Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Epilogue About the Author Also by Liz Crowe. Read Online Swipe version. Read Online Continuous version. Download now. Buy a paper book. Dual Agency by Liz Crowe. Closing Costs by Liz Crowe. Sweat Equity by Liz Crowe. Floor Time by Liz Crowe. Infusion by Liz Crowe.
Be the first to reply. Sign in to Comment. Don't have an account? Join Epub. Forgot password? First name. Last name. Website optional. Email address. Sign up. The period that elapses between the adjustment dates for an adjustable-rate mortgage ARM. A person appointed by a probate court to administer the estate of a person who died intestate. A formal sworn statement of fact. You may be required, for example, to sign an affidavit of occupancy. It states that you will use the property as a principal residence. Or, you and the seller may have to sign an affidavit stating all of the improvements to the property required in the sales contract were completed before closing.
Your lender can provide additional information regarding any of these documents you will sign. A detailed analysis of your ability to afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that you might expect to pay. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a year fixed-rate mortgage, the amortization term is months. To repay a mortgage with regular payments that cover both principal and interest. A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made. A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee points. An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis. A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security. A written analysis of the estimated value of a property prepared by a qualified appraiser.
Contrast with home inspection. A person qualified by education, training, and experience to estimate the value of real property and personal property.
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation. The valuation placed on property by a public tax assessor for purposes of taxation. The process of placing a value on property for the strict purpose of taxation.
May also refer to a levy against property for a special purpose, such as a sewer assessment. A public official who establishes the value of a property for taxation purposes. Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others including bank accounts, stocks, mutual funds, and so on. A provision in an assumable mortgage allows a buyer to assume responsibility for the mortgage from the seller.
The loan does not need to be paid in full by the original borrower upon the sale or transfer of the property. A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property. The fee paid to a lender usually by the purchaser of real property resulting from the assumption of an existing mortgage.
One who holds a power of attorney from another to execute documents on behalf of the grantor of the power. In short, underwriting is the process used to analyze how you have managed credit obligations in the past, whether you have the ability to repay the mortgage loan you are applying for i. A financial statement that shows assets, liabilities, and net worth as of a specific date. A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.
The final lump sum payment that is made at the maturity date of a balloon mortgage. A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee. A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
The person designated to receive the income from a trust, estate, or a deed of trust. An improvement that increases property value as distinguished from repairs or replacements that simply maintain value. A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate. Your lender will probably tell you that a biweekly mortgage is structured just like a traditional fixed-rate, level-payment, fully amortizing mortgage.
However, you make your payments every 14 days instead of once a month. The monthly payment is split in half, resulting in the same total monthly mortgage, but the resulting 26 and sometimes 27 biweekly payments a year translate into 13 monthly payments, or one extra monthly payment per year. Borrowers can qualify for a year monthly payment amount, but get a loan that pays off in approximately 22 years at current interest rates.
At higher rates, the actual term declines. If you are looking to build up equity in your home faster without the higher mortgage payments that come with a shorter-term mortgage, you may want to consider the biweekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account. A single policy that covers more than one piece of property or more than one person. The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.
An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust. A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.
A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses. A category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. Local regulations that control design, construction, and materials used in construction.
Building codes are based on safety and health standards. An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect. A permanent buydown reduces the interest rate over the entire life of a mortgage. A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.
A provision of an adjustable-rate mortgage ARM that limits how much the interest rate or mortgage payments may increase or decrease. Lenders will want to know if you can repay the mortgage debt you incur -- this is known as your capacity. Lenders will also review your expenses and any other debt obligations you have. The cost of an improvement made to extend the useful life of a property or to add to its value. Any structure or component erected as a permanent improvement to real property that adds to its value and useful life. A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens.
In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose. The Certificate of Deposit index represents the weekly average of secondary market interest rates on six-month negotiable CDs. The initial interest rate and payments adjust every six months after an initial six-month period.
