|
|
|
Home Buyer And Home Design Terms And Definitions
hen you start shopping
for a new home, you may Appreciation - The increase in
encounter some words and the value of a property.
terms with which you are
unfamiliar. The following Assessment - A tax levied on a
glossary will help you to be a property or a value placed on the
better informed shopper. worth of property by a taxing
authority.
Adjustable Rate Mortgage (ARM) -
A loan whose interest rate is Assumption - A transaction
adjusted according to movements allowing the buyer of a home to
in the financial market. assume responsibility for an
existing loan on the home instead
Amortization - A payment plan by of getting a new loan.
which a borrower reduces a debt
gradually through monthly Balloon - A loan which has a
payments of principal and series of monthly payments (often
interest. for 5 years or less) with the
remaining balance due in a large
Annual Percentage Rate (APR) - lump sum payment at the end.
The annual cost off credit over
the life of a loan, including Binder - A receipt for a deposit
interest, service charges, paid to secure the right to
points, loan fees, mortgage purchase a home at terms agreed
insurance, and other items. upon by the buyer and seller.
Appraisal - An evaluation to Buydown - A subsidy (usually paid
determine what a piece of by a builder or developer) to
property would sell for in the reduce the monthly payments on a
marketplace. mortgage loan.
owners in a subdivision.
Cap - A limit to the amount an
interest rate or a monthly Condominium - A home in a
payment can increase for an multi-unit complex; each
adjustable rate loan either purchaser owns an individual
during an adjustment period or unit, and all the purchasers
over the life of the loan. jointly own the common areas,
such as the surrounding land,
Certificate of Occupancy - A hallways, etc.
document from an official agency
stating that the property meets Conventional Loan - A mortgage
the requirements of local codes, loan not insured by a government
ordinances, and regulations. agency (such as FHA or VA).
Closing - A meeting to sign Convertibility - The ability to
documents which transfer property change a loan from an adjustable
from a seller to a buyer. (Also rate schedule to a fixed rate
called settlement) schedule.
Closing Costs - Charges paid at Cooperative - A form of ownership
settlement for obtaining a in a multi-unit complex; the
mortgage loan and transferring purchasers own shares of the
real estate title. entire complex rather than owning
individual units.
Conditions, Covenants, and
Restrictions (CC and Rs) - The Credit Rating - A report ordered
standards that define how a by a lender from a credit bureau
property may be used and the to determine if the borrower is a
protections the developer has good credit risk.
made for the benefit of all
Default - A breach of a mortgage to a person or company
contract (such as not making authorizing access to the owner's
monthly payments). land; for example, a utility
company may be grated an easement
Density - The number of homes to install pipes or wires. An
built on a particular acre of owner may voluntarily grant an
land. Allowable densities are easement, or in some cases, be
usually determined by local compelled to grant one by a local
jurisdictions. jurisdiction.
Downpayment - The difference Equity - The difference between
between the sales price and the the value of a home and what is
mortgage amount on a home. The owed on it.
downpayment is usually paid at
closing. Escrow - The handling of funds or
documents by a third party on
Due-on-Sale - A clause in a behalf of the buyer and/or
mortgage contract requiring the seller.
borrower to pay the entire
outstanding balance upon sale or Federal Housing Administration
transfer of the property. A (FHA) - A federal agency which
mortgage with a due-on-sale insures mortgages that have lower
clause is not assumable. downpayment requirements than
conventional loans.
Earnest Money - A sum paid to the
seller to show that a potential Fixed Rate Mortgage - A mortgage
purchaser is serious about whose interest rate remains
buying. constant over the life of the
loan. The payments are not
Easement - Right-of-way granted necessarily level. (See Graduated
Payment Mortgage and Growing the borrower to pay off a 30-year
Equity Mortgage). loan in 15 to 20 years, or less.
Fixed Schedule Mortgage - A Hazard Insurance - Protection
mortgage whose payment schedule against damage caused by fire,
for the life of the loan is windstorm, or other common
established at closing. The hazards. Many lenders require
payments and interest rate are borrowers to carry it in an
not necessarily level. amount at least equal to the
mortgage.
