Real Estate Lingo For The Newbie

Real Estate Lingo For The Newbie



Real Estate Lingo for​ the​ Newbie
In today's real estate market there is​ a​ lot of​ uncertainty .​
The sub-prime mortgage crisis is​ the​ buzz word phrase that has a​ lot of​ people talking .​
One lesson that can be learned from this situation, is​ that it​ is​ so important for​ prospective homeowners to​ know what they are getting themselves into .​
Buying a​ home can be stressful, and​ overwhelming, but knowing what you are signing on for​ is​ paramount to​ securing an​ investment that will serve you well .​
a​ little education can go a​ long way .​
Below is​ a​ glossary of​ key terms associated with all things real estate .​
If you are a​ newbie, familiarize yourself with these as​ you begin your real estate search:
We'll begin in​ the​ middle of​ the​ alphabet with M words, as​ mortgages seem to​ be the​ hot topic these days .​
Mortgage: is​ a​ lien on the​ property that secures the​ Promise to​ repay a​ loan .​
a​ loan to​ finance the​ purchase of​ real estate, usually with specified payment periods and​ interest rates.
Mortgage broker: is​ a​ professional who works for​ a​ firm that originates and​ processes loans for​ a​ number of​ lenders .​
Mortgage banker: is​ a​ company that originates loans and​ resells them to​ secondary mortgage lenders such as:Fannie Mae or​ Freddie Mac.Who?, you ask .​
Just, read on .​
Fannie Mae: is​ a​ sort of​ acronym which stands for​ Federal National Mortgage Association (FNMA); a​ federally-chartered enterprise owned by private stockholder .​
This enterprise purchases residential mortgages and​ converts them into securities for​ sale to​ investors;by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to​ potential home buyers.
Freddie Mac: is​ another acronym of​ sorts is​ the​ Federal Home Loan Mortgage Corporation (FHLM); a​ federally-chartered corporation that purchases residential mortgages, coverts them into securities,and sells them to​ investors, providing lenders with funds for​ new home buyers.
Mortgage insurance: is​ 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.
ARM: Adjustable Rate Mortgage is​ a​ mortgage loan subject to​ changes in​ interest rates .​
When rates adjust, ARM monthly payments increase or​ decrease at​ intervals determined by the​ lender .​
The change in​ monthly -payment amount, however, is​ usually subject to​ a​ Cap .​
What is​ Cap in​ this case?, you ponder .​
Again, just read on.. .​
Cap: is​ a​ limit, such as​ that placed on an​ adjustable rate mortgage, on how much a​ monthly payment or​ interest rate can increase or​ decrease.
Assumable mortgage: is​ a​ mortgage that can be transferred from a​ seller to​ a​ buyer; once the​ loan is​ assumed by the​ buyer the​ seller is​ no longer responsible for​ repaying it; there may be a​ fee and/or a​ credit package involved in​ the​ transfer of​ an​ assumable mortgage.
Amortization: is​ the​ repayment of​ a​ mortgage loan through monthly installments of​ principal and​ interest .​
The monthly payment amount is​ based on a​ schedule that will allow you to​ own your home at​ the​ end of​ a​ specific time period.
Appraisal: is​ a​ document that gives an​ estimate of​ a​ property's fair market value; an​ appraisal is​ generally required by a​ lender before loan approval to​ ensure that the​ mortgage loan amount is​ not more than the​ value of​ the​ property.
Balloon Mortgage: is​ a​ mortgage that typically offers low rates for​ an​ initial period of​ time, after the​ said time period elapses, the​ balance is​ due or​ is​ refinanced by the​ borrower.
Bankruptcy: is​ a​ federal law whereby a​ person's assets are turned over to​ a​ trustee and​ used to​ pay off outstanding debts .​
This typically occurs when someone owes more than they have the​ ability to​ repay.
Building code: is​ based on a​ set of​ agreed upon safety standards within a​ specific area .​
a​ building code is​ a​ regulation that determines the​ design,construction, and​ materials used in​ building.
Credit bureau score: a​ number representing the​ likelihood a​ borrower may default .​
This number is​ based upon credit history and​ is​ used to​ determine ability to​ qualify for​ a​ mortgage loan.
Debt-to-income ratio: a​ comparison of​ gross income to​ housing and​ non-housing expenses .​
With the​ FHA, the-monthly mortgage payment should be no more than 29% of​ monthly gross income (before taxes) and​ the​ mortgage payment combined with non-housing debts should not exceed 41% of​ income.
EEM: is​ short for​ an​ Energy Efficient Mortgage .​
This is​ an​ FHA program that helps home buyers save money on utility bills by enabling them to​ finance the​ cost of​ adding energy efficiency features to​ a​ new or​ existing home as​ part of​ the​ home purchase
Fair Housing Act: is​ a​ law that prohibits discrimination in​ all facets of​ the​ home buying process on the​ basis of​ race, color, national origin, religion, sex, familial status, or​ disability.
Home Inspection: is​ an​ examination of​ the​ structure and​ mechanical systems to​ determine a​ home's safety; makes the​ potential home buyer aware of​ any repairs that may be needed.
Interest rate: is​ the​ amount of​ interest charged on a​ monthly loan payment .​
This is​ usually expressed as​ a​ percentage.
Lease purchase: This exits to​ assist low- to​ moderate-income home buyers in​ purchasing a​ home .​
It allows them to​ lease a​ home with an​ option to​ buy .​
The rent payment is​ made up of​ the​ monthly rental payment plus an​ additional amount that is​ credited to​ an​ account for​ use as​ a​ down payment.
Lien: is​ a​ legal claim against property that must be satisfied When the​ property is​ sold
PITI: Principal, Interest, Taxes, and​ Insurance .​
These are the​ four elements of​ a​ monthly mortgage payment .​
The payments of​ principal and​ interest go directly towards repaying the​ loan while the​ portion that covers taxes and​ insurance goes into an​ escrow account to​ cover the​ fees when they are due.
Pre-qualify: This is​ when a​ lender informally determines the​ maximum amount an​ individual is​ eligible to​ borrow.
Pre-payment: This is​ a​ payment of​ the​ mortgage loan before the​ scheduled due date; maybe Subject to​ a​ prepayment penalty.
Principal: the​ amount borrowed from a​ lender .​
The principal doesn't include interest or​ additional fees.
Real estate agent: is​ an​ individual who is​ licensed to​ negotiate and​ arrange real estate sales; works for​ a​ real estate broker.
REALTOR ®: is​ a​ real estate agent or​ broker who is​ a​ member of​ the​ NATIONAL ASSOCIATIONOF REALTORS, and​ its local and​ state associations.
Refinancing: Means paying off one loan by obtaining another .​
refinancing is​ generally done to​ secure better loan terms such as​ a​ lower interest rate on a​ loan .​
Rehabilitation mortgage: is​ a​ mortgage that covers the​ costs of​ rehabilitating (repairing or​ Improving) a​ property .​
Some rehabilitation mortgages, allow a​ borrower to​ roll the​ costs of​ rehabilitation and​ home purchase into one mortgage loan.
Sweat equity: Using your own labor to​ build or​ improve a​ property as​ part of​ the​ down payment
Title insurance: This is​ insurance that protects the​ lender against any claims that arise from arguments about ownership of​ the​ property;also available for​ home buyers.
Title search: is​ 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.
Of course, there are many more terms and​ different types of​ mortgage situations to​ explore and​ educate yourself on .​
But, the​ above definitions are a​ good start toward becoming acquainted with the​ language, lingo and​ important concepts in​ real estate.




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