ARMs with this index typically come with a per-adjustment cap of 1 percent and a lifetime rate cap of 6 percent. An index that is used to determine interest rate changes for certain ARM plans. It represents the weekly average of secondary market interest rates on six-month negotiable certificates of deposit. A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner. The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
After construction begins, you may discover that you need to make unplanned and necessary changes to the work. The contingency reserve covers unforeseen repairs or deficiencies found during renovation. Unnecessary additions or changes are treated differently. These change orders are considered discretionary and must first be approved by your lender. You must deposit additional funds to pay for the work in the escrow account before work on the changes begins. These change orders - as well as any that result from unforeseen repairs - must be added as amendments to your construction contract.
A title that is free of liens or legal questions as to ownership of the property. A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. These can include but are not limited to preparing and recording the closing documents and disbursing funds. The types of services provided by a closing agent depend on the person you hire, but typically the closing is conducted by title companies, escrow companies or attorneys. A fee or amount that a home buyer must pay at closing for a single service, tax, or product.
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Many closing cost items are included as numbered items on the HUD-1 statement. Expenses over and above the price of the property incurred by buyers and sellers in transferring ownership of a property. After your lender has approved your mortgage and you accept the commitment letter, the next step is to set a closing date. Many times, your real estate sales professional coordinates the setting of this date with you, the seller, the closing agent, and your lender.
You can now finalize your moving plans. Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action. A person who signs a promissory note along with the borrower. A sharing of insurance risk between the insurer and the insured.
Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss. A provision in a hazard insurance policy that states the amount of coverage that must be maintained - as a percentage of the total value of the property - for the insured to collect the full amount of a loss.
An asset such as a car or a home that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract. The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary. Commercial banks, like thrifts, originate and service mortgage loans. In some cases, commercial banks may have mortgage banking subsidiaries that perform this function. Banks may choose to hold a loan in their own portfolio or sell the loan to an investor.
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan. A formal offer by a lender stating the terms under which it agrees to lend money to a homebuyer. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
An unwritten body of law based on general custom in England and used to an extent in the United States. An alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.
In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse. An alternative financing option for low- and moderate-income households under which an investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit organization. Payment on the second mortgage is often deferred and carries a very low interest rate or no interest rate at all.
Part of the debt may be forgiven incrementally for each year the buyer remains in the home. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property. Interest paid on the original principal balance and on the accrued and unpaid interest. The determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain.
Potential homeowners should know of major problems in a home before they make an offer. As a potential buyer, you should carefully examine all elements of the home. Ask questions to the seller and the real estate sales professional about any concerns you may have. Both the seller and the real estate agent can be held liable if they do not disclose any defects they know about in the home.
A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. Changing the ownership of an existing building usually a rental project to the condominium form of ownership. A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.
The terms and conditions of any major renovation job should be part of a formal, legally binding contract between you and your contractor - this is called the construction contract. The lender you choose will likely want to review this contract before you sign it. A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
In your purchase offer, you may consider stating that the seller must make sure the electrical systems, heating and cooling, plumbing, and mechanical systems are functioning properly at the closing. You may also state that your purchase is contingent upon the satisfactory completion of a professional home inspection, which will check these systems and other elements more completely. A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
Your purchase contract should include a contingency that the purchase is subject to your receiving clear title to the property. This process includes a title search and title insurance. When you make a formal offer on a house, your contract should include a financing contingency.
Your purchase contract should specify appliances, fixtures, and other personal property that must remain in the home. You can avoid any surprises by listing in your contract everything that is to be left behind when the seller moves out. Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account. This contingency reserve is only used when unforeseen repairs or deficiencies are found during renovation.
A general contractor is a person who oversees a construction project and handles aspects such as scheduling workers and ordering supplies. A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage. A provision in some adjustable-rate mortgages ARMs that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
An adjustable-rate mortgage ARM that can be converted to a fixed-rate mortgage under specified conditions. A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit. A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements. Mortgages related to a cooperative project.
This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units. A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.
An index that is used to determine interest rate changes for certain adjustable-rate mortgage ARM plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. When figuring out how much home you can afford, you need to account for the costs associated with getting into your home. These can include the cost for repairs that need to be made before you can occupy your residence.
There may also be the cost of purchasing appliances, such as a washer and dryer, refrigerator, or stove. The bottom line is you do not want to spend all your money on purchasing the home and not have any left to pay these types of costs.
