- A mortgage loan with an interest rate that can change over time.
- A real estate professional that is legally licensed to buy and sell property on behalf of their client. An agent cannot operate independently; they must work under a licensed broker.
- The process of gradually reducing mortgage loan debt over time by making scheduled monthly payments. The interest payment of an amortized loan will decrease as time goes on, while the principal payment increases.
- An unbiased estimate of how much a home is worth done by a third party (the appraiser). When purchasing a home with financing, the lender requires an appraisal to make sure the loan amount requested is accurate. If the home’s appraised value is below what the buyer has offered, the lender may request the buyer pay the difference in cost.
- The increase in value of a home over time.
- A type of mortgage where the borrower pays the loan in one lump sum. It is usually associated with investment or construction projects that don’t require collateral.
- A short-term loan that a homeowner takes out against their property to finance the purchase of another property. This type of loan usually occurs for a period anywhere between a few weeks to three years.
- A real estate professional who is licensed to represent clients and manage a brokerage. They have received extensive education and licensing, which allows them to manage individual agents or operate independently.
- Someone who represents a buyer and assists with finding and purchasing a property.
- A metric used in real estate to assess the potential rate of return on an investment property. This metric is usually calculated by dividing the net operating income (NOI) of a property by its current market value and expressed as a percentage. It’s an important tool for investors because it helps them to compare different properties quickly and determine which one will provide the highest return on their investment.
- The money that is set aside or saved by an individual or business to use in case of a financial emergency. Cash reserves are typically composed of liquid assets such as cash, bank balances, and short-term investments that can be easily converted into cash quickly with minimal impact. Having sufficient cash reserves allows individuals and businesses to pay for unexpected expenses when needed without needing to borrow money or sell off assets.
- Refinancing a mortgage for more than the current value of the loan and then taking out the difference in cash is known as a cash-out refi. This type of financing generally requires that the borrower has at least 20% equity in the property. It is a popular option for those who need to use their home equity to deal with unexpected financial hardships or for those looking to turn their real estate investments into liquid capital. When choosing this option, it is important to consider all associated costs, such as closing fees, new interest rates, and potential tax implications.
- An official document providing a complete record of past ownership for a property. It typically begins with the current owner and traces the history of ownership back to the original owner of the property. This documentation also includes any liens or mortgages placed against it over time, which makes it crucial for anyone considering purchasing a home to have this information verified before proceeding with a sale.
- An indication that there are no legal obstructions preventing clear ownership of a property, such as liens or encumbrances from creditors. In order to acquire this status, all previous owners must have settled all lien payments in full and all taxes paid to date. Additionally, any building code violations or disputes amongst owners must be resolved prior to granting free and clear title. Having clear title provides assurance that no one else can make a future claim on a property and offers protection for future buyers.
- The process of concluding a real estate transaction, including finalizing all mortgage agreements, paying associated transaction fees, and signing all paperwork necessary to close the deal. The closing process involves both parties involved in the transaction: buyer and seller; each party must contribute funds toward any costs associated with closing out the deal.
- All fees associated with finalizing a real estate transaction. These costs typically include application fee, inspection fees, homeowner’s insurance premiums, property taxes due at closing, title insurance fees if applicable, attorney’s fees if required under state law or contract terms and commission fees paid to agents and brokers involved in completing the sale. Closing costs can vary greatly depending on many factors such as local customs, location of the property being purchased/sold and whether it was purchased through a real estate agent or directly from the owner/seller.
- A fee paid by the seller at the time of closing. Generally, commision is 5%-6% of the home’s sale price, and this commission is split between the buyer’s and seller’s agents. This commission structure incentivizes agents to work in the best interest of their respective clients.
- The purchase prices of recently sold properties similar in nature and in the same area. “Comps” are used to determine the market value and worth of other similar properties, as well as justification for an asking price or offer.
- A process utilized by real estate agents and appraisers for determining an accurate estimate of a property’s value. The CMA uses recently sold comparable properties in the same area to compare features like size, location, features, and amenities in order to approximate the true market-value of a home. This process can be beneficial for both buyers and sellers as it takes into consideration factors like location, condition, and upgrades that may otherwise not be accounted for in pricing estimates.
