CLICK ON THE BUTTONS BELOW TO LEARN ABOUT THESE POPULAR TOPICS
terms to know
Amortization
A payment plan that enables you to reduce your debt gradually through monthly payments; the monthly amount is based on the schedule for the entire term or length of the loan.
Closing
Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligated, pays all closings costs, and receives title form the seller.
Deed
Also known as “title;” a document that legally transfers property ownership from one to another.
Escrow Account
A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.
GFE (CLOSING DISCLOSURE)
An estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.
Homeowner’s Insurance
An insurance policy, also called hazard insurance, that combines protection against damage to a dwelling and its contents including fire, storms or other damages with protection against claims of negligence or inappropriate action that result in someone’s injury or property damage.
Radon
A natural radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.
Title Insurance
Insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers.
Appraisal
A document from a professional that gives an estimate of a property’s fair market value based on the sales of comparable homes in the area and the features of
a property.
Closing Costs
Fees for final property transfer not included in the price of the property.
Down Payment
the portion of a home’s purchase price that is paid in cash and is not part of the mortgage.
Fair Market Value
The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.
Home Inspection
An examination of the structure and mechanical systems to determine a home’s quality, soundness and safety; makes the potential homebuyer aware of any repairs that may be needed.
Mortgage Insurance
A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.
Settlement
Another name for closing.
Title Search
A check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.
Certificate of Title
A document provided by a qualified source, such as a title company, that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.
Counter Offer
A rejection to all or part of a purchase offer and renegotiates the terms to reach an acceptable sales contract.
Earnest Money (Deposit)
money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.
Foreclosure
A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Home Warranty
Offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner’s insurance; coverage extends over a specific time period and does not cover the home’s structure.
Pre-Approval
a lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.
Survey
A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.
Underwriting
The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.