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| Orange County NY Real Estate Glossary |
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Amenity
A feature of the home or property that serves as a
benefit to the buyer but that is not necessary to
its use; may be natural (such as location, woods,
water) or man-made (such as a swimming pool or garden).
Amortization
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
(for example, 15 or 30
years).
Annual Percentage Rate (APR)
calculated by using a
standard formula, the
APR shows the cost of
a loan; expressed as
a yearly interest rate,
it includes the interest,
points, mortgage insurance,
and other fees associated
with the loan.
Application
the first step in the
official loan approval
process; this form is
used to record important
information about the
potential borrower necessary
to the underwriting process.
Appraisal
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.
Appraiser
A qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.
ARM
Adjustable Rate Mortgage; a mortgage loan subject
to changes in interest rates; when rates change, 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.
Assessor
a government official who is responsible for determining
the value of a property for the purpose of taxation.
Assumption of Mortgage
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.
Balloon Mortgage
A mortgage that typically offers low rates for an
initial period of time (usually 5, 7, or 10) years; after that time period
elapses, the balance is due or is refinanced by the borrower.
Bankruptcy
a federal law whereby a person's assets are turned
over to a trustee and used to pay off outstanding debts; this usually
occurs when someone owes more than they have the ability to repay.
Borrower
a person who has been approved to receive a loan
and is then obligated to repay it and any additional fees according to
the loan terms.
Building code
Based on agreed upon safety standards within a specific
area, a building code is a regulation that determines
the design, construction, and materials used in building.
Budget
A detailed record of all income earned and spent
during a specific period of time.
Cap
A limit, such as that placed on an adjustable rate
mortgage, on how much a monthly payment or interest
rate can increase or decrease.
Cash reserves
A cash amount sometimes
required to be held in reserve in addition to the
down payment and closing
costs; the amount is determined by the lender.
Certificate of Title
A document provided by a qualified source (such
as a title company) that shows the property legally
belongs to the current owner; before the title
is transferred at closing, it should be clear
and free of all liens or other claims.
Closing
Also known as settlement, this is the time at
which the property is formally sold and transferred
from the seller to the buyer; it is at this time
that the borrower takes on the loan obligation,
pays all closing costs, and receives title from
the seller.
Closing Costs
Customary costs above and beyond the sale price
of the property that must be paid to cover the
transfer of ownership at closing; these costs
generally vary by geographic location and are
typically detailed to the borrower after submission
of a loan application.
Commission
An amount, usually a percentage of the property
sales price, that is collected by a real estate
professional as a fee for negotiating the transaction.
Condominium
A form of ownership in which individuals purchase
and own a unit of housing in a multi-unit complex;
the owner also shares financial responsibility
for common areas.
Conventional Loan
A private sector loan, one that is not guaranteed
or insured by the U.S. government.
Cooperative (Co-op)
residents purchase stock in a cooperative corporation
that owns a structure; each stockholder is then
entitled to live in a specific unit of the structure
and is responsible for paying a portion of the
loan.
Credit History
History of an individual's debt payment; lenders
use this information to gauge a potential borrower's
ability to repay a loan.
Credit Report
A record that lists all past and present debts
and the timeliness of their repayment; it documents
an individual's credit history.
Credit Bureau Score
a number representing the possibility a borrower
may default; it 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.
Deed
The document that transfers ownership of a property.
Deed-in-Lieu
to avoid foreclosure
("in lieu" of
foreclosure), a deed is given to the lender to
fulfill the obligation to repay the debt; this
process doesn't allow the borrower to remain
in the house but helps avoid the costs, time,
and effort associated with foreclosure.
Default
The inability to pay monthly mortgage payments
in a timely manner or to otherwise meet the mortgage
terms.
Delinquenc
Failure of a borrower to make timely mortgage
payments under a loan agreement.
Discount Point
normally paid at closing and generally calculated
to be equivalent to 1% of the total loan amount,
discount points are paid to reduce the interest
rate on a loan.
Down Payment
The portion of
a home's purchase
price that is paid
in cash and is
not part of the
mortgage
loan. |
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