| The exercise of a clause
which gives the mortgagee the right to declare the entire
loan due prior to maturity under certain specified conditions, usually default. Back to Top |
||||||
| What is an "Adjustable Rate Mortgage (ARM)"? | ||||||
| A type of mortgage in
which the interest rate is keyed to a certain economic
index and is adjusted as the index rises and falls. If you have this type of mortgage your interest rate could go up or down, depending on the prevailing rates. Back to Top |
||||||
| What is an "Amenity"? | ||||||
| A feature that enhances
property value. Back to Top |
||||||
| What is an "Amortization"? | ||||||
| The process of paying off
a loan balance. As you make payments, a certain amount is
applied to the principal and a certain amount to the interest. Back to Top |
||||||
| What is an "Amortization Schedule"? | ||||||
| A timetable for payment
of a mortgage showing the amount of each payment applied
to interest and principal and the remaining balance. Back to Top |
||||||
| What is an "AMP"? | ||||||
| Automatic mortgage
payment - to have your monthly mortgage payment
automatically deducted from your checking or savings bank account. Back to Top |
||||||
| What is an "Annual Cap"? | ||||||
| The highest or lowest
amount the interest rate of an ARM loan can increase or
decrease in any one year. Back to Top |
||||||
| What is an "Annual Percentage Rate (APR)"? | ||||||
| The total yearly cost of
a mortgage stated as a percentage of the loan amount;
includes the base interest rate, primary mortgage insurance, and loan origination fee (points). In other words, Annual Percentage Rate (APR) is an expression of the effective interest rate that will be paid on a loan. It is different from the "note rate" (the advertised interest rate) because it includes one-time fees in an attempt to calculate a "total cost" of borrowing money. Back to Top |
||||||
| What is an "Appraisal"? | ||||||
| A professional opinion of
the market value of a property. Back to Top |
||||||
| What is an "Appreciation"? | ||||||
| An increase in the value
of a house due to changes in market conditions or other
causes. Back to Top |
||||||
| What is an "Assessed Valuation"? | ||||||
| The value that a taxing
authority places upon property for the purposes of
taxation. In other words, Assessed Valuation is the value assigned to property by a municipality for the purpose of tax assessment. Such an assessed valuation is important to investors in municipal bonds that are backed by property taxes. Back to Top |
||||||
| What is a "Balloon Mortgage"? | ||||||
| A mortgage with periodic
installments of principal and interest that do not fully
amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term. Back to Top |
||||||
| What is a "Bridge Loan"? | ||||||
| An interim loan given to
finance the difference between the construction loan and
the maximum permanent loan as committed or when unable to sell current home before purchasing a new home. Back to Top |
||||||
| What is a "Buydown Mortgage"? | ||||||
| A mortgage with a
below-market interest rate made by a lender in return for
an interest rate subsidy in the form of additional discount points paid by the builder, seller or buyer. In other words, a Buydown Mortgage is a mortgage loan with a below-market interest rate for a period of time. A home loan in which the lender receives a premium as an inducement to reduce the interest rate during the early years of the mortgage. Back to Top |
||||||
| What is a "Cap (Rate Cap)"? | ||||||
| The maximum allowable
interest rate or payment increase on adjustable-rate
mortgages. Back to Top |
||||||
| What is a "Closing"? | ||||||
| In real estate (immovable
property), the delivery of a deed, financial adjustment,
the signing of notes, and the disbursement of funds necessary to consummate a sale or loan transaction. Back to Top |
||||||
| What is "Closing Costs"? | ||||||
| Fees paid to effect the
closing of a mortgage, such as an origination fee,
discount points, title insurance fees, survey fees, and attorney's fees. Back to Top |
||||||
| What is a "Conventional Mortgage (Loan)"? | ||||||
| A conventional mortgage
is a mortgage made by banks and other lending
institutions that is not insured by the Federal Housing Administration, VA or the Farmers Home Administration. Back to Top |
||||||
| What is a "Convertible ARM"? | ||||||
| An adjustable-rate
mortgage that can be converted to a fixed-rate mortgage
under specified conditions. Back to Top |
||||||
| What is a "Conversion Option"? | ||||||
| The option to switch the
ARM mortgage to a fixed-rate mortgage. Back to Top |
||||||
| What is a "Deed"? | ||||||
| A written document
signed, delivered, and usually recorded, which conveys
title of the property from the seller to the borrower. Back to Top |
||||||
| What is a "Disclosure"? | ||||||
| Information required by
law relevant to specific transactions given to borrowers,
sellers, and agents. Back to Top |
||||||
| What is a "Discount Point"? | ||||||
| Amount payable to the
lending institution by the borrower or seller to increase
the lender's effective yield. One point is equal to one percent of the loan. Back to Top |
||||||
| What is a "Down Payment"? | ||||||
| The difference between
sales price and loan amount. The down payment is the
initial upfront portion of the payment, usually given in cash. The amount of money the purchaser pays to the seller upon the signing of the agreement of sale. The amount of money provided by the Purchaser toward the total price of the property (not including legal fees or other acquisition costs). In general, down payment plus mortgage equals purchase price. The amount of payment required to secure the purchase of a property. Lenders typically require a 20% down payment, although with mortgage insurance down payments of 5, 10, and 15% are common. The amount of your home's purchase price you need to supply up front in cash to get your loan. Back to Top |
