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Annual Percentage Rate (APR)
– All of the charges that the borrower will pay for the loan,
including the interest, loan fee, discount point, and mortgage
insurance costs, expressed as an annual percentage of the loan
amount.
Bump
Clause – A provision in a purchase and sale agreement that
allows the seller to keep the property on the market while waiting
for a contingency clause to be fulfilled.
In the meantime, if the
seller receives another good offer, he or she can require the buyer
to either waive the contingency or terminate the contract.
CC&R’s
– A declaration of covenants, conditions and restrictions; usually
recorded by a developer to place restrictions on all lots within a
new subdivision.
Closing
– The final stage in a real estate transaction, when the seller
receives the purchase money, the buyer receives the deed, and title
is transferred.
Closing
Costs – Expenses incurred in the transfer of real estate in
addition to the purchase price, i.e.: the appraisal fee, title
insurance, excise tax, broker commission, etc.
Closing
Date – The date on which all terms of the purchase and sale
agreement must be met or the contract is terminated.
Signing of documents takes
place a few days before this date.
Condominium – Property developed for concurrent ownership, where
each co-owner has a separate interest in an individual unit,
combined with an undivided interest in the common areas of the
property.
Counteroffer – A response to a contract offer, changing some of
the terms of the original offer. It
acts as a rejection of the original offer, not as an acceptance.
Discount
Points – A percentage of the principal amount of the loan,
collected by the lender at the time the loan is originated, to give
the lender an additional yield.
Document
Fee – The amount paid for preparation of documents.
Earnest
Money – A deposit that a prospective buyer gives the seller as
evidence of his or her good faith intent to complete the
transaction.
Easement
– An irrevocable right to use some part of another person’s real
property for a particular purpose.
Encroachment – A physical intrusion onto neighboring property,
usually due to a mistake regarding the location of the boundary.
Encumbrance – A nonpossessory interest in real property; a right
or interest held by someone other than the property owner, which may
be a lien, an easement, a profit, or a restrictive covenant.
Escrow
– An arrangement in which something of value, such as a money or a
deed, is held on behalf of the parties to a transaction by a
disinterested third party (escrow agent) until specified conditions
have been fulfilled.
Escrow
Fee – The amount you pay the escrow agent for holding and
preparing papers, accounting for all funds, and coordinating all
parties involved in the transaction.
Income
Ratio - A standard used in qualifying a buyer for a loan to
determine whether he or she has sufficient income
Insurance, Title – Insurance protects against losses resulting
from undiscovered title defects. An
owner’s policy protects the buyer, while a mortgagee’s policy
protects the lien position of the buyer’s lender.
This is a onetime premium paid at closing.
Loan,
Fixed Rate – A loan on which the interest rate will remain the
same throughout the entire loan term.
Loan-to-Value Ratio (LTV) – The relationship between the loan
amount and either the sales price or the appraised value of the
property (whichever is less), expressed as a percentage.
Mortgage, Adjustable Rate (ARM) – A loan in which the interest
rate is periodically increased or decreased to reflect changes in
the cost of money.
Offer
– When one party (the offeror) proposes a contract to another (the
offeree); if the offeree accepts the offer, a binding contract is
formed.
Prepayment Penalty – The amount you must pay your lender when
you pay your loan in full before it is due.
Real
Property – Land and everything attached to or appurtenant to it,
also called real estate.
Reconveyance Fee – The amount you pay to transfer the title of
your property to the next owner.
Title
Search – An inspection of the public record to determine all
rights and encumbrances affecting title to a piece of property.
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