Let’s take a look at several website online tools helpful in calculating value. Now you can stay updated on your most important life-time investment, that being your home.

Zillow is a leading free home value websites. It’s fun to use with helpful online tools and calculators that are generally useful.
Real Estate ABC is also a great online tool. One of its unique features offers a list of potentially comparable homes for you to select including in the valuations. This enables you to quickly know the best homes sold recently in your neighborhood.

Eppraisal, website offers home values, and neighborhood demographic data including education, finances and employment.
Reply online has a clean interface and provides a confidence rating for its appraisals based on factors related to the comparable homes used to generate the appraisal.

Yahoo! Is a useful website offering convenient tools. Yahoo home values are calculated using Zillow, Eppraisal and Reply thus giving you instant access to three appraisals for your home, with links to each of the three websites.

HomeGain offers market and census data plus home values. Its database might be somewhat limited when searching addresses.

CyberHomes is a practical, no nonsense home valuation tool. It provides reasonably accurate values and demographic data competitive to other websites.

Property Shark’s database is rather limited but does offer some cool features.

Trulia is also a popular website real estate tool. It offers solid calculation solutions and convenient mobile device applications.
Rentometer although, it doesn’t provide the value of the home, it gives the estimated rent one would pay to rent the home. A solid useful resources but has its limitations.

Ideally, when searching online you should be looking for website tools that allow you to input the address of your house, condo or other real estate property. It should also list recent home sales and valuation estimates based on recent home prices of comparable properties. Your list of recent comparable sales includes home prices, property data, plus the number of beds, baths, size and last date sold.

Remember, these property values given are typically, only estimates based on public data and other sources. If you are selling or buying this home, you should consult a local professional, such as an appraiser or real estate agent, for an appraisal or comparative market assessment (CMA) that takes into consideration the unique value and characteristics of your home.

The time has come, your savings for the down payment, check, credit score is healthy, and your search for the perfect house is complete. Now you have to figure out the hard stuff, but you saved and kept your credit healthy, thats the hard stuff.

This is a common feeling for many homeowners looking to find the best deal to finance their dream. They even fear mortgage deals so much they just end up settling for the first mortgage put in front of them! Why? Maybe they don’t know where to look? Or they don’t want to spend the time. If any of these sound familiar we are here to help!

It’s important to protect yourself by searching for the best deals out there.

Here are five ways to help you find the best deal:

1.Shop around – Get quotes from various lenders. Look at local and national lenders and don’t overlook the internet.

2. Compare terms – Interest rates vary from lender to lender but lenders offer different interest rates depending on the terms of the mortgage. How long will it be (15, 20 or 30 years)? Will it be variable or fixed?

3. Tweak some of the optional items that you control, such as the type of insurance you will carry and whether or not you will use escrow for taxes etc.

4.Adjust your down payment – Sometimes being able to increase the percentage of what you are putting down can make a difference     in the lenders terms (similarly buying a less expensive house will work the same)

5. Haggle – Yes! Lenders often act as if their rates are written in stone but this is not the case. This is where shopping around can really come in handy. If you can show that you’ve got a slightly better deal with another lender then sometimes another lender will lower their rate to beat the competitor.

Hey it’s worth a try!

Just remember that you are in control of your future. You can choose whether or not to accept any lenders terms. There are a lot of lenders out there so you do not need to sign with the first offer you receive. Yes, this is not the most glamours part of buying you new home but it can save you thousands of dollars!

One last tip: It might be best to go through this process before you head out to search for the home of your dreams. You can get preapproved for a mortgage with most lenders and that removes the pressure and worry of losing any home you find while you negotiate with the lender. This also puts you in the driver’s seat when you are negotiating to buy and even put you first in line if anyone else is bidding on the house you want. Get pre-approved, it will save you!

A VA loan is available to a variety of military members, some family members, and even members of certain organizations.  The list of eligible candidates that can apply include:

1. Active duty members of service
2. Members of the National Guard
3. Reservists
4. Veterans- certain guidelines have to be met such as time in service and type of discharge
5. Widows and widowers of veterans, as long as the veteran’s death was directly related to their military service
There are others who can also qualify for a VA loan who are often overlooked:
6. Some veterans of foreign service who served with allied forces during World War II.
7. Certain organizational members, such as officers who work for the National Oceanic and Atmospheric Administration
8. Some service members of the Public Health Service

Where To Apply For a VA Loan

The great thing about VA loans is their availability.  They can be obtained from banks, mortgage companies and even a savings and loan.  This means that no matter where you bank, chances are good that you have access to this program.

Benefits of a VA Loan

VA loans are not only appealing to buyers, but also to banks, as well.  That’s because VA loans are backed by the government, or, in this case, the Veterans Administration.  The VA guarantees the loan to the bank in the event that the buyer defaults so that the bank is not forced to write off the debt.  The bank where the loan originates gets the interest off of it and the VA gets fees that the buyer is charged up front.  But even if someone qualifies for the chance to apply for the loan, the same criteria still exists for qualifying for the loan.

VA loans also require no money down, except for a few incidental fees.  When you add this factor to the fact that you can still receive excellent interest rates this makes them extremely appealing.

Another benefit of this loan is that, unlike other popular loan programs, private mortgage insurance is not required. Since the VA guarantees the loan there is no need for third-party insurance requirements.

Not only does the VA offer a fixed rate mortgage, but many people do not realize that there is also an adjustable rate mortgage.  In this loan, the interest can be adjusted one percent each year for a total of no more than five percent over the life of the loan.  Plus, the VA also offers ways to refinance.  And if you have a VA loan and sell the property, you are free to use your benefit again.

A

ÒAÓ Loan or ÒAÓ Paper: when the credit rating of an individual is 660 or above.  No late mortgage payments within a 12-month period.  When entering a new loan this is the best credit rating to have.
ARM: Adjustable Rate Mortgage: this is a mortgage loan that will change shifts in interest rates.  When rates change, the ARM monthly payments will increase or decrease accordingly.  Usually, the overall change is subject to a cap no matter what the changes in interest rates are.
Abstract of Title: any document that records the ownership of a particular property throughout time.
Acceleration: defines the right of a lender to demand payment from the borrower regarding the outstanding balance of a loan.
Acceptance: when the buyer accepts the sellerÕs offer in writing.
Additional Principle Payment: money paid to the lender over the established payment amount and is used against the loan principle to shorten the years the borrower pays on the loan.
Adjustable Rate Mortgage (ARM): a mortgage loan that does not have a fixed interest rate and payments will shift based on changes in the interest rate.  These are also called adjustable mortgage loans (AMLs) or variable-rate mortgages (VRMs).
Adjustment date: the date when the interest rate on an ARM changes.
Adjustment Index: the published market index that is used to determining the interest rate of an ARM during adjustment or origination.
Adjustment Interval: the amount of time between the change of the interest rate and the payment date of an ARM.
Affidavit: a sworn, signed statement between the buyer and seller about the truth of information provided.
Amenity: any feature of a home or property that is considered a benefit to the buyer but is not a necessary part of the property.  This might include natural elements like woods or water, or man-made elements like a swimming pool or a tennis court.
American Society of Home Inspectors: a professional organization of home inspectors who run independent businesses.  Phone: (800) 743-2744
Amortization: this payment plan allows borrowers to reduce debt through monthly payments.  These payments might be interest-only, or principal and interest.  This amount is based on the schedule for the entire length of the loan as decided by lender and borrower.
Annual Mortgagor Statement: a yearly statement to the borrower determining the remaining principal to be paid on a lone as well as amounts paid on interest and taxes.
Annual Percentage Rate (APR): the cost of credit as expressed in a yearly rate.  This involved interest as well as other charges.  All lenders must, by federal law, follow the same rules to ensure that the APR is accurate so that it provides consumers with a good way to measure competing loans and mortgage plans.  APR is higher than the regular interest rate of a loan or mortgage.
Application: this form is the first step to get approved for a loan: it records information about a potential borrower that is required for the underwriting process.
Application Fee: when lenders charge a fee to process an application for a loan.
Appraisal: this document is from an independent professional that assesses the value of a property based on the sales of other homes in the area and the features of the particular property.  A lender usually requires an appraisal before a loan is approved to ensure that the value of the mortgage is not more than the value of the home.
Appraisal Fee: the fee levied by an appraiser to figure out the approximate market value of a property.
Appraised Value: the current estimation as to the market value of a property
Appraiser: an individual who has considerable experience and knowledge in estimating the value of property.
Appreciation: when property increases in value.
Arbitration: a legal method of solving disputes that does not involve going to court.
As-is Condition: when property is purchased in existing condition without allowances for repair.
Asking Price: how much money the seller wishes for a property.
Assess Value: the cash value a public official has decreed for any asset, used to determine the tax value of said asset.
Assessments: the process of placing value on assets for tax determination.
Assessor: a representative from the government who determines the value of property for the purpose of tax determination.
Assets: any item or property with value that can be measured.
Assumable Mortgage: when property or homes are sold, the seller is sometimes able to transfer to mortgage to the new buyer.  This means that the mortgage is assumable.  Lenders will require a credit review of the new borrower and might levy a fee for transferring the mortgage.  If the mortgage has a due-on-sale clause, you will not be able to transfer the mortgage to a new buyer.  If you have an assumable mortgage, it makes your home more attractive to potential buyers.
Assumption Clause: allows the buyer to take responsibility of the mortgage from the seller Ð it is a provision in the terms of a loan.
Automated Underwriting: when a loan is processed using a computer-based system in order to remove the possibility of personal bias against the buyer.
Average Price: a method of determining the cost of a home by totaling the cost of all houses sold in one area and dividing that number by the number of houses sold.