||||||
| What is "Earnest Money"? | ||||||
| A sum of money given to
bind a sale of real estate, or assure payment or an
advance of funds in the processing of a loan; a deposit. Back to Top |
||||||
| What is an "Easement"? | ||||||
| A right to the limited
use or enjoyment of land held by another. Also, an
interest in land to enable sewer or other utility lines to be laid, or to allow access to a property. Back to Top |
||||||
| What is an "Escrow Account"? | ||||||
| An account to which a
borrower makes monthly installment payments for property
taxes, insurance, and special assessments, and from which the lender disburses the sum as payments become due. Back to Top |
||||||
| What is a "FHA Loan"? | ||||||
| A loan insured by the
Federal Housing Administration (FHA), open to all
qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the country. You can put down a smaller down payment on a FHA loan, but you will also be required to pay mortgage insurance. The Federal Housing Administration (FHA) operates several low down-payment mortgage insurance programs that homebuyers can use to purchase a home with a down payment of 3 percent or less of the cost of the home. The most commonly used FHA program is the 203(b) program which provides for down payment assistance on one- to four-family homes. Back to Top |
||||||
| What is a "Fixed Rate Mortgage"? | ||||||
| A mortgage in which the
buyer contracts for a specified interest rate over a
specified period of time. The principal and interest payment does not vary. A fixed-rate mortgage is a type of mortgage in which the interest rate is fixed for the life of the loan. Back to Top |
||||||
| What is a "Foreclosure"? | ||||||
| A foreclosure is the
legal process by which a mortgage property is seized due
to default and then sold. A legal term applied to any of the various methods of enforcing payment of the debt secured by a mortgage, or deed of trust, by taking and selling the mortgaged property and depriving the mortgagor (borrower) of possession. Court action taken by a mortgagee when a borrower has defaulted. The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. A proceeding in or out of court, to extinguish all rights, title, and interest, of the owner(s) of property in order to sell the property to satisfy a lien against it. An enforcement process in which the lender under a defaulted mortgage takes title to the property for the purposes of selling it to recoup moneys owed under the mortgage. The legal process reserved by a lender to terminate the borrower's interest in a property after a loan has been defaulted. When the process is completed, the lender may sell the property and keep the proceeds to satisfy its mortgage and any legal costs. Any excess proceeds may be used to satisfy other liens or be returned to the borrower. Legal procedure used by creditors to take a mortgaged property from a debtor who has defaulted on the loan. A legal process instituted by a mortgagee or lien creditor after the debtor's default. Back to Top |
||||||
| What is a "Funding Fee"? | ||||||
| The insurance premium
that is collected up front on a VA loan to insure the
lender against loss. This premium may be paid in cash or financed over the life of the loan. The amount of the premium is based on the loan-to-value ratio. There is no refund on any portion of this premium. Back to Top |
||||||
| What is a "Good Faith Estimate"? | ||||||
| A requirement that
lenders provide borrowers with an estimate of settlement
service charges the borrower is likely to incur. A Good-Faith Estimate must be provided by the lender within three business days of receiving a signed loan application. Back to Top |
||||||
| What is a "Graduated Payment Mortgage (GPM)"? | ||||||
| A mortgage with a
structured repayment schedule to enable borrowers to meet
monthly payments. The monthly payments rise at a set rate over a set period of time and then become constant for the remaining term of the loan. Negative amortization occurs during the first few years since the initial payments do not cover the interest due on the loan. Back to Top |
||||||
| What is an "Insured Loan"? | ||||||
| A loan insured by FHA or
a private mortgage insurance (PMI) company. Back to Top |
||||||
| What is a "Lease Purchase Mortgage"? | ||||||
| A lease purchase mortgage
is a financing option that allows potential homebuyers to
lease a property with the option to buy. Often constructed so the monthly rent payment covers the owners first mortgage payment, plus an additional amount as a savings deposit to accumulate cash for a down payment. Sellers may agree to a lease purchase option if the housing market is saturated and they are having difficulty selling the property. Back to Top |
||||||
| What is a "Lifetime Cap"? | ||||||
| A provision of an ARM
that limits the total increase in interest rates over the
life of the loan. Back to Top |
||||||
| What is a "Lock In"? | ||||||
| Interest rates and
discount points are guaranteed for a period of time; loan
must be closed prior to expiration of lock-in period. Back to Top |
||||||
| What is a "Mortgage"? | ||||||
| A mortgage is a method of
using property as security for the payment of a debt.
Technically the term mortgage (from Law French, lit. "dead pledge") refers to the legal device used in securing the property, but it is also commonly used to refer to the debt secured by the mortgage. In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals or businesses can purchase residential or commercial real estate without the need to pay the full value immediately. Back to Top |
||||||
| What is a "Mortgagee"? | ||||||
| A morgagee is the lender.
