A loan that is paid off in equal installments during its term.
Buyer takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage.
The final payment of a mortgage loan when it is larger than the regular payment. It usually extinguishes the debt.
CAPITAL GAINS TAX
The taxable profit derived from the sale of a capital asset. The capital gain is the difference between the sale price and the basis of the property after making appropriate adjustment for closing costs, fixing up expenses, capital improvements, allowable depreciation, etc.
Expenses incurred in the closing of a real estate or mortgage transaction. Buyers expenses normally include: cost of title examination, premiums for title policies, survey, attorney fees, lenders service fees, and recording charges. In addition, the buyer may have to place in escrow a sum of money to cover accrued real estate taxes and insurance.
A loan neither insured by the FHA nor guaranteed by the VA.
Certificate of reasonable value. A document (appraisal) issued by the VA establishing their opinion of maximum value.
The difference between the market value of property and the homeowner’s indebtedness (mortgage).
That portion of a mortgagor’s monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they became due, known as impounds in some states.
The trading of an equity in a piece of property for the equity in another.
Nickname of Federal Home Loan Mortgage Association (FHLMC), a federal controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.
Nickname of Federal National Mortgage Association (FNMA), a tax paying corporation created by Congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages.
A lender’s agreement to make a loan to a specific borrower on a specific property. A FHA or PMI agreement to insure a loan on a specific property, with a designated buyer.
The holder of a mortgage or the permanent lender for whom the mortgage banker’s services the loan. Any person or institution that invests in mortgages.
LEASE PURCHASE AGREEMENT
Buyer makes a deposit for the future purchase of a property with the right to lease the property in the interim.
A written promise by a lender to make a loan under certain terms and conditions. These include interest rate, length of the loan, lender fees, annual percentage rate, mortgage and hazard insurance and other special requirements.
LOAN TO VALUE RATIO
The ratio of the mortgage loan principal (amount borrowed) to the property’s appraised value (selling price). On a $100,000 home with a mortgage loan principal of $80,000, the loan to value ration is 80%.
MORTGAGE/DEED OF TRUST
Pledge of real property to secure a debt by a written instrument given by the mortgagor. Should be recorded in the County Recorders Office.
MORTGAGE INSURANCE PREMIUM (MIP)
The consideration paid by a mortgagor for mortgage insurance either to FHA or a private mortgage insurance (PMI) company.
The lender of money or the receiver of the mortgage document.
The borrower of money or the giver of the mortgage document.
A written promise to pay a certain amount of money.
A fee or charge for work involved in the evaluation, preparation, and submission of a proposed mortgage loan.
One percent of loan amount.
A fee paid to the mortgagee for paying the mortgage before it becomes due. Also knows as a repayment fee or reinvestment fee.
The right given a buyer to pay all or part of a debt prior to its maturity. The mortgagee cannot be compelled to accept any payment other than those originally agreed to.
PRIVATELY INSURED MORTGAGE
A conventional mortgage loan on which a private mortgage insurance company protects the lender against loss.
PRIVATE MORTGAGE INSURANCE (PMI)
Insurance written by a private company protecting the mortgage lender against loss occasioned by a mortgage default.
RENT WITH OPTION
A contract that gives one the right to lease a property at a certain sum with the option to purchase at a future date.
SECOND MORTGAGE/SECOND TRUST
Junior Mortgage or Junior Lien; an additional loan imposed on property with a first mortgage. Generally at a higher interest rate and shorter terms than a “first” mortgage.
A loan with periodic payments of interest only: the principal sum due in one lump sum upon maturity.
Often used interchangeably with the word ownership. It indicates the accumulation of all rights in property; the owners and others.
An insurance policy that protects the insured (purchaser or lender) against loss arising from defects in title.