B

ÒBÓ Loan or ÒBÓ Paper: A FICO score from 620-659.  Also known as Sub Prime.  This rating includes factors such as late mortgage payments or two to three 30 days late installment loan payments over the last 12 months.  Any delinquencies can be no longer than 60 days.  Must be two to four years from a bankruptcy.
Back End Ratio (debt ratio): compares all monthly debt payments (could include real estate taxes and insurance, car loans, other consumer loans, or mortgage) to gross monthly income.
Back-to-Back Escrow: allows a property owner to sell one property and purchase another simultaneously.
Balance Sheet: a statement that shows the liabilities, net worth, and assets of a company or individual.
Balloon Loan or Mortgage: these mortgages offer low rates for a set period of time (usually 5, 7, or 10 years).  Once this period passes, the balance (or balloon) is either due or refinanced by the borrower.
Balloon Payment: a final lump sum that must either be paid at the end of a balloon mortgage or refinanced.
Bankruptcy: declared when an individual or company has more debt than ability to pay.  Through bankruptcy a personÕs assets are turned over to a trustee and are then used to settle outstanding debts.
Biweekly Payment Mortgage: when a mortgage is paid twice a month rather than once a month.  This reduces the amount of interest ultimately paid on the loan.
Borrower: any person or entity that has been approved for a loan and then must repay it as well as any additional fees a defined by the terms of the loan.
Bridge loan: a loan with a short term that is paid off after a short period of time.  Generally these are used until longer-term loans can be processed.
Broker: an individual or firm who is licensed to serve as a mediator between buyers and sellers.  Mortgage brokers negotiate contracts between lenders and borrowers, but do not loan money.  Real estate brokers help people buy and sell houses.
Buy Down: when a seller pays the lender an amount so that the lender provides a lower rate and lower payments for an ARM.  A seller may increase the price of a sale to cover the cost of a buy down.

C

ÒCÓ Loan or ÒCÓ Paper: FICO scores from 580-619.  Also called Sub-Prime.  A C rating may include three to four 30-day late payments on a loan or two to four 60-day late payments.  Generally one or two years past bankruptcy.
Callable debt: a kind of debt security where the issuer can redeem it at a specified price or after a specified date, but before the final stated maturity of the security.
Cap: a limit on any sort of loan.  For an ARM, it might refer to how much a monthly payment can increase or decrease.  Payment caps have nothing to do with the interest on a loan, so they can cause negative amortization.
Capacity: the ability for an individual or company to make payments on time.  This is dependant on the amount of income the entity claims each month after paying housing costs, debts, and other obligations as well as the assets that entity might hold.
Capital Gain: overall profit gained based on the differentiation between the original purchase price of a property and the total sale price.
Capital Improvements: when improvements are made on property that will enhance the propertyÕs value or the life of the property.
Capital or Cash Reserves: the savings, investments, or assets of an individual
Cash-Out Refinance: when a borrower refinances a mortgage at a higher principal in order to get additional money.  Generally this happens when a property has appreciated in value.
Cash Reserves: the lender of a loan determines the amount Ð the amount of cash the buyer must have in addition to closing costs and down payment.
Casualty Protection: this is a kind of property insurance that covers damage to the home and personal property either inside or outside the building.
Certificate of Title: a document that shows a property belongs to the current owner, usually provided by a title company.  The title is transferred at closing, and should be free of liens or any other claims.
Chapter 7 Bankruptcy: a bankruptcy wherein assets are liquidated in exchange for debt cancellation.
Chapter 13 Bankruptcy: a bankruptcy wherein a court sets a payment plan between the borrower and any creditors.  Homeowners may retain their property, but must make bankruptcy payments between a 3 to 5 year period.
Charge-Off: a portion of principal and interest due on a loan that is written off by the lender when it is deemed to be uncollectable.
Clear Title: a title that has no defects.  When a property has a clear title, it is able to be sold.
Closing: a meeting between the buyer, seller, settlement agent and other agents.  This is the final step in the transfer of property, where the title is given from the seller to the buyer.  At closing the seller receives his or her payment for the property.  This is also known as a settlement.
Closing Costs: the fees required for the final transfer or property that are not covered in the price of the property itself. These include originating fees, appraisal fees, discount points, survey fees, title insurance, real estate professional fees, legal fees, prepayment of taxes and insurance, and real estate transfer taxes. Generally for buyers these are estimated at 2 to 4 percent of the overall value of the home.  For sellers it is between 3 and 9 percent.
Cloud On The Title: any property condition that stops the property from having a clear title.
Co-Borrower: any additional person who is responsible for the repayment of a loan and is listed on the title of a house.
Co-Signed Account: where somebody else is signed on to the account in addition to the primary loan borrower, making both persons responsible for the amount borrowed.
Co-Signer: when a second person signs a credit application and agrees to be equally responsible for loan repayment.
Collateral: when a security is forfeit if a loan falls into default.  For example, with a mortgage, if the individual fails to pay the loan the lender takes the house, making the house the collateral on the loan.
Collection Account: when a debt goes unpaid and must be referred to a collection agency.  This will be reported to credit bureaus and shows up on the credit report of the borrower.
Commission: generally a percentage of the property sales price that is given to the real estate professional as a fee for negotiations.  Generally the seller pays the commission.  The amount of commission depends on the real estate professional, but is generally less than 6% of the sales price.
Common Stock: the most common stock that companies hold.  This provides the holder with voting rights in a corporation and pays dividends after the preferred stock holders have gotten paid.
Comparative Market Analysis (COMPS): an evaluation that determines the value of a property by comparing the stats of similar properties sold within the last year.
Compensating Factors: these show the ability of an individual to repay a loan on non-traditional criteria, including rent, employment, and utility payment history.
Condominium: a non-traditional form of home ownership where individuals own a unit of housing in a many-unit complex.  Owners share financial responsibility for the common areas of the complex.
Conforming Loan: a loan that does not exceed the limits placed by Fannie Mae or Freddie Mac.  Loans through Fannie Mae or Freddie Mac have been called conforming loans.
Consideration: when a valuable item has been given in exchange for an act or promise.
Construction loan: these are short-term loans that are used to build a new home.  Lenders pay builders based on ÒmilestonesÓ during the building process.
Contingency: before a contract is executed, there are conditions that must be met which are considered contingencies.  Buyers and sellers may both have contingencies, and both parties must accept these.
Conventional Loan: a loan that is issued through the private sector, which is not insured or guaranteed by the U.S. government.
Conversion Clause: some ARMs have this provision, which allows the ARM to change to a fixed-rate loan during some point during the term.  There may be an additional cost for this clause.
Convertible ARM: when an ARM mortgage allows the buyer to convert it to a fixed-rate mortgage at some point over the life of the term.
Cooperative (Co-op): when residents of a structure purchase stock in a cooperative corporation that owns said structure.  Each stockholder may then live in a unit of that structure and must pay a portion of the loan.
Cost of Funds Index (COFI): the index, which is used to determining the changes in interest rate for some ARMs.
Counter Offer: when one party rejects all or some of purchase offer in order to negotiate a new set of terms.  A natural step in creating a sales contract acceptable to all parties.
Covenants: terms, which are legally enforceable and govern the use of property; these are transferred terms that come with the property deed.  Any covenant that is discriminatory is illegal.  These are also called restrictive covenants, deed restrictions, restrictions, or conditions.
Credit: a base agreement that a borrower will accept a loan and then repay it to the lender over a period for time.
Credit Bureau: also known as the National Credit Repository, this is an agency that will give lenders the credit history of potential borrowers.
Credit Counseling: a kind of education on how to improve bad credit and avoid having overwhelming debt.
Credit Enhancement: when the lender reduces the chance of default of on loans by requiring mortgage insurance, collateral, or other agreements.
Credit Grantor: the institution that provides a borrower with credit or a loan.
Credit History: a record of an individualÕs debts and payment history.  This record is known as a credit report, and lenders use this in order to assess a potential borrowerÕs ability to repay a loan.
Credit Loss Ratio: a ratio calculated by credit-related losses to the dollar amount of MBS and total mortgages owned by the corporation in question.
Credit Related Expenses: any expenses that include provision of loss or foreclosed property expenses.
Credit Related Losses: expenses related to foreclosed properties and charge-offs.
Credit Repair Companies: Consumers who have credit and debt related problems often turn to these for-profit businesses that claim to offer assistance for credit problems and bad credit reports.
Credit Report: this report is generated by the credit bureau and controls all of the borrowerÕs debt and repayment history for the past seven years.  This is the document that lenders use to determine whether or not an individual qualifies for a loan.
Credit Risk: the amount of risk involved with granting a loan to a borrower.
Credit score: this is a quantitative assessment of an individualÕs ability to pay back loans.  Generally the scores range from 360-840.  The lower the score, the higher the risk of the individual defaulting.
Credit Union: a financial institution that is non-profit and regulated by the feds while being owned by those who use the services.  Credit unions generally service those who have a common interest and you must be a member to use their services.
Creditor: a lending institution or entity providing credit or a loan.
Creditworthiness: the ways in which lenders decide if a person is able to receive a loan and pay it back.