- The overall structural and cosmetic status of a house. Condition is important as it may affect enjoyment, work needed, and financing.
- A short-term loan that finances the construction of a home or real estate project until long-term financing can be acquired. These loans cover building expenses such as labor and materials, permitting fees, land acquisition costs and more. Furthermore, construction lenders typically require borrowers to provide them with details regarding their plans for completing the project such as blueprints and contractor bids. Repayment terms vary from one lender to another; some require payments during the draw period while others may allow borrowers to defer payments until after completion of the project.
- An important part of any real estate purchase contract and refers to a condition or clause that must be met before the sale can be finalized. These contingencies are typically included in order to protect either the buyer or seller from any potential liabilities during or after the transaction occurs. Common contingencies include obtaining financing within a certain period of time, conducting inspections on major systems such as plumbing or roofing, receiving approved permits from local authorities, among others. Depending on the specific details of each case, contingencies may require that one party bear some responsibility if certain conditions are not met which could potentially affect whether or not closing can occur.
- A legal document outlining important details between two parties involved in a real estate transaction – usually between a buyer and seller – which includes specifications such as sale price and payment terms among other pertinent information relevant to closing proceedings. It serves as protection for both parties involved by clearly stating expectations so that no misunderstandings arise throughout closing procedures. Contracts also provide security for buyers who may otherwise feel uncertain about making such large purchases without having some assurance that their interest will be looked after throughout proceedings; similarly it provides security for sellers who may worry about events occurring out of their control once they have committed themselves to selling their property through writing up legal contracts with buyers.
- A loan not guaranteed or insured by the federal government. Conventional mortgages usually require larger down payments than other types of loans (at least 20%), do not require mortgage insurance in most cases, and offer competitive rates making them attractive to many homebuyers. Additionally, borrowers are often required to have good credit scores in order to qualify for conventional mortgages, which helps protect against defaulting on payments in most cases. Borrowers also have more options when it comes to repayment terms, as lenders are more flexible with offering longer repayment periods than other types of loans.
- A numerical representation of creditworthiness. It measures the likelihood of possible default on a loan – the lower the score, the higher the risk. This score is commonly referred to as a FICO score, named after the company that created the most used scoring formula. A multitude of factors are taken into consideration when calculating a credit score, including payment history, credit length, and types of credit. The range for a FICO score is from 301 to 850, with scores above 740 considered excellent. Having an excellent credit score enables a borrower to secure the best loans and lowest rates available.
- A concept as it pertains to the appeal and attractiveness of the exterior, frontage of a home. Curb appeal describes both physical aspects like landscaping design, exterior paint color & materials used as well as more intangible aspects like overall tidiness & maintenance of outdoor spaces; this concept ultimately helps potential buyers visualize how living in this space would feel even before stepping foot inside your home!
- A percentage that helps lenders determine the level of risk associated with granting a loan to a borrower. It is calculated by taking the total of all monthly debt payments and dividing it by the borrower’s monthly gross income. This metric can be used to evaluate an individual’s creditworthiness and ability to repay debts, as well as their overall financial health. The debt-to-income ratio is an important factor when a lender is considering loaning money, as it provides insight into the borrower’s capacity for repayment. Generally speaking, lenders prefer borrowers who have a low debt-to-income ratio to reduce the risk of default.
- A written legal document that transfers title from one party to another. It is the primary instrument used in transferring ownership of real estate from a seller to a buyer, and thus it serves as the vehicle for conveying an interest in the property.
- A borrower has failed to meet the agreed-upon payment terms. This often involves not making mortgage payments for at least 90 days, which can lead to serious financial consequences, such as foreclosure of the home or repossession of other assets used as collateral.
- Also known as mortgage points, are fees paid by homebuyers to their lender at the time of closing. By paying this amount upfront, borrowers may be able to secure a lower interest rate on their loan, resulting in reduced monthly payments. Under certain conditions, these points can be tax deductible and may also be used to pay closing costs or other related fees associated with the loan. They can also act as additional down payment for those who are short of funds at settlement.