Graduated Payment Mortgage (GPM)
- A fixed-rate, fixed-schedule Housing Finance Agency - A state
loan which starts with lower agency which offers a limited
payments than a level payment amount of below-market-rate home
loan; the payments rise annually financing for low-and
over the first 5 to 10 years and moderate-income households.
then remain constant for the
remainder of the loan. GPMs Index - The interest rate or
involve negative amortization. adjustment standard which
determines the changes in monthly
Growing Equity Mortgage (Rapid payments for an adjustable rate
Payoff Mortgage) - A fixed-rate, loan.
fixed-schedule loan which starts
with the same payments as a level Infrastructure - The public
payment loan; the payments rise facilities and services needed to
annually, with the entire support residential development,
increase being used to reduce the including highways, bridges,
outstanding balance. No negative schools, and sewer and water
amortization occurs, and the systems
increase in payments may enable
Interest - The cost paid to a
lender for the use of borrowed Mortgage Company (Mortgage
money. Banker) - A company that borrows
money from a bank, lends it to
Joint Tenancy - A form of consumers who want to buy homes,
ownership by which the tenants then sells the loans to
own a property equally. If one investors.
dies, the other would
automatically inherit the entire Mortgagee - The lender who makes
property. a mortgage loan.
Level Payment Mortgage - A Mortgage Loan - A contract in
mortgage whose payments are which the borrower's property is
identical for each month over the pledged a s collateral and which
life of the loan. can be repaid in installments
over a long period. The mortgagor
Mortgage Broker - A broker who (buyer) promises to repay
represents numerous lenders and principal and interest, to keep
helps consumers find affordable the home insured, to pay all
mortgages; the broker charges a taxes, and to keep the property
fee only if the consumer finds a in good condition.
loan.
Mortgage Origination Fee - A
Mortgage Commitment - A formal charge by a lender for the work
written communication by a involved in preparing and
lender, agreeing to make a servicing a mortgage application
mortgage loan on a specific (usually 1 percent of the loan
property, specifying the loan amount).
amount, length of time and
conditions. Negative Amortization - An
increase in the outstanding determine the boundaries of your
balance of a loan when a monthly property. The cost will depend on
payment is not large enough to the complexity of the survey.
cover all of the interest due.
Rapid Payoff Mortgage - (See
Note - A formal document showing Growing Equity Mortgage).
the existence of a debt and
stating the terms of repayment. Recording Fee - A charge for
recording the transfer of a
PITI - Principal, interest, property, paid to a city, county,
taxes, and insurance (the 4 major or other appropriate branch of
components of monthly housing government.
payments).
Real Estate Settlement Procedures
Point - A charge of 1 percent of Act (RESPA) - A federal law
the mortgage amount. Points are a requiring lenders to provide home
one-time charge assessed by the buyers with information about
lender at closing to increase the known or estimated settlement
interest yield on a mortgage costs. The act also regulates
loan. other aspects of settlement
procedures.
Prepayment - Payment of all or
part of a debt prior to its R-Value - The resistance of
maturity. insulation material (including
windows) to heat passing through
Principal - The amount borrowed it. The higher the number, the
in a loan, excluding interest and greater the insulating value.
other charges.
Sales Contract - A contract
Property Survey - A survey to between a buyer and seller which
should explain, in detail, a person's legal right to
exactly what the purchase ownership of a property.
includes, what guarantees there
are, when the buyer can move in, Transfer Taxes - Taxes levied on
what the closing costs are, and the transfer of property or on
what recourse the parties have if real estate loans by state and/or
the contract is not fulfilled or local jurisdictions.
if the buyer cannot get a
mortgage commitment at the Veterans Administration (VA) - A
agreed-upon terms. federal agency which insures
mortgage loans with very liberal
Settlement - (See Closing). downpayment requirements for
honorably discharged veterans and
Shared Appreciation Mortgage - A their surviving spouses.
loan in which partners agree to
share specified portions of the Walk-Through - A final inspection
downpayment, monthly payment, and of a home before settlement to
appreciation. search for problems that need to
be corrected before ownership
Tenancy in Common - A form of changes hands.
ownership in which the tenants
own separate but equal parts. To Warranty - A promise, either
inherit the property, a surviving written or implied, that the
tenant would either have to be material and workmanship of a
mentioned in the will or, in the product is defect-free or will
absence of a will, be eligible meet a specified level of
through state inheritance laws. performance over a specified
period of time. Written
Title - Evidence (usually in the warranties on new homes are
form of a certificate or deed) of either backed by insurance
companies or by the builders within a specific area.
themselves.
For more information, be sure to
Zoning - Regulations established visit us online at
by local governments regarding http://www.houseplancentral.com.
the location, height, and use for
any given piece of property
About the Author:
Mark Mathis is a building designer and publisher of several stock house plan websites and informational resources including http://www.HousePlanCentral.com,
http://www.HousePlanGallery.com, and http://www.moneytalks-bswalks.com. Be sure to visit each site and subscribe to our eNewsletters to receive special offers, promotions, and subscriber-only features.
Source: www.isnare.com
|
|