D

Debtor: any individual who borrows money.  Debtor and borrower are synonyms.
Debt-to-Income Ration: the comparison of gross income vs. housing and non-housing expenses.  Generally, mortgage payment and non-housing debt should not exceed 41% of income.
Debt Security: a security that is a representation of a loan from an investor to an issuer.  In turn, the issuer will pay interest in addition to the principal amount of the loan.
Deductible: the amount of cash that is paid by the homeowner to cover a damage or loss.  This is also called Òout of pocket expenses.Ó  Generally, policies that have higher deductibles have lower costs.
Deed: the document that transfers property from one entity to another in a legal fashion.  It is also known as the title.
Deed-in-Lieu: instead of foreclosure, the deed of the property will be given to the lender to help repay the debt.  With deed-in-lieu the borrower may not remain in the house but it does save some of the hassle involved with foreclosure.
Default: defined as the inability to make monthly mortgage payments or otherwise comply with mortgage terms in a timely manner.  When a payment on a mortgage has not been made after 60 or 90 days, it is considered to be in default.  If a mortgage is in default, the owner may begin foreclosure proceedings.
Delinquency: when a borrower fails to make timely mortgage payments as defined by the loan agreement.  Generally after fifteen days a mortgage is considered to be delinquent and late fees may be charged.
Deposit (Earnest Money): a potential buyer will put down this money to show that they are dedicated to purchasing the home Ð if the offer is accepted it will become part of the down payment, or it will be returned to the potential buyer if the offer is rejected, or forfeited if the buyer pulls out.
Depreciation: due to market conditions, wear and tear, or other factors a house or property may decrease in value.
Derivative: when a contract exists between two or more parties where the security depends on the price of an investment not directly connected to the property in the contract.
Disclosures: when relevant information is released about a property that could affect the final sale, such as defects or other problems.  ÒFull disclosureÓ generally means that the seller must provide all known information about the property voluntarily.  Law may require some disclosures.  A seller who has knowingly lied about a defect could face legal penalties.
Discount Point: generally paid at the closing and usually up to 1% of a total loan amount, these are paid to reduce the interest rate of a loan.  After the discount period, if the mortgage is an ARM the rate will usually go up.
Down Payment: not part of the mortgage loan, this is the portion of the homeÕs purchase price that is paid in case by the seller.  The amount varies based on the loan type, but is determined by the difference between the sale price and the mortgage loan amount.  If a down payment of less than 20% is made, mortgage insurance is required.
Document Recording: when a loan is closed, documents are filed and made part of the public record.  First, discharges for the prior mortgage holder are filed, and then the deed is written in with the new ownerÕs and mortgage companyÕs names.
Due on Sale Clause: a loan provision allowing a lender to demand full repayment of a mortgage loan should the property be sold.
Duration: the number of years it will take the lender to receive the present value of all expected future payments on a security that includes both principal and interest.

E

Earnest Money (Deposit): a potential buyer will put down this money to show that they are dedicated to purchasing the home Ð if the offer is accepted it will be come part of the down payment, or it will be returned to the potential buyer if the offer is rejected, or forfeited if the buyer pulls out.
Earnings Per Share (EPS): determined by taking the net earnings of a stock and dividing it among the number of outstanding common stocks held.  This is how a company determines its profitability.
Easements: the rights that somebody other than the property owner has to access the property for a specific purpose.  These may affect property values and can be part of the deed.
EEM: Energy Efficient Mortgage.  A program by the FHA that allows homebuyers to save money on their utilities by financing the cost of adding more energy efficient appliances to their home either as part of a home purchase or as updates to an existing home.
Eminent Domain: the process of a government taking private property for public use.  The owner gets payment for a fair market value of the property.
Equal Credit Opportunity Act (ECOA): federal law requiring that lenders give credit to individuals without regard to race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
Equity: the financial interest an owner has in a property.  This is calculated by subtracting the amount still owed on a property from the fair market value of said property.
Escape Clause: a provision in a contract that allows any party to cancel part of the contract if the other does not respond to changes in the sale within a set period of time.  Generally, escape clauses are used when the potential buyer makes the purchase offer contingent on the sale of another house.
Escrow: funds that a lender holds in an account to pay for home insurance and property taxes.  A third party can also hold these funds until certain conditions are met.
Escrow Account: an account where the lender will put a portion of each monthly mortgage payment.  This account provides the funds needed to cover property taxes, homeowners insurance, mortgage insurance, and other associated fees.
Estate: the sum of all property holdings, both real and personal, that an individual owns.
Exclusive Listing: where a real estate agent has exclusive rights to sell a property for a determined amount of time.

