REAL ESTATE TERMS

100% Financing	No down payment is required.  All of the purchase price is financed through your new mortgage
2nd Mortgage	This is a second mortgage on your home.  It will require another scheduled monthly payment.
80/20 Mortgage	This is actually two loans.  The first loan is  80% of the purchase price or your first mortgage.  The second mortgage would be 20% of the purchase price. No down payment is required.  All of the purchase price is financed through your new mortgage
Adjustable Rate Mortgage (ARM):	This loan has an interest rate that changes through the life of the loan. The monthly payment will change (higher or lower) depending on the index and margin used to calculate the new rate.
Annual ARM:	This adjustable loan has an interest rate that is recalculated once every year.
Annual Percentage Rate (APR):	The interest rate that represents the relationship of the total finance charges to the amount of the loan.
Appraisal:	An expert estimate on the value of the home on a particular date.
Binder or “Offer to Purchase”:	A preliminary agreement, secured by the payment of earnest money, between a buyer and seller as an offer to purchase real estate. An Offer to Purchase or binder secures the right to purchase the home with agreed terms.  A limited time may apply to this document. The buyer will lose the earnest money if a decision is made not to purchase the home.
Closing Costs:	The expenses which buyer and seller must pay at the time the property transfers ownership.  These fees are in addition to the purchase price.
Closing Day:	The day the real estate changes ownership.   Mortgage documents are signed and any additional fees (closing costs) are collected.
Conforming Balloon Loan:	A short-term loan with very low mortgage payments. This loan requires full payment of the normal amortization period by paying the full balance in five or seven years.
Conforming Loan:	A mortgage loan which is eligible for federal agencies to purchase the loan.  The conforming loan amount is limited to $300,700.
Conforming Fifteen-Year Fixed Rate Mortgage:	This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate -- and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment.
Conforming Thirty-Year Fixed Rate Mortgage:	The traditional loan that expands for a 30-year period.  This loan is a fixed-rate mortgage so the payments remain constant throughout the life of the loan.
Conventional Mortgage:	A mortgage loan not insured by HUD or guaranteed by the Veteran’s Administration.  The lender and state establish conditions.
Deed:	A document by which title to real estate property is transferred from one owner to another.
Depreciation:	Decline in value of a house.
Down Payment:	The amount of money the buyer gives to seller of the home with the condition of purchasing the home
Equity:	The value of the homeowner’s profit in the property.  The equity is calculated by subtracting the amount owed from the property value.
Fair Market Value:	Value of a property the buyer and seller agree are within the current market conditions.
Fannie Mae (FNMA):	The Federal National Mortgage Association. A government sponsored Private Corporation, which purchases mortgages from lenders.
Federal Housing Administration (FHA):	A division of the federal Department of Housing and Urban Development (HUD).
FHA Mortgage:	A mortgage insured by the Federal Housing Administration. This loan requires additional mortgage insurance.
Finance Charge:	The charges imposed by the lenders.
Fixed Rate Mortgage:	The interest rate of this mortgage is set when the loan is made and never changes.
Foreclosure:	Taking possession of a mortgage property from the buyer due to lack of payment.
Freddie Mac:	Federal Home Loan Mortgage Corporation. A government sponsored Private Corporation, which purchases mortgages from lenders.
Home Equity Line of Credit (HELOC):	Borrowing against the equity in your home with a "revolving loan".  Periodic payments of a minimum interest are required.  The borrow may pay the loan in full or partially and still retain the available balance for future use.
Home Improvement Loans:	A loan that allows for your home to be updated or remodeled.
Homeowner’s Insurance Policy:	Insurance providing coverage against personal liability and other items.
HUD:	U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by lenders and sets minimum standards for such homes.
HUD-1 Settlement Statement:	A form provided at settlement (closing) to all parties involved that detail all the charges of the transaction.
Interest:	A charge paid for borrowing money.
Investor:	The source of money for the mortgage loan.
Joint Tenancy:	Joint home ownership by two or more persons such as husband and wife.
Jumbo Loan:	A mortgage for an amount greater than the amount eligible for purchase by Fannie Mae or Freddie Mac.
Lien:	A claim by one owner of a property to another as security for money owed. Such claims may include obligations not met or legal judgments, unpaid taxes, bills or others.
Line of Credit:	An agreement to extend credit to a borrower under specified conditions and financial limitations.
Loan:	A sum of borrowed money (principal) that is repaid with interest.
Loan to Value (LTV) Ratio:	The percentage relationship between the amount of the loan and the value or sales price.
Lock in:	An agreement in which the lender guarantees a specified interest rate for a certain amount of time.
Monthly ARM:	With this loan, the interest rate is recalculated every month. Compared to other options, the rate is usually lower on this ARM because the lender is only committing to a rate for a month at a time, so his vulnerability is significantly reduced.
Mortgage:	A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under the government insured or loan guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.
Mortgagee:	The lender in a mortgage agreement.
Mortgagor:	The borrower in a mortgage agreement.
Mortgage Broker:	An person or company that intiates the mortgage process but does not fund mortgages. A mortgage broker arranges mortgages with a variety of lenders.
Mortgage Commitment:	A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a home.
Mortgage Insurance Premium:	The payment made by a borrow to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance premium program and to provide a reserve found to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of one-half of one percent paid by the mortgagor on a monthly basis.
Multi-Family Residence:	A building which features two or more family dwellings within the same building.
New Construction:	Newly built residence that has never been occupied.
New Construction Loan:	This loan provides funds that are disbursed as needed during the construction phase and then converts to a permanent, fully-amortized mortgage at time of completion.
Nonconforming Loan:	A mortgage loan that does not meet all requirements to be eligible for purchase by federal agencies such as FNMA and FHLMC.
Non-owner Occupied:	The owner does not occupy the residence.
Owner Occupied:	The owner occupies the residence.
Points:	Sometimes called “discount points”, a point is one percent of the amount of the mortgage loan.  For example, if a loan is for $25,000, one point is $250. Points are charged by a lender to raise the yield on their loan at a time when money is tight, interest rates are high, and there are is a legal limit to the interest rate that can be charged on a mortgage. Buyers are prohibited from paying points on HUD or Veteran’s Administration Guaranteed loans (sellers can pay however). On a conventional mortgage, points may be paid by either buyer or seller or split between them.
Prepayment:	Payment of a mortgage loan, or part of it, before its due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment.
Quitclaim Deed:	A deed, which transfers interest to another party.  This gives clear title to the property.
Refinancing:	The process of the same mortgagor paying off one loan with the proceeds from another loan.
Single Family Residence:	A property designed for the use and occupancy of one family group.
Survey:	A measurement of land, prepared by a registered land surveyor, showing the location of the land property markers, dimensions, and the location of buildings.
Title:	Rights of ownership and possession of particular property.
Title Insurance:	A policy, usually issued by a title insurance company, which insures a homebuyer against errors in the title search.
Underwriting:	The analysis and matching or risk to an appropriate rate and term. The process of deciding whether to make a mortgage loan.
VA Loans:	The main purpose of the VA home loan program is to help Military Veterans finance the purchase of homes.
Vacant Land:	Land that is bear and not developed or in use.