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure. An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date. The three main credit reporting agencies, or credit bureaus, are Equifax, Experian, and Trans Union. You can order a copy of your credit report a nominal fee may apply via telephone at:.
A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner. A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force. There are several ways to ensure you have a good credit report and credit score. One of the most effective is to manage your existing credit in a positive way. Ask your lender for suggestions about ways to control the amount of money you owe.
Or, you can choose a credit counselor from the list provided on this site. Some lenders may view consumers as a greater risk if they have used most or all of their available credit. Missing a payment on a bill should be avoided, as should late payments on any of your credit obligations. Experiencing a mortgage foreclosure, filing for bankruptcy, or having your vehicle repossessed can also affect your credit score and credit report, limiting your ability to get new credit at a reasonable rate.
When a credit report is received, your lender will check it against your application and look for any discrepancies. You may be asked to explain information in your credit report. The agency obtains data for these reports from a credit repository as well as from other sources. An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. Your credit score is based on all the information in your credit report.
This information is converted into a number - a credit score - that the lender uses to determine whether you are likely to repay your loan in a timely manner. The scores used in mortgage lending are typically in the to range. A general guide is that the higher your score the better. But you should keep in mind that your credit score is just one of several factors that will be used to evaluate your mortgage loan application.
A credit union is a financial institution that is owned and run by its members. It is a nonprofit, cooperative institution that offers members a place to save and borrow. A credit union often works by having its members pool their funds so additional loans can be made to other members.
An amount owed to another. See installment loan and revolving liability. The deed is the document that transfers ownership from the seller to you. The closing agent will record the deed with you listed as the new property owner. Your name and the names of any other buyers appear on the deed, and it will be sent to you after it is recorded. The document used in some states instead of a mortgage; title is conveyed to a trustee. When homeowners sign a deed of trust, they receive title to the property but convey title to a neutral third party - called a trustee - until the loan balance is paid in full.
A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage. An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans. The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions.
To obtain more information, you can contact the U. Department of Veterans Affairs. If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office. A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. The Direct Leveraging Loan Program makes it easier and more economical for rural residents to own a home through lower interest rates and no down payment.
Under this program, the lender offers up to 50 percent of the mortgage amount as a conventional year, fixed-rate first mortgage and the Rural Housing Service RHS offers the balance as a second mortgage at an interest rate that is generally below market. Discount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage.
A point equals 1 percent of the loan amount. Typically, each point you pay for a year loan lowers your interest rate by. If the current interest rate on a year mortgage is 7. Ask your lender if you have the option of paying 1, 2, or 3 discount points - or you can choose not to pay any discount points. It often makes more sense to pay discount points if you plan to stay in your home for a long time. The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage. Saving for a down payment is usually one of the most difficult parts of preparing to buy a home.
If you believe you have the needed funds, you are in a better position to seek pre-qualification from a lender to get the mortgage that is right for you. Most homeowners rely on a mortgage from a financial institution, and most mortgage products require buyers to include a portion of their own funds towards the purchase of the home.
This is called the down payment. Lenders feel more secure when buyers include a down payment, indicating they are less likely to walk away from their investment if their finances take a downturn. But today, new mortgage products allow buyers to put down as little as 3 percent to 5 percent, provided private mortgage insurance is obtained. A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
A deposit made by the potential home buyer to show that he or she is serious about buying the house. The earnest money is deposited in an escrow account and will be applied to your closing costs. Sometimes, your lender will want you to bring a receipt for the earnest money deposit along with your sales contract to the initial loan application meeting. A right of way giving persons other than the owner access to or over a property.
The actual age of a building may be shorter or longer than its effective age. Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable. The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions. A person who signs ownership interest over to another party. Contrast with co-maker. A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity is the difference between the fair market value of the property and the amount still owed on its mortgage. A lender determines how much equity you have in your home by taking the appraised value of the home and subtracting any mortgage debt. Your credit report may contain inaccuracies. The best way to ensure there are no errors in your credit report is to request copies and review the information. Since each of the main credit bureaus keeps its own records, you may want to request copies from all three: Trans Union, Equifax, and Experian.