F

FICO Score: FICO stands for Fair Issac Corporation and it refers to a personÕs credit score as according to their credit history.  Lenders and credit card companies use this score to determine whether or not a person is likely to pay back his or her bills.  Generally a credit score is between 300 and 850, and the higher the better.
FSBO (For Sale By Owner): when a home is sold by the owner of a property and not a real estate professional.
Fair Credit Reporting Act: federal provisions ensuring that credit bureaus are transparent and accurate regarding an individualÕs rights to privacy as enacted in 1971 and revised in 1997.
Fair Housing Act: an act which prohibits discrimination in all parts of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.
Fair Market Value: a hypothetical price that a buyer and seller will agree upon for a property when acting freely and with complete knowledge of the situation.
Familial Status: Used by the HUD to describe groups that might be discriminated against when it comes to housing: these include singe people, pregnant women, or a household with children under 18 living with parents or guardians.
Fannie Mae: acronym for Federal National Mortgage Association (FNMA).  This federally charted entity is owned by private stockholders who purchase residential mortgages and converts them into securities to sell to investors.  By purchasing mortgages, Fannie Mae provides funds that may be loaned to potential homebuyers.
FHA: the Federal Housing Administration.  This was established in 1934 to help all Americans become homeowners should they choose.  It assists homebuyers by providing mortgage insurance to lenders so that they can cover losses when a borrower defaults; this makes it easier for borrowers who might not otherwise qualify for mortgages to become property owners.
First Mortgage: in the event that there are multiple mortgages, this is the mortgage with the first propriety of loans go unpaid.
Fixed Expenses: payments that do not change month to month.  Usually includes car payment, utility payment, etc.
Fixed-Rate Mortgage: a mortgage with monthly payments that do not change over the life of the loan.
Fixed Markup UML:  a mortgage lender who is described as upfront and discloses his whole sale and markups.
Fixture: any personal property that becomes attached to real estate.
Float: allowing interest rates and discount points to fluctuate when the market changes.
Float Down: a version of rate lock, which has the option to reduce rate if market interest rates decline during the period of lock.  These are also called caps.  A float down costs more to the borrower than a regular lock since it is more costly to the lender.  Float downs vary considerably in terms, most often in how often the borrower can exercise it, though the number is usually once.
Flexible Payment ARM: also known as an option ARM.  They have very low minimum payments in the early years, but have a higher risk in later years since the terms will likely increase in value.
Flood Insurance: a kind of insurance that protects buyers against flood loss.  Some areas of the country require flood insurance before approving loans.
Forbearance: if a lender does not decide to take legal action regarding nonpayment of loans.  Usually this is when the borrower and lender come to an agreement on the subject.
Foreclosure: when a borrower defaults on mortgage payments and the property is sold out from under the borrower to pay for the defaulted loan.  Foreclosure laws are different from state to state.
Front End Fee:  the income of the mortgage broker, which is paid by the borrower.  The fees that are paid by the lender a known as Òback end.Ó
Fully Amortizing Payment:  the monthly mortgage payment which, if it stays unchanged through the life of the loan at the then-existing interest rate, will result in the loan being completely paid off over term.  On Fixed Rate Mortgages, the payment is always fully amortizing, assuming that the borrower makes no prepayments.  In the event that the borrower on a fixed rate mortgage makes prepayments, the monthly payment will be over amortizing.  On ARMs, the monthly payment may not be amortizing, depending on the kind of ARM.  Sometimes ARMs will result in negative amortization, but fixed rate loans never will.
Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally charged entity that purchases residential mortgages, turns them into securities, and sells them to investors.  This in turn provides lenders with funds to approve new homebuyers with.
Front End Ratio: the comparison of a borrowerÕs monthly income before deductions as compared to the totally monthly expenditures related to buying a house (mortgage principal and interest, real estate taxes, insurance).

G

GSE: the abbreviation for a Government Sponsored Enterprise.  Examples include Fannie Mae and Freddie Mac.
Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation that is overseen by the US Department of Housing and Urban Development.  Ginnie Mae pool FHA-insured and VA-guaranteed loans to back securities for private investment.
Generic Prices: prices that have a more or less standard set of transition practices and generally command the lowest prices on the market.
Gift of Equity: when the sale price of a home is below market value, where the different is considered a ÒgiftÓ from the sellers to the buyers.  Generally this happens between family members or people who otherwise have a personal connection.  Lenders usually count this gift toward a down payment.
Global Debt Facility: allows investors from around the world to purchase loans of US dollars and foreign currency using a variety of systems.
Good Faith Estimate: must be given to the borrower within three days after submission of a loan application, and is an estimate of all closing fees including pre-paid and escrow items as well as lender charges.
Grace Period: the period that is after the due date of a mortgage or other loan where the borrower may pay the monthly payment without having to pay a late fee.  Grace periods only pertain to mortgages, which are paid monthly.  If you have a simple interest mortgage, a grace period will not apply since interest accrues daily on these loans.
Graduated Payment Mortgages: mortgages that begin with lower monthly payments and then increase over the years to a plateau point.  These are good if you anticipate your income rising in the future.
Graduation Period: the interval at which the payment rises on a graduated payment mortgage.
Graduation Rate: the percentage in increase in the payment on a graduated payment mortgage.
Grantee: an individual who has a conveyed interest in real property.
Grantor: the individual who is conveying interest in real property to the grantee.
Gross Income: all money that is earned before taxes and deductions.  It might include income from rental property, child support, alimony, self-employment, public assistance payments, and retirement benefits
Guaranty Fee: payment from a lender to Fannie Mae, which assures timely principal and interest payments to the MBS (Mortgage Backed Security) holders.

H

HECM (Reverse Mortgage): for homeowners who are 62 and older, they can convert the equity in their home into a monthly source of income or line of credit that will be paid back when they no longer own the home.
HARP Program: the Home Affordability Refinance Program.  This was started by Freddie Mac and Fannie Mae in 2010 to help provide refinancing to borrowers who have a loan to value ratio too high to be considered eligible for standard loan programs.
Hazard Insurance: insurance protection guarding against losses caused by fire, floods, wind, etc.  This is for a period of time that is secured by a premium payment.
HELP: acronym for Homebuyer Education Learning Program, which is run by the FHA.  It counsels people about the home buying process as well as budgeting, house hunting, getting a loan, and maintaining the home.  Completing a HELP course can entitle a homebuyer to a reduced initial mortgage insurance premium.
Home Equity Line of Credit: a mortgage loan usually gained during second mortgage, allowing a borrower to take out money against the equity of a home.
Home Equity Loan: also known as a second mortgage.
Home Inspection: generally done before the selling of a home, a professional will come to the property and conduct an examination of the structure and mechanical systems to determine the quality, soundness, and safety of a home.  The buyer usually pays the inspection fees.
Home Warranty: extended protection for attached appliances and mechanical systems that are not covered by homeownerÕs insurance.  It does not cover the structure of the home.
HomeownerÕs Insurance: also called hazard insurance, this policy combines protecting against structural damage against fire, wind, and other damages with protection against claims of negligence that may result in the injury of property damage of third parties.  Most lenders require homeownersÕ insurance.  Flood insurance is NOT typically part of homeownerÕs insurance and must be purchased separately.
Homeownership Education Classes: education that stresses the importance of a strong credit history and give advice on how to get a mortgage approved, choose an affordable home, and go through finances and closing processes.
Homestead Credit: offered by some state governments, this is a property tax credit program that provides reductions in property taxes to eligible persons.
Housing Bubble: a serious increase of housing prices that is partially tipped off by the belief that prices are expected to rise.  The crash of the housing market in the early 2000s was a major contributor to the current state of the economy.
Housing Expense:  This is also known as the PITI.  It is the sum of mortgage payments, hazard insurance, property taxes and homeowner association fees.
Housing Counseling Agency: offers assistance to individuals on many issues regarding home ownership, including fair housing, loan default, and home buying.
HUD: the US Department of Housing and Urban Development. It was established in 1965 and works to create suitable living environments for all Americans by addressing housing needs, developing communities, and enacting fair housing laws.
HUD1 statement: known as the ÒSettlement sheet,Ó or Òclosing statement,Ó this itemizes all costs associated with closing, and must be pressed to the borrower before closing.
HVAC: Heating, Ventilation, and Air Conditioning Ð refers to the climate control of a property.

I

Indemnification: protects the homeowner against harm, loss, or damage, which is caused by actions or negligence on the part of the general and all subcontractors.  A homeowner should negotiate for this in when setting up contracts with contractors.
Index: measures the changes in interest rates that determine the payments of an ARM mortgage.  Nobody knows when an index rate will rise or fall.  Ask your lender for the index of any ARM before you accept a loan.
Inflation: occurs when the amount of a particular currency in circulation is greater than the goods and services available for purchase. Devalues currency.
Inflation Coverage: an endorsement to a homeownerÕs policy that adjusts for inflationary rise in the value of a home.  It does not compensate for increases in the homeÕs value due to improvements.
Inquiry: a request or a credit report.  Every time a credit application is completed it is counted as an inquiry.
Interest: the amount of money that is charged for using borrowed funds.
Interest rate: the amount of interest that is charged on a loan payment, usually expressed as a percentage of the loan.
Interest Rate Swap: generally based on a notational principal amount, this is a transaction between two parties where each agrees to exchange payments linked to different interest rates for a period of time.
Intermediate Term Mortgage: a mortgage loan which has a contractual maturity equal or less than 20 years from the time of purchase.
Insurance: a policy that protects against loss due to elements outside of the control of the homeowner (theft, fire, hurricanes) that is secured by a payment of a premium.

