REAL ESTATE GLOSSARY & DEFINITIONS Q-Z
Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. The “top” or “front” ratio is a calculation of the borrower’s monthly housing costs (principle, taxes, insurance, mortgage insurance, homeowner’s association fees) as a percentage of monthly income. The “back” or “bottom” ratio includes housing costs as will as all other monthly debt. [Top]
The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
Rent loss insurance
Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
Replacement reserve fund
A fund set aside for replacement of common property in a condominium, PUD, or cooperative project — particularly that which has a short life expectancy, such as carpeting, furniture, etc.
A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
Right of first refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
FNMA and FHLMC together primarily make up what is know as the Secondary Market. Although these organizations do not originate any loans, they purchase home loans originated by banks and lenders which returns the investment used by those banks and lenders to make the original loans. The return of investment is then used to originate more home loans, which are in turn are usually sold. This Secondary Market is what makes the entire process work. If banks and lenders could only lend out what they had in their savings accounts, they would soon run out of money to lend and the real estate market would come to a screeching halt. secured loan. A loan that is backed by collateral.
As opposed to a Dual Agent or Buyer’s Agent a Seller’s Agent has a contractual relationship only to the home seller. This agent’s trust or fiduciary relationship is with the home seller.
A Real Estate market where the number of home buyers is more than the number of home sellers. Or where the demand is high and the supply is low. This generally gives home sellers favorable negotiating power. Often home prices will tend to rise as multiple buyers tend to bid against each other for the available homes.
An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
When selling a home, it is important to present the home to potential buyers in such a way as to be appealing to the average buyer. This means keeping the home neat and clean as well as free from unusual odors and bold colors or unusual patterns.
Typically funded by Government Agencies from the federal level town to the county or city level. These loans are typically 2nd Trust Deeds used for your down payment and/or closing costs. The loans are silent in that they do not require any monthly payments. Interest will accrue on the loan for as long as you keep the property. Upon selling your home, you will have to pay back the silent loan and any interest that has accumulated. The interest is usually very low and sometimes will be forgiven if you do not profit enough from the sell of your home.
We can reduce the amount of income tax due the government by reducing the gross amount on which our tax is calculated (Taxable income). The government allows us to reduce our taxable income by taking legitimate and IRS defined Tax Deductions. These defined Tax Deductions include all the interest and Property Taxes we pay.
When a home buyer moves from renting a home to owning a home, they will probably experience greater Tax Deductions. Where Qualified, they may also receive Tax Credits. This can substantially reduce the income tax owed to the government by the home buyer By filing a new “W-4” form with their employer, the borrower can receive these Tax Savings, which may be several hundred dollars each month, right in their pay checks.
Tenancy in common
As opposed to joint tenancy, when there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death.
A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
Transfer of ownership
Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property “subject to” the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury’s daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.
When a lender makes a loan on real estate they record a Trust Deed with the county recorder’s office. The Trust Deed is a document showing a lien against the property by a lender so when the property is transferred or sold, the lender is sure to be repaid. This is similar to a lien holder on a pink slip for a car.
An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
Two- to four-family property
A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.
A home loan for Veterans and offered by the U.S. Department of Veterans Affairs (VA). This program is a self insuring program designed to help Veterans and Active Duty Personnel purchase a home. The program offers no down payments and easier qualifying than most conventional or other conforming loans. The loan is insured by the government, however you must apply and get the loan from a VA approved lender or broker like Nationwide Realty Services, Inc.
Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.
Veterans Administration (VA)
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.
Many banks and lenders have Loan Officers who are paid a commission to originate home loans. A Wholesale Lender is a bank or lender who does not have Loan Officers, processors, or appraisers. Instead, they contract with Mortgage Brokers who will originate the loan, submit and fund the loan with the Wholesale Lender. The Wholesale Lender offers their programs to Mortgage Brokers at a low, wholesale price. A home buyer can not take advantage of a Wholesale Lender’s loan programs unless they go through a Mortgage Broker.