The lender in a mortgage agreement. The lender in a
mortgage transaction. Also known as "chargee". A bank or other financial institution that lends money to the borrower. The lender of mortgage funds. Back to Top |
||||||
| What is a "Mortgagor"? | ||||||
| A mortgagor is the
borrower in a mortgage agreement. The borrower, purchaser
or homeowner in a mortgage transaction. Also known as "chargor". The borrower of mortgage funds. Back to Top |
||||||
| What is a "Mortgage Banker"? | ||||||
| A mortgage banker is a
company that originates mortgages and sells them to a
secondary market. Back to Top |
||||||
| What is a "Mortgage Broker"? | ||||||
| A mortgage broker is an
intermediary who ensures a loan between a borrower and
lender. The broker takes the loan and then packages for the lender. Back to Top |
||||||
| What is a "Mortgage Insurance Premium (MIP)"? | ||||||
| A mortgage insurance
premium is a policy that insures the lender against loss
if the homeowner defaults on a mortgage. Back to Top |
||||||
| What is a "Negative Amortization"? | ||||||
| In finance, negative
amortization, also known as NegAmMort, is an amortization
method in which the borrower pays back less than the full amount of interest owed to the lender each month. The shorted amount is then added to the total amount owed to the lender. Such a practice would have to be agreed upon before shorting the payment so as to avoid default on payment. Also known as deferred interest or Graduated Payment Mortgage (GPM). Back to Top |
||||||
| What is an "Origination Fee"? | ||||||
| The fee mortgage lenders
charge to borrowers for preparing loan documents, making
credit checks, etc.; usually computed as a percentage of the face value of the loan. This fee is usually paid by the buyer unless other arrangements are made. Back to Top |
||||||
| What is a "Payment Buydown"? | ||||||
| Payment buydowns occur
when a third party, typically a builder, pays part of the
initial P&I payments for a year or two, so that the borrower has smaller payments and can qualify for the loan. Back to Top |
||||||
| What is a "PITI"? | ||||||
| PITI is the total monthly
payment you make on a house: Principal, Interest,
Taxes, and Insurance
(components of a mortgage payment). Back to Top |
||||||
| What is a "Point"? | ||||||
| An amount equal to one
percent of the principal amount of a mortgage. Back to Top |
||||||
| What is a "Pre-qualification"? | ||||||
| Loan application package
processed and submitted for credit approval when no
subject property has been chosen by the borrower. Back to Top |
||||||
| What is a "Prepaid Interest"? | ||||||
| Mortgage interest that is
paid in advance of when it is due, to obtain tax
advantages. Back to Top |
||||||
| What is a "Principal"? | ||||||
| Amount of loan excluding
interest or other charges. Back to Top |
||||||
| What is a "Private Mortgage Insurance (PMI)"? | ||||||
| Private mortgage
insurance is insurance that protects mortgage lenders
against default on loans by providing a way for mortgage companies to recoup the costs of foreclosure. PMI is usually required if the down payment is less than 20 percent of the sale price. Homebuyers pay for the coverage in monthly installments. PMI is usually terminated when the homebuyer has built up 20 percent equity in the property. Back to Top |
||||||
| What is a "Second Mortgage"? | ||||||
| A second mortgage is a
secured loan (or mortgage) that is subordinate to another
loan against the same property. More specifically, the second loan in sequence. In real estate, a property can have multiple loans against it. The loan which is registered with county or city registry first is called the first mortgage. The loan registered second is called the second mortgage. A property can have a third or even fourth mortgage, but those are rarer. Second mortgages are called subordinate because, if the loan goes into default, the first mortgage gets paid off first before the second mortgage gets any money. Thus, second mortgages are riskier for the lender, who generally charges a higher interest rate. Back to Top |
||||||
| What is a "Subprime Mortgage"? | ||||||
| A subprime mortgage is a
mortgage granted to a borrower who is considered
subprime, that is, a person with a less than perfect credit report. Subprime borrowers have missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default. Back to Top |
||||||
| What is a "Title"? | ||||||
| A legal document
establishing the right of ownership. Back to Top |
||||||
| What is a "Title Insurance Policy"? | ||||||
| A contract by which the
insurer agrees to pay the insured a specific amount for
any loss caused by defects of title to real estate, wherein the insured has an interest as purchaser, mortgage, or otherwise. Back to Top |
||||||
| What is a "VA Loan"? | ||||||
| A mortgage offered to
eligible veterans and guaranteed by the Veterans
Administration. Back to Top |
||||||
| What is a "Wrap-Around Mortgage"? | ||||||
| A wraparound mortgage is
a new mortgage that includes the remaining balance on an
old mortgage, plus a new amount. Seller keeps original mortgage. Buyer makes payments to seller, who forwards a portion to the lender holding the original mortgage. A secondary financing option in which new money borrowed is blended with money already owed and registered on title to the property. A second mortgage is registered as security for the new money but the old mortgage remains in existence and the rate of interest is a blend of the rate chargeable on the old mortgage and the rate chargeable on the newly borrowed money. A loan to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both loans are made to the lender who holds the wrap-around loan. Back to Top |
||||||