J

Joint Tenancy (with Rights of Survivorship): when multiple people own equal rights to a property.  In the event than an owner dies, his or her share of that property will pass on to the other owners without the interference of a probate judge.  In a joint tenancy, owners may not will the property to somebody who is a non-owner.
Judgment: a legal decision.  When applied to finances, it could include requiring debt payment.  Judgments may also include property liens.
Jumbo Loan: also known as a non-conforming loan, these exceed the limits imposed by Fannie Mae and Freddie Mac.

K

L

Late Payment Charges: a penalty paid by the homeowner if a mortgage payment is made late.
Lease: an agreement between the owner of a property and the tenant that stipulates conditions and payment under which the tenant will occupy a home or apartment for a certain length of time.
Lease Purchase (Lease Option): helps those with low to moderate income buy homes by allowing them to lease first with the option to buy.  The rent agreement includes a small amount that is credited to an account for use as a down payment.
Lender: any person or company who makes loans for the purpose of real estate.  They may also be known as a loan lender or officer.
Lender Option Commitments: these give lenders the option to give loans or securities by a specified date at agreed terms.
Liabilities: any financial obligations can include short term or long-term debt, as well as other financial responsibilities.
Liability Insurance: a policy that covers claims alleging that the negligence of a property owner resulted in injury or damage to another.  Normally included in a homeownerÕs insurance policy.
Lien: a claim that is made against a property that must be satisfied by the time a property changes hands. The most well known kind of lien is a tax lien, wherein the owner has failed to pay property taxes.  Liens are defects on titles and must be satisfied before a property is sold.
Lien Waiver: once a lien has been paid in full, a waver ensures that the homeowner is free from any further obligation from the debt.
Life Cap: this limits the amount that a monthly payment for an ARM can increase or decrease.
Line of Credit: when a financial institution (like a bank) agrees to extend credit for a specific amount of time for a specific purpose to a specified borrower.
Liquid Asset: cash, or something that can be easily converted into cash.
Listing Agreement: when a seller and real estate professional enter into contract to sell a home.  Under a listing agreement, the real estate professional must seek qualified buyers, negotiate the highest possible price and report all purchase offers to the seller.
Loan: any amount of money that is borrowed and must be repaid, generally with interest.
Loan Acceleration: a clause that allows the lender to demand the outstanding balance of the loan if a monthly payment is missed.
Loan Fraud: defined as giving incorrect information on a loan application so as to better qualify for a loan: this can result in criminal or civil penalties.
Loan Officer: a representative who solicits persons to qualify for loans.  These are also called lender, account representative, loan representative, or a loan rep.
Loan Origination Fee: any charges made by the lender in order to cover any administrative costs involved with making a mortgage.  It usually ends up being 1 to 2 percent of a mortgage amount.
Loan Servicer: the company that dispersed property taxes, insurance payments, and collects mortgage payments.  They also contact delinquent borrowers, notify insurers and investors of potential problems, and monitor nonperforming loans.  They may be a lender themselves or simply a company that specializes in loan information.
Loan to Value (LTV) Ratio: calculated by dividing the amount borrowed for a house by the appraised loan of the home to be purchased.  The higher the LTV, the lower the down payment.
Lock-In: many lenders offer an interest rate that is guaranteed to stay constant for a particular period of time, since the actual interest rate is in flux constantly.
Lock-In Period: a period of time that a lender guarantees that a specific interest rate will not change on a loan.
Loss Mitigation: when the lender tries to help a borrower who has been unable to make mortgage payments and is in danger of foreclosure.

M

Mandatory Delivery Commitment: when a lender agrees to deliver securities or loans by a certain date according to certain terms.
Margin: when the lender calculates the ARM interest rate at each adjustment, the margin is the number of percentage points added to the index rate.
Market Value: the estimated amount that a willing buyer would pay a willing seller for property.
Medium Term Notes: any unsecured general obligations of Fannie Mae included with maturities of one day more and with interest and principal payable in dollars.
Merged Credit Report: data that is taken from two or more of the major credit reporting bureaus.
Mitigation: refers to any improvement or change made to a home to better the structure or value.
Modification: when lenders change the terms of the loan without refinancing.
Mortgage: an agreement between the buyer of a home and the lender of the loan wherein the house is collateral.  The lender has the right to collect payment on the loan and foreclose on the house if the terms of the loan are not met.
Mortgage Acceleration Clause: a provision allowing a lender to demand the entire balance of the mortgage loan in a lump sum under certain circumstances.  This is usually triggered if the home is sold, the loan is refinanced, or the borrower is in delinquency on the loan.
Mortgage-Backed Security (MBS): a security through Fannie Mae that represents a complete interest in a grouping of mortgages.  Principle and interest from the mortgage loans of individuals are grouped and paid out as dividends to the MBS holders.
Mortgage Banker: any company that originates loans and then sells them to mortgage lenders like Fannie Mae or Freddie Mac.
Mortgage Broker: a company that processes and originates loans for many lenders.
Mortgage Life and Disability Insurance: bought by homeowners to pay for a mortgage in the event of death or disability.  The coverage decreases as they balance of the principal declines.
Mortgage Insurance: this is a policy that protects lenders against the majority of losses that can be sustained if a borrower defaults on a mortgage loan.  Generally it is required if the borrower puts down a down payment of less than 20% on the propertyÕs purchase price.  The cost of the insurance is added to the mortgage payment.  Mortgage insurance is commonly held for at least seven years.
Mortgage Insurance Premium (MIP): usually part of the mortgage payment that is paid by the borrower to cover mortgage insurance.
Mortgage Interest Deduction: a tax deductable expense that represents the interest cost of a mortgage.
Mortgage Modification: allows a borrower to refinance or extend the term of a mortgage loan and reduce monthly payments if the borrower is having trouble paying the mortgage.
Mortgage Note: an agreement between a lender and borrower wherein the borrower will pay a loan at a stated interest rate during a specified period of time.  The agreement is recorded in the public records, along with the deed, and is secured by the mortgage itself.
Mortgage Qualifying Ratio: calculates the maximum amount of funds that any individual is able to afford.  Generally the ratio is 28:36.
Mortgage Score: the information that is obtained about the borrower through the credit report, property value information, and the loan application.  It is a comprehensive assessment of the borrowerÕs ability to pay of mortgage debt and manage credit.
Mortgagee: another word for the lender in a mortgage agreement.
Mortgagor: another word for the borrower in a mortgage agreement.
Multifamily Housing: any building with more than four residential rental units.  Apartments are common examples.
Multiple Listing Service (MLS): specific of the Metro Columbus area.  This is where realtors must submit listings and agree to sell all properties.  It offers very timely information, access to houses and other property, and accurately reflects availability of the properties that are involved.

N

National Credit Repositories: there are three companies that maintain national credit databases.  They are Equifax, Experian, and Trans Union, and are sometimes called Credit Bureaus.
Negative Amortization: when monthly payments do not cover the interest cost of a loan.  What isnÕt covered is then added to the unpaid balance of the principal.  Negative amortization could mean that even if you pay your mortgage payments on time, you might end up owing more than at the beginning of the loan.
Net Income: payment after taxes and deductions, also known as take home pay.
No Cash Out Refinance: when a loan is refinanced only for the principal amount that remains on the mortgage.  The borrower gets no cash against the homeÕs equity.  Sometimes called a rate and term refinance.
No Cost Loan: Typically, it is a loan that doesnÕt charge for settlement fees, title insurance, escrow fees, recording fees, notary fees, or appraisal.  It lessens the need for cash in hand during the buying process, but they tend to have higher interest rates.
Nonperforming Asset: any asset that is not accruing interest or on which interest is not being paid.
Note: any legal document that obligates a borrower to pay a loan at a stated interest rate over a certain period of time.
Note Rate: the interest rate as stated on a note.
Notice of Default: a written notice that is submitted to a borrower when there is a default on the loan and legal action may be taken.
Notational Principal Amount: a proposed amount where interest rate swap payments are based by not paid or received by either party involved.
Non-Conforming Loan: a loan that does not conform to Fannie MaeÕs and Freddie MacÕs loan limits.  If the loan does conform to the limits, it is called a conforming loan.
Notary Public: an individual who is a public official and certifies that all signatures on a document are authentic by signing and stamping the document.