If you have been turned down for credit because of the information in your credit report, you are entitled to receive a free copy of your report within 60 days of the denial. If you find errors in your report, follow the directions in the credit report and contact the agencies to have the errors corrected. They will investigate the targeted items and remove incorrect information. Explain the discrepancies in the report to your lender and state that the credit agency is correcting them.
An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.
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An escrow account is money that is deposited with a third party - outside the buyer and the seller - to be used to pay various fees. A borrower typically provides funds that will pay taxes, mortgage insurance, lease payments, hazard insurance premiums, and other payments when they are due.
When escrow funds are used to pay taxes, hazard insurance, and other fees, it is called an escrow disbursement. Periodically, an escrow analysis will be performed to determine if current monthly deposits provide sufficient funds to pay bills when they are due. The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due. The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
It is possible to establish a credit history even if you do not have a traditional credit record that shows credit card payments or payments on a student or car loan. You can build a nontraditional credit history, for example, by documenting your monthly payments to previous and current landlords; to utility companies for your gas, water and telephone services; and to insurance companies for medical, life, and automobile coverage. Your lender can provide further details on how you can effectively establish a credit record. The ownership interest of an individual in real property.
The sum total of all the real property and personal property owned by an individual at time of death. The report on the title of a property from the public records or an abstract of the title. A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
A New York Stock Exchange company and the largest non-bank financial services company in the world. An agency of the U. Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing. Fee simple ownership provides the owner with unrestricted powers to dispose of the owned property as the owner sees fit. Of all types of ownership a person can have in real estate, fee simple provides the greatest amount of personal control.
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building the unit and is an owner in common with respect to the land and other common portions of the property.
With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower. FHA mortgages have a maximum loan limit that varies depending on the average cost of housing in a given region. In general, the loan limit is less than what is available with a conventional mortgage through a lender.
Also known as a government mortgage. In general, the loan limit is less than what is available with a mortgage through a lender. Your sales contract should include a clause that allows you to examine the property you want to purchase within the 24 hours before closing. This walk-through, during which you will be accompanied by the real estate sales professional, is your chance to ensure that the seller has vacated the house and left behind whatever property was agreed upon.
Make sure to check that all lights, appliances, and plumbing fixtures are in working order. You will also want to make sure that all conditions of the sales contract have been met. One other option is to make sure money to correct the problems is placed in an escrow account at closing to cover the cost of repairs. An index is a number to which the interest rate on an adjustable rate mortgage ARM is tied. It is generally a published number expressed as a percentage, such as the average interest rate or yield on U. Treasury bills. A margin is added to the index to determine the interest rate that will be charged on ARMs.
This interest rate is subject to any caps associated with the mortgage. The interest rate changes on an ARM are tied to some type of financial index. Some of the most common type of indexed ARMs are:. When comparing ARMs, look at how the index to which it is tied has performed recently. Your lender can provide information on how to track the index and a history of the index they use. A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.
You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less. When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments. The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest. This type of adjustable-rate mortgage ARM maintains the same initial interest rate for the first three, five, seven, or 10 years of your loan, depending on the term you choose.
Your interest rate then adjusts annually, and can move up or down as market conditions change. Be sure to ask your lender about the interest rate caps for both the annual adjustments and for the life of the loan. Fixed-rate mortgages, the most popular type of mortgage, offer the peace of mind that your interest rate will remain the same for as long as you have your loan. If you expect to live in your home for many years, having the same interest rate may be your key concern.
If you decide that you like the stable, predictable payments of a fixed-rate loan, you have the option of choosing from a variety of repayment terms: 15, 20, and 30 years are the most common. Typically, the longer the term of the mortgage, the more interest you pay over the life of your loan. However, stretching out your repayment term means your monthly mortgage payments will be less than they would be with a comparable shorter-term mortgage. Lenders offer a wide array of fixed-rate mortgages:.
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas. The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. If you repeatedly do not make your mortgage payments on time, your lender could sell your home and evict you from it in a legal procedure called foreclosure.