- An upfront payment made by a potential buyer when purchasing real estate property. It is usually expressed as a small percentage of the total purchase price, though there are instances where some lenders may require up to 20% or more of the purchase price depending on other factors such as credit score or type of loan taken out (e.g., FHA loan). The down payment serves as collateral for lenders in case of default on payments and helps reduce their overall risk associated with loaning money for large purchases like houses or cars. It also demonstrates that buyers are serious about making their payments and have enough resources saved up for initial costs associated with owning property – such as things like home inspection fees and moving costs – which makes them more attractive candidates for loans from banks and other financial institutions.
- A real estate situation where one agent or broker represents both the buyer and seller in a transaction. In these cases, agents are legally obligated to treat each party fairly and impartially, meaning they cannot give preferential treatment or disclose confidential information to either party without first obtaining their consent. Additionally, agents must clearly communicate any potential conflicts of interest with both parties prior to closing any deals in order to avoid any legal issues down the line.
- A sum of money paid by a buyer to the seller during a real estate contract in order to demonstrate their commitment to finalizing the purchase. Although sometimes referred to as ‘good faith deposit’, earnest money serves as a security deposit and is typically held in trust until closing. This type of payment helps assure that both buyers and sellers meet their obligations within the conditions set forth in the contract, and can be returned if those obligations are not met.
- An owner’s financial interest in their property, which is calculated by taking the market value of the property and subtracting any loans or liens against it. For example, if a homeowner purchases a house for $200,000 and puts down $40,000 as a down-payment, they have $40,000 worth of equity in their home. As payments are made on the loan or property values increase over time, either through market appreciation or additional improvements made to the home, equity increases as well.
- An arrangement where a neutral third-party holds funds associated with a real estate transaction until specific requirements set forth in the contract are fulfilled. Typically this includes documents such as title searches and surveys being completed prior to closings so that all parties involved can be assured that they will receive what they were promised during negotiations. The escrow agent will then release any funds or documents held in escrow upon confirmation that all terms have been met.
- An exclusive right to sell agreement is an agreement between a seller and real estate agent wherein the seller guarantees that they will pay commissions to the agent even if they find their own buyer for their property rather than using someone from the agent’s network. This type of listing agreement provides real estate agents with an incentive to thoroughly market properties since they have assurance of payment regardless of who finds buyers for them. Additionally it gives sellers peace-of-mind that an experienced professional is working hard on their behalf to ensure the most profitable sale possible for them.
- The accurate valuation of an asset in a free and open market where buyers and sellers have access to all information needed in order to make an informed decision about the purchase or sale. In order for this valuation to be considered fair market value, both parties must operate without undue pressure or bias and act in accordance with their best interests.
- A type of home loan administered by the Federal Housing Administration that is backed and insured by them in order to provide protection and security for borrowers. This loan option offers competitive rates and an easier qualification process, making it a great choice for many individuals.
- A home loan with an unchanging interest rate over its entire lifetime. This kind of mortgage gives borrowers the peace of mind knowing what their payments will be throughout the life of the loan. It also allows for long-term budgeting as nothing changes during this period, so there are no surprises or sudden increases in payment amounts. Additionally, fixed-rate mortgages tend to offer lower rates than adjustable rate mortgages (ARMs). This makes them a popular choice among buyers who intend to stay in the same home for several years since they can benefit from those low rates.
- A property listing where a home is being sold without the help of a real estate agent. This option gives sellers the opportunity to save money by avoiding paying commission fees. However, it also comes with certain risks and challenges. When selling FSBO, sellers must be aware of all local laws and regulations, as well as any licenses they may need in order to complete the sale transaction. Additionally, they will face the challenge of marketing their property to potential buyers and completing all necessary paperwork on their own.
- The process of a mortgage lender claiming and reselling a property when the owner fails to make their payments according to the mortgage agreement. In this situation, the lender is attempting to recoup their losses and gain back what they have lost.
- A process in which an experienced and knowledgeable licensed appraiser evaluates numerous aspects of a property to determine its fair market value. This evaluation is typically requested by mortgage lenders when someone is looking to buy or refinance a house. An appraisal involves the appraiser assessing the condition of the property, inspecting both the interior and exterior, noting any necessary repairs, evaluating comparable properties in the area that have recently sold, and more. The appraiser will then apply all of their findings to arrive at their opinion of value for the particular property.