O

Offer: when a potential buyer indicates willingness to purchase a home and at a certain price.  It is generally in writing.
Original Principal Balance: the principal owed on a loan before any payments are made.
Origination: the administrative process of preparing, submitting, and evaluating a loan application.  It typically involves a credit check, a verification of employment, and appraisal of the property.
Origination Fee: the charges involved with originating a loan.  It is usually paid at closing.
Owner Financing: where the seller of the home provides most or part of the financing, and acts as a lender.
Ownership: documented in the deed of a property, states that is in possession of the property at that point in time.
OwnerÕs Policy: a policy that prevents the buyer from title defects. Also known as title insurance.

P

PITI (Principal, Interest, Taxes, and Insurance): four elements of any monthly mortgage payment.  Principal and interest go toward the payment of the loan while taxes and insurance goes into an escrow account to cover fees when they are due.
PITI Reserves:  the amount of cash that a borrower must have on hand after making the down payment and covering all closing costs associated with buying a home.  The PITI Reserves must equal the amount that the power would have to pay PITI for over a defined number of months.
PMI: Private Mortgage Insurance.  Many private companies offer affordable mortgage insurance programs for borrowers who are qualified but have down payments less than 20% of the price of the home.
Partial Claim: allows the borrower, with help from the FHA and the lender, to get a loan from the HUD to bring mortgage payments up to date.
Partial Payment: any payment which is less than the agreed upon monthly payment.  Typically partial payments are not accepted except for certain agreed-upon times.
Payment Cap: the limit on how much a payment on an ARM can increase, regardless of the interest rate.
Payment Change Date: the date when a new monthly payment takes effect for an ARM or a GPM.  Usually it happens the month after the interest rate adjustment occurs.
Payment Due Date: the date on which payments are due on money that has been borrowed.  Payment must be received on or before the specified date. There may be grace periods, but these do not eliminate the need to pay on time.
Perils: any event that damages property, as defined by a homeownerÕs insurance policy.  HomeownerÕs insurance can cover a wide range of perils.
Personal Property: any property that is not attached to real property or real property.  A chair would be a piece of personal property, but a wall-mounted sconce would not be.
Planned Unit Development (PUD): a housing development that is planned and built as a single entity.  They generally have common features, land, and facilities that are managed by the owners or a neighborhood association.  A common example would be a condominium complex.
Points: one point is equal to one percent of the principal of your mortgage.  If your mortgage were 85,000, then one point would be 850.
Power of attorney: a document that authorizes a chosen person to act on your behalf.  Power of attorney can give an individual complete power or have limiting boundaries.
Pre-Approval: when a lender agrees to give a borrower money basked on the loan application and any other information that was pertinent.  The loan will be granted so long as the borrower still meets qualifications at time of purchase.  If the loan is a mortgage loan, the house must meet qualifications, as well.
Predatory Lending: any sort of abusive lending Ð an example is providing a mortgage to somebody who cannot repay.
Predictive Variables:  part of the formula that makes up the elements of a credit-scoring model.  They are used to predict the future credit performance of a buyer.
Preferred Stock: preferred stockholders typically have no voting rights in a company, but the stock takes place over common stock insofar as dividends and liquidation rights are concerned.
Pre-foreclosure Sale: gives the chance for a defaulting borrower to sell the home and settle the debt before foreclosure occurs.
Pre-Qualify: when a lender makes an informal decision about a potential borrowerÕs eligibility.
Premium: the amount paid on an insurance policy that maintains coverage.
Prepayment: any amount paid on a loan before the due date of that loan.  There may be penalties attached with prepayment.
Prepayment Penalty: a penalty assessed to a homeowner who makes payments on mortgages or other loans before the due date.
Prepayment Penalty Mortgage (PPM): a mortgage that requires the borrower to pay a penalty for prepayment, or repaying the entire loan within a certain time period.
Price Range: the amount of money a buyer is willing to pay for property.
Prime Rate: an interest rate that banks give to preferred customers.  Any changes in prime rate are publicized through business media.  Prime rate may be used as the basis for ARMs.
Principal: the dollar amount borrowed to buy a house or the amount of the loan that has not yet been paid back to the lender.  The principal does not include the interest.  A principal balance refers to the amount of money yet to be paid to the lender.
Principal, Interest, Taxes, and Insurance (PITI): four elements of any monthly mortgage payment.  Principal and interest go toward the payment of the loan while taxes and insurance goes into an escrow account to cover fees when they are due.
Private Mortgage Insurance (PMI): Many private companies offer affordable mortgage insurance programs for borrowers who are qualified but have down payments less than 20% of the price of the home.
Promissory Note: a promise in writing to pay a specified amount on a mortgage over a determined amount of time.
Property (Fixture and Non-Fixture): property is the land within legally described boundaries including all permanent structures and fixtures.  Fixture property refers specifically to items that are attached to the structure, like ceiling fans and basketball hoops.
Property Tax: an amount charged by local government, used to fund services like schools, street maintenance, and the police.  The percentage of this tax depends on the state.
Property Tax Deduction: In the United States, homeowners can deduct their property taxes from their total taxation responsibilities.
Public Record Information: court records such as foreclosure, tax liens, credit, and bankruptcy that are a matter of public interest.  If there is public record information on a credit report, it is regarded unfavorably by creditors.
Punch List: items that have not been completed by contractors during the final walkthrough of a new home.
Purchase Offer: a document in writing that makes an offer to purchase a property.  It might be amended several times before being accepted Ð once it is signed by all parties, it becomes a legally binding contract which is called the sales contract.

Q

Qualifying Ratios: guidelines used by lenders that determine how much money they will give to a borrower.  They generally include a housing expense to income ratio and a maximum monthly expense to income ratio.
Quitclaim Deed: when a deed transfers hands but there is no guarantee of a clear title.

R

RESPA: Real Estate Settlement Procedures Act.  This protects consumers from abuse during the purchase of residential real estate and loan qualifying process by requiring lenders to disclose information regarding settlement costs, relationships, and practices.
Radon: a gas that is radioactive, and if is found in a house in large quantities can be harmful.
Rate Cap: a limit on how much an ARM interest rate or monthly payment can fluctuate over the life of the loan.
Rate Lock: when a lender commits to providing a borrower a specific interest rate over a certain period of time at a guaranteed cost.
Real Estate Agent: a person who negotiates and arranges real estate sales, and works for a broker.
Real Estate Mortgage Investment Conduit (REMIC): a particular security that represents an interest in a trust that has many classes of securities.
Real Estate Property Tax Deduction: any tax deductable expense related to real estate that reduces a taxpayerÕs income that is taxable.
Real Estate Settlement Procedures Act (RESPA):   This protects consumers from abuse during the purchase of residential real estate and loan qualifying process by requiring lenders to disclose information regarding settlement costs, relationships, and practices.
Real Property: term used to refer to all land including the permanent buildings and natural resources found in it.
Realtor: a broker or real estate agent who is a member of the National Association of Realtors.
Recorder: a public official who keeps track of transactions concerning real property.  They are sometimes known as a ÒCounty ClerkÓ or a ÒRegistrar of DeedsÓ depending on where you live.
Recording: a written record in a registerÕs office of any executed legal document.  These can include mortgages, deeds, extension or mortgages, or satisfaction of mortgages.
Recording Fees: any fees charged for recording deeds with government agencies.
Refinancing: the act of paying off one loan by obtaining another.  Usually this is done to get better terms Ð like a lower interest rate.
Rehabilitation Mortgage: any mortgage that has provisions to cover the cost of repairing or improving a property.  Some allow borrowers to combine the costs of rehabilitation and home purchase into a single loan.
Reinstatement Period: the point in the foreclosure process where the borrower has the chance to stop foreclosure by paying the money that is owed to the lender.
Remaining Balance: the amount of principal on a loan that has not been repaid.
Remaining Term: the original term of amortization minus the amount that has already been paid on the loan.
Repayment Plan: a consensus between the lender and the borrower where the borrower agrees to make more payments on a loan to lessen the amount of past due accounts while still making regular monthly payments.
Return On Average Common Equity: the entire income that is available to common stockholders, expressed as the average common stockholder equity.
Reverse Mortgage (HECM): for homeowners who are 62 and older, they can cover the equity in their home into a monthly source of income or line of credit that will be paid back when they no longer own the home.
Right of First Refusal: a clause in a contract that requires the owner of a property to offer the property to a certain entity before it is offered for lease or sale to others.
Risk Based Capital: the amount of funds or assets needed to offset losses over a ten-year period in the event of adverse circumstances.
Risk Based Pricing: a fee structure enacted by creditors when dealing with a borrower with a poor credit history.
Risk Scoring: an automated credit report analysis. This is so no bias enters the process.