A foreclosure on your property can result in the loss of your home and your good credit rating. Before going to foreclosure, lenders will work with you if you are facing financial hardships to come up with repayment plans that will let you get back on track and remain in your home. For Sale By Owner, or FSBO, is the process of marketing, buying and selling of real estate without the representation of a real estate broker. An adjustable-rate mortgage ARM with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.
A general contractor is someone whom you may work closely with during your home improvement project. The general contractor is the person who oversees the construction project and handles various aspects such as scheduling workers and ordering supplies. If you are borrowing mortgage funds to renovate a home, your lender may need to review whether your contractor meets all federal, state, and local registration, licensing and certification standards.
The good-faith estimate is a report from your lender that outlines the costs you will incur to get your mortgage. Contrast with conventional mortage. A government-owned corporation within the U. Popularly known as Ginnie Mae. The amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate. A single-family residential structure designed or adapted for occupancy by unrelated developmentally disabled persons. The structure provides long-term housing and support services that are residential in nature.
A fixed-rate mortgage that provides scheduled payment increases over an established period of time, with the increased amount of the monthly payment applied directly toward reducing the remaining balance of the mortgage. Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards. A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs.
Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Sometimes called a reverse mortgage. A Home Equity Conversion Mortgage HECM is a type of home loan that lets homeowners aged 62 or over with little or no remaining balance on their mortgage convert their equity into cash. The equity can be paid to the homeowner in a lump sum, in a stream of payments, draws from a line of credit, or a combination of monthly payments and line of credit.
Whatever payment plan you select, you do not have to repay any part of this reverse mortgage until you sell the home or vacate it for another reason. At that time, you pay the loan balance, plus any accrued interest. Any proceeds above that amount go to you or to your estate. Developed by the Federal Housing Administration FHA , the HECM mortgage provides a cash growth feature not found with some other reverse mortgages - check with your Fannie Mae approved lender to see how this works based on your personal needs and your payment plan.
A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.https://au.latycewoqosu.tk
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The home inspection reviews the structural and mechanical condition of the property. This is not an evaluation of the market value of the home or a determination of whether the home complies with applicable building and safety codes. The inspection does not include a recommendation on whether you should or should not buy the house. The inspector bases the findings on observable structural elements of the home. Potential home buyers are urged to be present during the inspection - this will allow you to ask questions and be in a better position to learn more about any problems that arise.
You should view the home inspection report as a way to identify problems before you buy the home, to help negotiate adjustments in the purchase price if problems exist, and to help get the buyer to make any needed improvements before you buy the home. Lastly - and for some buyers most importantly - the home inspection report is a way to make you feel confident that the home you are buying includes systems that are in good working condition.
A nonprofit association that manages the common areas of a planned unit development PUD or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements. Replacement cost coverage ensures that your home will be fully rebuilt in case of a total loss. In fact, it may be required in some areas, so check with your real estate professional or an approved lender for further information.
Seek out and compare rates from several insurance companies before making your final decision. Your lender may add the insurance cost to your monthly mortgage payments and keep this portion of your payments in an escrow account. The lender then pays your insurance bill out of escrow when it receives premium notices from your insurance company. A type of insurance that covers repairs to specified parts of a house for a specific period of time.
It is provided by the builder or property seller as a condition of the sale. This loan provides financing from the construction through the purchase phases of your new home. A mortgage that enables eligible borrowers to obtain financing to remodel, repair, and upgrade their existing homes or homes that they are purchasing. The percentage of gross monthly income that goes toward paying housing expenses. A document that provides an itemized listing of the funds that are payable at closing.
Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. The blank form is published by the U. The form is filled out by your closing agent and must be signed by the buyer and the seller. The buyer should be allowed to review the HUD-1 Settlement Statement on the business day before the closing meeting to know the closing costs in advance.
An objective account, normally computer-generated, of credit and legal information obtained from a credit repository. A number used to compute the interest rate for an adjustable-rate mortgage ARM. The index is generally a published number or percentage, such as the average interest rate or yield on Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. This interest rate is subject to any caps that are associated with the mortgage. An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services.
