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Real Estate Glossary

Posted on December 11, 2011 by Evelyn Johnston in Home Buying Process

Elkhart County, Indiana is a GREAT place to live, and spring is here and you want to start looking for a home.  GREAT!  Let’s familiarize ourselves with the Real Estate Glossary.  It will help the process make more sense to you as you work with  Evelyn Johnston with Elkhart County Subdivisions, 574-304-7148.

 

  • Adjustable Mortgage Loans: Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates.  The amounts and times of adjustment are agreed to at the inception of the loan.  Also called adjustable rate loans, adjustable rate mortgages (ARM’s), flexible rate loans or variable rate loans.
  • Amortization: Payment of a debt in equal installments of principal and interest, rather than interest-only payments.
  • Annual Percentage Rate (APR):  The yearly interest percentage of a loan, as expressed by the total finance charge actually paid (interest, loan fees, points).  The APR is disclosed as a requirement of federal truth in lending statutes.
  • Buydown:  A payment to the lender from the seller, buyer or third party, or some combination of these, that causes the lender to reduce the interest rate during the early years of the loan.
  • Buyer Broker:  A Buyer Broker represents the interest of the Buyer.  If you are looking for a home to buy, call your local Elkhart County Real Estate Expert Evelyn Johnston with Elkhart County Subdivisions at 574-304-7148.
  • Cap:  In adjustable rate mortgages, the limit on how much the interest rate or monthly payment can change.
  • Capital Gains:  Profits an investor makes from the sale of real estate or investments.
  • Closing:  The final procedure in which documents are executed and/or recorded, and the sale (or loan) is completed.
  • Closing statement:  The statement which lists the financial settlement between buyer and seller, and also the costs each must pay.
  • CMA:  CMA, or competitive market analysis, is a comparison of homes silimiar to a seller’s home in terms of size, style, features and location that have sold recently or are on the market.  A CMA is prepared by  your local Elkhart County Real Estate Expert Evelyn Johnston with Elkhart County Subdivisions, LLC to help set a home’s listing price.
  • Contingency: Commonly, a stated event which must occur before a contract is binding.  For example, a home sale may be contingent upon the buyer obtaining financing.
  • Deposit:  A portion of the down payment given by the buyer to the seller or escrow agent with a written offer to purchase.  Shows good faith.
  • Down Payment:  Cash portion of the purchase price paid by a buyer from his own funds as opposed to that portion which is financed.
  • Escrow:  A procedure in which a third (neutral) party holds all funds, documents, ets. necessary to the sale, with instructions from the buyer and seller as to their use and dispostion.
  • FHA Loan:  A loan insured by the Federal Housing Administration, a part of the Department of Housing and Urban Development.  FHA insurance enables lenders to loan a very high percentage of the sale price.
  • Graduated Payment Mortgage: A mortgage initially offering low monthly payments that increase at fixed intervals and at a predetermined rate.
  • High Density:  The concentration of housing units in a specific area or on a specific property.
  • Index or Rate Index:  A measure of interest rate changes used to adjust the intersest rate of an adjustable mortgage loan.  Example:  The change in U.S. Treasury securities (T-Bills) with a one-year maturity based upon their weekly average yeild.
  • Lien:  A legal claim or charge on property as security for payment of a debt or for the discharge of an obligation.
  • Loan-to-value ratio:  The ratio — expressed as a percentage – of the amount of a mortgage loan to the appraised value or selling price of the property.
  • Margin:  In adjustable mortgage loans, the number of percentage points the lender adds to the index rate to determine the new interest rate at each adjustment.
  • MLS:  MLS stands for multiple listing service, by which member brokers cooperate in the sale of each other’s listings.  Sellers may choose not to allow their property into multiple listing, if they wish.
  • Mortgage acceleration clause:  A clause that allows a lender to demand that the entire balance of the loan be repaid in a lump sum under certain circumstances.  The acceleration clause is usually triggered if the home is sold, title to the property is changed, the loan is refinanced or the borrower defaults on a scheduled payment.
  • Points:  A fee charged by a lender as a service charge or as an amount needed to make the yield on a mortgage competitive with other types of investments.  Each point represents 1 percent of the loan amount.
  • Principal:  Amount of debt, not including interest; the face value of a loan.
  • Private Mortgage Insurance:  Insurance issued by a private company against loss by a lender in the event of default.  Private mortgage insurance is generally required for conventional financing whenever less than 20 percent is put down.
  • Quit-claim Deen:  A document that releases a party from any interest in a piece of real estate.
  • Second Mortgage:  A mortgage that ranks after the first mortgage lien in priority.
  • Seller Broker:  A seller broker represents the interest of the seller.  If you are considering selling your property please contact your local Elkhart County Real Estate Expert Evelyn Johnston at 574-304-7148.
  • Title Insurance:  Insurance against loss resulting from defects of title of p ublic record.
  • Title Search:  A check of public title reqcords to ascertain that the seller is the legal owner and that there are no claims or liens against the property.
  • VA Loans:  Loans partially guaranteed by the Verterans Administration, enabling veterans to buy a home with little or no down payment.

These are not all of the Real Estate Terms but they are a start to help you understand different aspects of the Home Buying procedure.  Real Estate Agent Evelyn Johnston is an Elkhart County Expert.  You may reach her at 574-304-7148.