S

Sale Leaseback:  when the seller passes the deed to a buyer in lieu of payment, and then the buyer leases the property to the seller.
Second Mortgage: an additional mortgage taken out on a property.  The first mortgage must be paid before the second.  Second mortgages are riskier and generally have a higher interest rate as compared to first mortgages.
Secondary Mortgage Market: where mortgage loans are bought and sold.
Secured Loan: a loan that is backed up by collateral.  A mortgage is a secured loan.
Security: any asset that is given as collateral for a loan.
Seller Take Back: when the owner of property gives second mortgage finances.  Generally these are combined with an assumed mortgage rather than a portion of the sellerÕs equity.
Serious Delinquency: a mortgage that has not been paid in over 90 days.
Servicer: the business that collects payments on mortgages from borrowers and manages the escrow accounts of the borrower.
Servicing: the responsibilities of a loan officer, which may include collecting mortgage payments.
Setback: the space between a property line and where buildings may be built.  These are used to ensure there is proper distance between buildings.
Settlement: also known as closing.
Settlement Statement: required by the Real Estate Settlement Procedures Act.  It is a statement that is itemized, including services and charges relating to property transfer and closing.  It is often called the HUD 1 Settlement Statement.
Special Forbearance: where the lender arranges for a revised repayment program for the borrower to follow.  This is a form of loss mitigation on the part of the lender, and usually involves a temporary suspension or reduction of monthly loan payments.
StockholdersÕ Equity: the sum total from the earnings of stock minus what is paid to repurchase common shares.
Stripped MBS (SMBS): securities that are created by separate things: principal and interest payments into two classes of securities.  These classes then receive different proportions of the principal and interest payments.
Sub-Prime Loan: these are also called ÒBÓ Loans or ÒBÓ Paper.  Due to the fact that sub-prime loans carry higher risk, they have higher interest rates and fees.
Subordinate: when one item is less important as compared to other items.
Survey: a diagram relating to property that indicates easements, rights of way, encroachments, legal boundaries, and more.  They are conducted by local licensed surveyors and are typically required by lenders in order to confirm that the description of the property matches the actuality.
Sweat Equity: when labor is used to improve a property in lieu of cash for the down payment.

T

Third Party Origination: when a lender uses a third party to completely or partially process, underwrite, originate, fund, close, or package a mortgage it plans to release to the mortgage market.
Terms: a period of time and the interest rate agreed upon by the borrower and the lender when it comes to repaying a mortgage loan.
Title: the document that transfers property from one entity to another in a legal fashion.  It is also known as the deed.
Title 1: an FHA-insured loan that allows a borrower to make improvements to their house as long as they are of a non-luxury nature.  If the loan is less than 7,500, a property lien is not necessary.
Title Company: a firm that examines and insures titles for real estate.
Title Defect: when there is a claim on a property that hinders the selling of that property.  This is also known as a cloud on the title.
Title Insurance: a policy that prevents the buyer from title defects.  Also known as an ownerÕs policy.
Title Search: when public records are checked to ensure that the seller is the recognized owner of a particular property.  Title searches check that there are no unsettled liens or other claims to the property that might hinder its sale.
Transfer Agent: a trust company or bank that keeps records of a companyÕs stockholders and issues or cancels certificates as shares are bought and sold.
Transfer of Ownership: when a property changes hands by any means.  This could include an assumption of mortgage debt, an exchange of possession through a land sales contract, the purchase of a property, or any other land trust device.
Transfer Taxes: any taxes, either state, local, or national, that are charged over the course of real estate transfer.  Generally this is a percentage of the sales price.
Treasury Index: sometimes is used as the basis for ARMs.  It is generated from the results of auctions that the US Treasures holds for bills and securities.
Truth-In-Lending: the federal law which obligates a lender to give written disclosure in full of all terms, fees, and conditions associated with the loan over the initial period of the loan and all adjustments that may happen in the future.
Trustee: an individual that controls or holds property for the benefit of another individual.

U

Underwriting: when a loan application is analyzed to determining the risk involved with making a loan to a person or persons.  This involves a review of the potential borrowerÕs credit history and an assessment of the value of the property.
Up Front Charges: all fees that are charged to the homeowner at the time that at mortgage loan is closed.  These involve points, insurance, brokerÕs fees, and other charges depending on the mortgage loan.

V

VA (Department of VeteranÕs Affairs): this federal agency guarantees loans for veterans. Loans taken out with the help of the VA act in a similar way to mortgage insurance, and protect lenders against the chance of default.
VA Mortgage: any mortgage through the Department of VeteranÕs Affairs (VA)
Variable Expenses: Any cost that is necessary the might vary from month to month.  Food is a good example of a variable expense.
Variance: an exemption of a zoning law that allows property to be used in a manner that contradicts an existing law.
Vested: the marked point where you can withdraw funds from an investment account Ð like a 401K Ð without penalties being exacted.

W

Walk Through: the very last inspection of a property being sold conducted by a buyer.  This is done to ensure that any contingencies as specified in the purchase agreement have been completed Ð these can include repairs made to the house or the surrounding property, and can include anything from structural issues to plumbing to mechanics.
Warranty Deed: a legal document which ensures that the person who is selling the property is indeed the true owner of it, and that there are no outstanding claims on the property itself.

X

Y

Z

Zoning: local laws which control the use of land in a particular area. Zoning separates residential land from that which is used for non-residential purposes, like commercial or industry.  A zoning ordinance involves many laws and provisions that govern the structure of buildings, the setbacks, the size of lots, and the uses of a building.  They are different depending on what state you are looking to buy property in, and if that property is in a rural or an urban district.

Starting Your Home Search

When you first decide that you want to buy a home, the excitement can be overwhelming. You start looking around online, using mortgage calculators and driving new neighborhoods. You figure your income and decide what you think you can afford. Then, you might even call up an agent to start viewing homes. However, you have already made a huge mistake. You have not had a conversation with a lender, and that is where you should have started your search in the first place.

You cannot possibly know what price range of home to search for without talking to a lender. If you need to get a mortgage, you have to get pre-qualified so that you will know your price range, interest rate, down payment amount and other information to assist in your home search.

So many buyers end up distraught and disappointed because they start looking in a higher price range than what they can really afford. Then, they are forced to go down in price range which causes every home to pale in comparison to the ones they were looking at before pre-qualification. The remedy for this? You need to talk to a qualified lender before you start the home search so that you will have a letter in hand to show to sellers.

Proving Your Worth

Sellers are very picky when it comes to offers on their home. You must prove to them that you are worth them taking their home off the market for other potential buyers. The seller is going to want to see proof that you are a quality purchaser who can actually get a home loan. By having a letter in your hands from a lender, you are one step ahead when it comes to competing with other buyers. This letter will assure the seller that you are working with a loan officer and you are a credit worthy purchaser.

