Common Mortgage/Real Estate Terms
Appraisal
An expert opinion on the value of a property
Annual Percentage Rate (APR)
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 (Adjustable Rate Mortgage) 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.
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.
Conventional Financing
Standard, non-government financing.
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%.
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 toward down payment submitted with a purchase agreement as evidence
of the buyers commitment
Equifax Information Services
PO Box 740243
Atlanta, GA 30374
(800) 685-1111
Escrows
The portion of the monthly payment that is not applied to principal or
interest, but rather is used to pay mortgage insurance, homeowners insurance
and property taxes.
Experian Information Services
PO Box 2002,
Allen, TX 75013-3742
(888) 397-3742
Source: www.suwoodard.com
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