- An extensive examination of the overall condition of a property conducted by a certified inspector. It includes an investigation into structural components such as foundation, roofing, walls, windows, and doors as well as other parts like plumbing fixtures, electrical systems and appliances. During this process buyers can inspect any potential safety concerns or health hazards that could affect their purchase decision such as mold buildup or roof damage. Additionally, potential buyers get insight into what repairs are needed if any so they can negotiate with sellers on how much they are willing to pay for these repairs or even ask that they be taken care of before closing on the sale.
- type of policy that covers any losses or damages incurred by the homeowner, such as those caused by a natural disaster, theft, or damage. It also provides homeowners with liability protection should an accident occur in the home or on their property. Homeowner’s insurance is typically included in your monthly mortgage payments and serves to protect both you and your financial interests.
- The profit a mortgage lender makes in exchange for the loan. It is quantified as a percentage.
- A loan that exceeds conforming loan limits – which are based on local median home values – and can’t be backed up by government-sponsored programs. Borrowers who need to take out a jumbo loan must go through stricter qualifications than those required for conforming loans. These loans are also manually underwritten in order to reduce the lender’s risk exposure. Furthermore, applicants may be asked to provide additional documentation when compared to what is normally required for more standard loans, thus increasing the time needed for approval.
- A financial institution or private group that provides money to an individual so they may purchase a piece of real estate with expectation that it will be repaid over time with interest based on agreed upon terms. Lenders typically review credit ratings of potential borrowers and assess risk associated with loan approval before agreeing to provide financing for a property purchase. Furthermore, lenders may also impose certain restrictions on borrowers such as requiring borrower insurance policies to protect against loss from non-payment or damage to property being purchased.
- A property that is advertised and available for sale through a real estate agent or broker. This includes residential properties, commercial buildings, and land.
- A licensed real estate professional who acts as the representative of the property owner in the marketing and sale of their listing. They are responsible for providing guidance throughout the sales process and helping to negotiate a favorable outcome for their client.
- A contract between a property owner and a real estate agent that outlines how the agent will represent the owner in selling their home or other piece of real estate. This agreement typically includes details such as commission fees, duration of the listing, services provided by the agent, marketing strategies used to advertise the listing, and any other relevant information related to the sale of the property.
- Professionals employed by mortgage lenders who specialize in providing guidance and advice to borrowers when it comes to purchasing or refinancing a home. They are responsible for helping borrowers choose the most appropriate type of loan, collecting loan application documents, and liaising with appraisers. In addition, loan officers typically review credit history and any documentation required to determine an individual’s capacity to repay their mortgage loan.
- The procedure used by banks or financial institutions when processing loan applications submitted by customers. As part of the origination process, brokers must identify an appropriate loan product for each borrower based on their individual needs as well as ensuring that all necessary paperwork is collected and reviewed prior to approval of the loan. In most cases there will be some form of fee associated with this service known as an origination fee which covers administrative costs associated with this process.
- A type of loan used for financing the purchase of a real estate property. Mortgages are typically long-term loans with repayment terms ranging anywhere from 5 years up to 30 years. Generally, borrowers will need to provide collateral in exchange for the loan and may need to pay a down payment depending on other factors such as the value of the property and credit history.
- A type of policy that lenders require homebuyers to purchase when making less than a 20% down payment on a home purchase, taking out an FHA loan, or having an USDA loan. This policy is meant to lower the risk of these types of loans by providing additional protection for lenders if borrowers default on their payments. The cost is typically added onto monthly payments but does not go directly towards paying off the loan balance; it is used instead as compensation for any losses incurred by lenders due to a borrower’s inability to make payments.
- An online platform that allows agents or brokers to list properties they are selling or renting out. MLS systems provide accurate and up-to-date information on local listings, allowing buyers and sellers to search for homes or apartments quickly and efficiently. With an MLS system, buyers can research potential areas or properties without needing to visit in person.
- An event held by a real estate agent that is open to anyone interested in viewing the property, usually for several hours at once. This gives potential buyers an opportunity to view the property without making an appointment, allowing the agent to showcase the home and generate interest or potential offers.
- A situation in which a property owner opts to forgo exclusive agreements and sell their home on their own with no assistance from a real estate agent. This allows the homeowner to list with multiple agents, as well as advertise directly in order to draw more attention to their property.