Getting pre-qualified is great, but getting pre-approved is even better. If you start early enough and provide the information a mortgage representative is requesting, you can get a pre-approval letter that will really impress sellers and allow you to negotiate from a stronger position.

Benefits of an FHA loan

The appeal to an FHA loan is not just that it is guaranteed.  Another main reason why buyers like them is because they only require a small down payment.  The amount required is less than 5 percent.  Many people who can afford the monthly payments may not have the means to come up with a significant amount to put down on the home.  FHA takes this burden out of the equation.  This frees up homeownership to many more of the population.

The low down payment can also be gifted to the buyer.  What does this mean?  It means that a family member can give you the money to use as your down payment.  The money can also come from other sources.  There are certain guidelines that have to be followed so it is best to go over these with me beforehand to ensure compliance.  This is especially helpful for first-time homebuyers to get them started.

Other advantages to an FHA loan is that it typically has lower closing costs than many other types of loans, such as conventional.   FHA loans are also easier to qualify for than many other loans so they are open to a larger sector of the population.  Since the federal government is willing to back the loan it takes much of the pressure off of the bank.

What if my credit isn’t perfect?

FHA loans are designed to take certain credit blemishes into consideration.  Then know how difficult it is to keep credit ratings in perfect condition.  They also know that “life” happens and things can sometimes get out of our control.  That’s why FHA loans take all of the information into play and can make allowances on certain circumstances that might automatically disqualify you from other loans.

The number one question, what do you need to qualify for an FHA Streamline loan? Well, you need an existing FHA mortgage to start. If not you must apply to refinance your conventional loan through a FHA refinancing loan program.

Those borrowers with conventional loans looking to refinance through a FHA loan program will need to apply for the usual credit check, employment verification, and debt-to-income ratio requirements. By refinancing a conventional loan to an FHA-insured refinancing loan you may get better rates and lower monthly payments.

For example borrowers already in the FHA home loan program, the requirements for Streamline include:

1. Up-to-date on current existing loans with all mortgage payments on schedule for the last year.

2. You must own the original property for at least six months prior to qualifying for Streamline refinancing.

3. To refinance borrowers must go through an FHA-approved lender. If you don’t want to use your current lender, any financier you choose must be approved by FHA.

4. FHA Streamline loans don’t require appraisal, however no-appraisal loan cannot exceed your current loan.

5. All closing costs must be paid up front or coordinated through a “no-cost” FHA Streamline loan. Borrowers can also include the closing costs with their loan for “with appraisal” FHA Streamline loans. Although, you must have enough equity in the home to cover the extra amount.

Another option is called the “FHA Streamline 203(k) Loan. This loan is designed for those that may want to refinance modify plans or improve the home. The 203(k) is compares with the general Streamline loans with a few exceptions.

1. FHA Streamline 203(k) Loans are a minimum $5,000. The maximum loan being $35,000. It is can be added to your mortgage for weatherizing your home, removing lead paint and other home improvements that don’t include major home alterations.

2. Under the Streamline 203(k) Loan guidelines, you are required to use at least one contractor to do the repair work. Self-help renovations are prohibited unless the borrower can prove he/she is an expert.

3. FHA guidelines state you must get an estimate that is broken down into by the contractor into specifics including the costs of each project. The contractors must sign an agreement to do all the work outlined in the estimate for pre-determined amount and within the time line.

4. Borrowers must obtain all permits required by law.
Some restrictions on 203(k) Streamline refinancing loans include no major structural repairs such as altering a load-bearing wall or work that needs architectural plans. Home improvement work that exceeds $15,000 requires third-party inspection after the job is done and certifications submitted to FHA.

Under FHA guidelines borrowers are permitted to make two payments to each contractor. If you do the work yourself as a “expert”, same rules apply.

While borrowing under FHA Streamline 203(k) programs, you must “close out” the loan when by furnishing a “mortgagor’s acknowledgement of satisfactory completion, mortgagee’s inspection report(s), change orders, mortgagee accounting of the escrow funds, and record of disbursements.”

With all of the FHA programs above, it’s very important to keep accurate records in order to prove the work was completed according to agreement within the scheduled timeframes.

When Is The Time Right?

Knowing the right time to refinance your mortgage can be a bit tricky. You need to look at the long-term rather than just focusing on the here and now. A good lender can help you look at all of the factors to determine if now is the right time to refinance your mortgage loan. For instance, you will want to take closing costs into consideration to make sure that the savings on your monthly payment will be worth it. Some lenders offer no closing cost options, so ask your loan officer what the best deal is for your current situation.

You also want to look at the amount of equity you have in your home. If you do not have enough equity or a history with your mortgage company, it can be difficult to get approved for a refinance. Your lender can explain the requirements that you will need to meet before you start down the road to refinancing.

Credit is King

Credit is another part of qualifying for a refinance as most lenders are going to need to see good FICO scores to proceed. It is always a good idea to pull your own credit report before you apply for any kind of financing as it will allow you to see if there are any outstanding debts on your report that you were not aware of or that are errors. Taking care of things in advance is always the way to go.

Refinancing can be a great avenue for getting your monthly mortgage obligations reduced which will free up more of your cash each month. As interest rates fall, more home owners are seeing refinancing as a way of creating stability in their finances. Plus, it makes no sense to pay higher mortgage rates if there is another option available to you. As with anything, though, you must weigh the pros and cons using the advice of an experienced professional.

The benefit of these loans may include avoiding higher interest rates on credit cards. So many homeowners often decide to take cash-out of their homes in order to pay off bills. It can make sense and save a lot of money in the end if done correctly.

For example, instead of paying a 20% interest rate on a credit card each month, homeowners can pay off that balance using their home mortgage at a rate of maybe 5%.

Still other homeowners like the cash-out refinancing option to make home improvements on what may increase the value of the property significantly. You have to be careful but it can be smart in enhancing overall loan-to-value and increase the equity in a home.

Another move made by homeowners, a bit more risky though, is trying to pull cash-out to invest the money at a better rate of return than the actual interest rate.

ItÕs important to note, a majority of lenders will require you to have owned the home for at least 12-months before you can be considered for a cash-out refinancing plan. Lenders enacted tougher cash-out rules to prevent investors from buying homes with zero money down, and quickly refinancing them and taking cash out.

However, you may find some lenders might allow cash-out up to 75% loan-to-value with no property seasoning i.e. no 12-month period but they generally allow cash-outs only up to 25% equity in home.

Regardless of what other homeowners use the cash-out option for, itÕs important to examine your unique situation carefully. Ask yourself whether it makes sense financially to refinance your current mortgage taking the risk in cash-out refinancing.

An ARM has lower payments and interest rates at the beginning of the loan which can often assist buyers with purchasing a home that is more expensive than what they would have been able to afford having been financed with a fixed rate mortgage product.  Once the initial time limit has been met, whether it is 3 or 5 years, then the rate can fluctuate based on market trends.

A fixed rate mortgage is a set interest rate for the life of the loan.  It will never change, no matter what the market is doing.  If, down the road, interest rates drop significantly, then you would want to contact a lender about seeing if it makes good financial sense to refinance to the new, lower rate.

When is it good to have an adjustable rate mortgage?

Adjustable rate mortgages are a good choice in several different scenarios.  Scenarios where this makes good financial sense are when income will be increasing within the preliminary period of 3 or 5 years.  For example, if a single person will be getting married and adding an additional income to the household, then that is a good time.  Or if you are starting a new job with guaranteed pay increases, an ARM could make sense.  If you know that the difference the payment can go up will be covered by that time frame then you can take advantage of a lower payment to start with.

Adjustable rate mortgages are also a great idea if you will only be in a specific location for a short time.  If you know you will only reside in the home for less than five years then a 5-year ARM makes perfect sense.

This gives you time to move before your ARM adjusts.  Plus, while you are waiting for it to start adjusting you can always add extra money to the principal, if you wish, to pay down the principal even faster.  The bank is counting on the fact that most people will be in their home for the adjustment period to begin so they are willing to take the chance by offering a lower rate up front.