July 30, 2021

MP Now News

Mortgage News

Real Estate lingo is like alphabet soup!!

From Donna DeLauro

As with many companies, the process uses terms and abbreviations that we do not always understand.

There are many in a real estate transaction. As a broker, I often speak to buyers and sellers and find that I may sound like I speak a foreign language. Years ago I created a glossary of terms and abbreviations that I should include in my information package during my first consultation.

I thought it might be useful to provide this in the hope that it might help you too.

I’ve sorted the list alphabetically to make it easier to look up later.

Adoption: the date on which both parties, seller and buyer, agreed to sign and / or initialize the contract and entered into it.

ARM Variable Rate Mortgage: a mortgage that allows the lender to periodically adjust the interest rate on the mortgage based on changes in a particular index. Interest rates can go up or down as market conditions change.

Amortized Loan: a loan that is paid out in equal installments during its term.

Rating: an appraisal of the property’s value, usually issued according to FHA, VA and FHMA standards. Recent comparable sales in the neighborhood are the most important factor in the appraisal, although deficiencies in property condition can be a factor in value and ability to proceed with the closure.

Recognition: an increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Accepted mortgage: The buyer takes ownership of real estate encumbered by an existing mortgage and assumes responsibility as the guarantor of the unpaid balance of the mortgage.

BOS purchase contract: Personal property transfer document. Mainly used in real estate for the sale of prefabricated houses

CD Closing Disclosure: a financial report presented to the buyer and seller at the time of transfer of ownership, containing a report of all funds received or expended. Formally known as the HUD Billing Proof (see below), which is typically used for current case sales.

Cloud on title: any condition that affects the unique title of real estate.

Consideration: anything of value to induce another into a contract, that is, money, services, a promise.

Did: a written instrument that, when properly executed and delivered, transfers ownership of real estate.

Discount points: a loan fee charged by an FHA, VA, or conventional loan lender to increase the return on the investment. One point = 1% of the loan amount.

Relief: the right to use someone else’s land.

Burden: everything that encumbrances (restricts) the property, such as B. a lien, relief or restriction of any kind.

Equity: the value of real estate beyond the mortgage liens. It is obtained by subtracting the total mortgage liens from the value.

Escrow payment: that portion of a mortgage lender’s monthly payment that is held in escrow by the lender to pay taxes, hazard insurance, and other items when due.

Real estate sales: a sale or auction to dispose of a substantial portion of material belonging to a recently deceased person who must have their personal property to facilitate a move

FHA Federal Housing Administration: an agency of US Department of Housing and Urban Development (HUD). Its main activity is the insurance of residential real estate mortgage loans issued by private lenders. The FHA sets standards for construction and underwriting but does not borrow or design or build homes.

FHA insured mortgage: a mortgage under which the Federal Housing Administration insures loans granted in accordance with the regulations.

FHLMC Freddie Mac: Nickname for Federal Home Loan Mortgage Corporation, a federal government controlled and operated company to support the secondary mortgage market. It buys and sells conventional residential mortgages.

FMV fair market value: the price at which the property would change hands between a willing buyer and a willing seller who is neither forced to buy nor to sell, and who both have adequate knowledge of the relevant facts.

FNMA Fannie Mae: Nickname for Federal National Mortgage Corporation, a taxable corporation established by Congress to support FHA-insured or VA-guaranteed secondary mortgages, as well as conventional loans.

Foreclosure: The process of selling property pledged as security for a debt to settle the debt in the event of default.

FRM fixed-rate mortgage: a loan that fixes the interest rate at a prescribed interest rate for the duration of the loan.

HOA homeowners association: A private organization within a planned parish, subdivision, or condominium, charged with creating and enforcing rules for the homes in the parish and their residents. Those who buy property within the jurisdiction of an HOA are automatically accepted as members and must pay fees or HOA fees.

HUD-1 billing declaration: a financial report presented to the buyer and seller at the time of transfer of ownership, containing a report of all funds received or expended. Currently used for cash sales. The new term is Closing Disclosure (see above)

JT co-ownership: a person who jointly owns an estate or property with one or more parties, the share of which passes to the other or the other upon death.

Leasing with option: a contract that gives you the right to lease real estate for a specified amount with the option to buy it at a later date.

LTV Loan to Value Ratio: the ratio of the mortgage loan (amount borrowed) to the estimated value of the property (selling price). For example, for a $ 100,000 home and a $ 80,000 mortgage loan, the loan-to-value ratio is 80%.

MLS Multiple Listings Service: A database of property listing data that is available for sale (now or in the past) and is managed and shared by real estate agents.

Mortgage: a legal document that pledges a property to the lender as collateral for paying a debt.

MIP mortgage insurance premium: the amount paid by a mortgage lender for mortgage insurance. This insurance protects the investor from possible losses in the event of a borrower’s default.

Note: a written promise to pay a certain amount of money.

Origin Fee: A fee paid to a lender for services rendered in obtaining a loan, usually a percentage of the face value of the loan.

PITI capital, interest, taxes and insurance: the sum components of a mortgage payment. Since PITI represents the total monthly mortgage payment, it helps both the buyer and the lender determine the affordability of an individual mortgage.

PMI Private Mortgage Insurance: see Mortgage insurance premium.

P&S purchase and sales contract: a binding legal contract between two parties that prescribes a transaction between a buyer and a seller. … The agreement concludes the sales conditions and is the culmination of negotiations between buyer and seller.

Second Mortgage / Second Trust Deed / Junior Mortgage / Junior Lien: an additional loan for a property with an initial mortgage. Generally a higher interest rate and shorter term than a “first” mortgage.

Severalty Ownership: Owned by one person only. Sole ownership.

TBE lease of the entire some form of common property Property reserved for married couples only. An entire tenancy essentially allows the spouses to own property together as a single legal entity. This means that each spouse has an equal and undivided interest in the property. This form of legal property creates a right to survival. So if one spouse dies, the surviving spouse will automatically receive the full amount title of property.

Joint TIC tenancy: Property of two or more people who have an undivided interest with no right to survive. (In the event of the death of an owner, his share goes to his heirs.

Property insurance: an insurance policy that protects the insured (buyer or lender) from losses due to legal defects.

VA Veterans Administrative Loans: A type of home loan only available to U.S. military veterans and their surviving spouses. Designed to help veterans who want to buy a property without the need for a down payment or mortgage insurance. A percentage of VA loans are guaranteed by the federal government so that lenders can offer more favorable loan terms.

From Donna DeLauro

RE / MAX real estate center


[email protected]