- A fee paid by a borrower to cover the costs of processing their loan application when applying for a mortgage, typically charged as a percentage of the loan amount or fixed dollar amount. These fees are used by lenders to cover administrative costs such as credit reports and appraisals that are necessary when assessing loan applications.
- When buying a home, this option enables borrowers to finance the purchase directly through the seller instead of using traditional mortgage lenders or financial institutions. In this situation, the seller serves as both the lender and lessor, offering an agreed-upon payment plan that allows buyers who may not qualify for traditional financing due to bad credit or lack of income history access to buying a home.
- A real estate property for sale that has not been made publicly available to other agents or buyers. This type of listing is often kept off the market in order to give certain buyers an advantage over others when it comes to purchasing the property. Pocket listings are usually managed by one specific agent, who will use their own channels and networks to locate potential buyers, as well as manage negotiations.
- An important step taken by potential home buyers before submitting an offer on a home (or even engaging with a real estate agent). It involves getting an assessment from your chosen lender regarding how much you’re able to borrow for a home purchase and for what length of time. To get pre-approved for a mortgage loan, lenders must check your credit score and verify certain information such as income and employment status. Typically, pre-approvals are good for up to 90 days from issue date meaning that you’ll need to act quickly within that period if you want to secure your financing.
- This provides an estimate of how much you may be able to afford in terms of buying a home – it does not provide confirmation or guarantee that you’ll actually be approved by a lender. During this process, lenders collect basic information about your financial situation such as income and debts in order to calculate how much they think you can afford when making monthly payments on a mortgage loan. While this information can help guide potential buyers into looking at homes within their price range, it’s important to note that pre-qualification does not replace pre-approval which is required before submitting an offer on any property.
- The total amount borrowed from the lender and does not include any interest or fees. This can also be referred to as loan amount or amount financed. Generally, when making payments on a mortgage loan, the majority of your payment will go towards paying down interest while a small portion will be applied towards reducing your principal balance.
- A legal mechanism used by lenders to secure repayment of a debt. The lien is placed on a piece of property and can be used as security for unpaid taxes, court judgements, or unpaid bills. Homebuyers may find themselves facing difficulty in the homebuying process if they have outstanding liens against them.
- The amount a buyer is willing to pay for a property. When making an offer on a piece of real estate, the buyer sets a price that reflects their perceived value of the property. This amount may vary from the asking price or market value of the property. Additionally, the term value can also refer to net income or cash return, divided by a capitalization rate, which is a common way to determine a fair price for an investment property. Ultimately, the value or price of a property is determined by the individual needs and considerations of the buyer, and can vary widely based on a multitude of factors.
- A legally binding contract between two parties (a buyer and seller) that outlines agreed upon terms surrounding the sale of a piece of property. It typically includes details such as both parties involved, purchase price being offered, closing date, inspections needed and all associated costs with the transaction (including real estate fees).
- A legal document which transfers ownership of a property from one party to another. The deed itself conveys title to the property, but only passes on whatever interests or rights the seller has in it. These deeds are designed to be simple and straightforward with no warranties or promises made about the condition of the property.
- Agreements between borrowers and lenders that allow borrowers to secure an advantageous interest rate before closing a real estate transaction. A rate lock guarantees that regardless of market fluctuations, the borrower will be able to have access to that particular interest rate for a predetermined period of time in order to protect them from further variations.
- Enacted by Congress in 1974 for the purpose of protecting consumers involved in real estate transactions. RESPA requires lenders to provide disclosure documents to borrowers informing them of settlement costs and services linked with their purchase or refinance and applicable consumer protection laws related to those procedures. Additionally, it prohibits specific practices such as kickbacks between settlement service providers and places limits on escrow accounts for consumers in these transactions. RESPA seeks to ensure fair treatment of consumers throughout all stages of a real estate transaction while also reducing costs associated with home buying and financing.
- A professional in the real estate industry who has chosen to join the National Association of Realtors (NAR), an organization dedicated to advancing the interests of real estate brokers, agents and appraisers. Real estate professionals who become members of NAR agree to abide by a strict Code of Ethics, which serves as a guideline for conducting ethical business practices. With access to resources like market intelligence, legal support and professional development programs, NAR members are well-positioned to provide quality services to their clients.