Over time, inflation reduces the purchasing power of a dollar, making it worth less. The original interest rate of the mortgage at the time of closing. This rate changes for an adjustable-rate mortgage ARM. The regular periodic payment that a borrower agrees to make to a lender. The installment is more often referred to as your monthly mortgage payment. Installments, or monthly payments, can be made either monthly or biweekly, depending on your mortgage type.
Your approved lender may also offer additional payment plans tailored to fit your needs. Borrowed money that is repaid in equal payments, known as installments. A furniture loan is often paid for as an installment loan. A property title that a title insurance company agrees to insure against defects and disputes.
A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium. A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date. If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.
Simply put, this is the fee that is charged for borrowing money from lenders. The interest rate is the rate of interest that is in effect when the monthly payment is due. An interest rate ceiling - for an adjustable-rate mortgage ARM - is the maximum interest rate, as specified in the mortgage note; the interest rate floor is the minimum interest rate, as specified in the mortgage note.
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage ARM with payment change limitations. For an adjustable-rate mortgage ARM , the maximum interest rate, as specified in the mortgage note. For an adjustable-rate mortgage ARM , the minimum interest rate, as specified in the mortgage note. It is tied to the weekly average yield of U. Treasury securities adjusted to a constant maturity of one year.
The interest charged on the HECM loan will be payable to your lender when the loan terminates. A retirement account that allows individuals to make tax-deferred contributions to a personal retirement fund. Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks, bonds, or mutual funds. A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right of survivorship.
A decision made by a court of law. A lien on the property of a debtor resulting from the decree of a court. A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. A loan that exceeds mortgage amount limits. Also called a nonconforming loan.
The penalty a borrower must pay when a payment is made a stated number of days usually 15 after the due date. A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent. An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy.
Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs. A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it. A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.
Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others. The London Interbank Offered Rate LIBOR is based on the interest rate that major international banks are willing to lend and borrow funds for a specified period of time in the London interbank market.
This type of ARM typically has a per-adjustment period cap of 1 percent and is offered with either a 5 percent or a 6 percent lifetime rate cap. A legal claim against a property that must be paid off when the property is sold. For an adjustable-rate mortgage ARM , a limit on the amount that the interest rate can increase or decrease over the life of the mortgage.
For an adjustable-rate mortgage ARM , a limit on the amount that the interest rate can increase or decrease over the life of the loan. An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property.
Some states require lenders to file a lis pendens to begin the foreclosure process if a borrower is in default on loan payments. A sum of borrowed money principal that is generally repaid with interest. The loan application is a detailed form designed to provide information from you that your lender will need. Lenders use the application to evaluate whether or not they can give you a loan, and if so, the amount of money they can lend you. The commitment letter states the dollar amount of the loan being offered, the number of years you have to repay the loan, the loan origination fee, the points, the annual percentage rate, and the monthly charges.
The letter also states the time you have to accept the loan offer and to close the loan. Make sure you understand all aspects of the commitment letter because by signing it, you indicate your acceptance of its terms and conditions. Mortgages which exceed the conforming loan limit are known as jumbo mortgages. The interest rate on jumbo mortgages can be higher than the interest rate on conforming mortgages. A borrower whose mortgage amount slightly exceeds the conforming loan limit should analyze the economics of reducing their loan size through a larger downpayment or possibly using secondary financing to qualify for a conforming mortgage verses a jumbo mortgage.
The process by which a mortgage lender brings into existence a mortgage secured by real property.
The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount. With a reverse mortgage, a lender can call in your loan under certain conditions. But, if you occupy the property as your primary residence, are not absent from the property for 12 consecutive months. You may instruct the lender to pay the taxes and insurance on your behalf from your reverse mortgage funds.
The lender will set aside funds from your reverse mortgage to pay for future taxes and insurance, as long as funds are available. The relationship between the principal balance of the mortgage and the appraised value or sales price if it is lower of the property. A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.
The time period during which the lender has guaranteed an interest rate to a borrower. Homes and dwellings that are not built at the home site and are moved to the location are considered manufactured housing. Manufactured housing units must be built on a permanent chassis at a factory and then transported to a permanent site and attached to a foundation.