- The process of replacing an existing loan with new terms and conditions that offer potentially better terms than those available on your current loan. This can involve changing the interest rate, extending your repayment period or obtaining cash out of your home equity. The goal of refinancing is typically to reduce monthly payments, lower interest rates and/or access cash from your home’s equity. To do this it may be necessary to incur additional costs such as origination fees or closing costs upfront.
- A financial product specifically designed for homeowners who are 62 years or older that allows them to access money through their home’s equity without having to make any payments until they move or pass away. With a reverse mortgage, you receive payment from the lender in exchange for relinquishing some ownership rights over the property – typically in the form of reduced home value once you sell it – while maintaining control over how you use the funds received from the loan. As long as all requirements are met, no repayment is due until after leaving the property permanently or passing away.
- When a third party wishes to purchase or lease an asset owned by a property holder, the right of first refusal ensures that the owner of the asset has the opportunity to accept the same terms as those offered by the third party buyer before any agreement is reached with them. This provides added security to owners as they have the chance to buy or lease their own asset under the same conditions as a third-party instead of allowing it to be sold or rented to someone else.
- This is commonly applied in cases where two or more people jointly own or lease a property. It states that when one of these individuals passes away, their share in the property automatically passes onto their co-owner and that individual becomes the sole owner of all rights pertaining to it. This means that if one joint owner dies, their co-owner does not need to seek out legal action in order to gain access and control over their deceased counterpart’s portion, but can simply enjoy full ownership over it without any further complications. In addition, this eliminates any confusion regarding inheritance taxes related to ownership claims and guarantees that there are no disputes between heirs regarding who should receive what portion of ownership.
- Also referred to as a Home Equity Line of Credit (HELOC), is a type of loan taken out by a property owner against the market value of their home. These types of loans generally provide the borrower with access to a lump sum or line of credit, both of which can be used however they wish. Payback plans are available with various options that help tailor payments to the individual’s needs. Second mortgages can provide homeowners with an excellent option for financing large projects like home renovations, debt consolidation, and more due to the relatively low-interest rates compared to other forms of borrowing. They are also tax-deductible making them even more attractive for many property owners looking for extra financial support.
- A type of loan that is backed by the borrower’s assets, such as cars, a second home, or other items of value. This type of loan is advantageous for borrowers who do not have enough liquid funds to cover their borrowing needs and are unable to qualify for an unsecured loan. In these cases, the borrower puts up collateral in exchange for the loan and if they fail to pay back the lender, the lender can use the collateral as payment against the debt.
- A real estate transaction in which the sale of a property is made for an amount less than the balance owed on its mortgage. The sale is typically initiated by the homeowner, who may be underwater on their mortgage or otherwise unable to pay the full balance due on the loan. In these cases, the lender who holds the mortgage agrees to accept a reduced payout and forgive any remaining debt.
- A legal document that conveys the rights to ownership of real estate from the current owner to the buyer. It establishes the buyer’s legal claim and interest in the property, granting them exclusive rights to use, possess, and enjoy it. The title is typically issued by a governmental or third-party agency responsible for verifying and certifying real estate transactions. Upon closing, the seller must transfer this title to the buyer in order for them to gain full ownership of the property. This document serves as evidence that no other party has an interest in the property and that all previous obligations have been satisfied, such as mortgages, liens, or judgments.
- A loan backed by the United States Department of Agriculture (USDA) that enables US residents living in rural areas to obtain financing for purchasing a home. The USDA backs the loan, providing lenders with assurance that they will receive their principal and interest payments back even if the borrower defaults on the loan. This type of home loan often offers favorable terms such as lower down payment requirements, no minimum credit score, and lower interest rates than other types of mortgages.
- A home loan guarantee provided by the U.S. Department of Veterans Affairs (VA) to service members, veterans, and eligible surviving spouses who are looking to purchase or refinance a primary residence. VA loans are guaranteed up to a certain percentage of the total amount borrowed, which gives lenders assurance that they will be able to recover their principal and interest payments in case of default. Benefits associated with VA loans include lower closing costs and fees, flexible credit requirements, no mortgage insurance requirement, and competitive interest rates when compared to other types of mortgages.
- A record of past employment.
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