09/10/2013
Property terms demystified
Insights into the jargon used in real estate purchase agreements and home loan documents
Default: Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.
Delinquency: Failure to make payments on time. This can lead to foreclosure.
Deferred interest: When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance.
Debt-to-income (DTI) ratio:The ratio of monthly debt payments to monthly gross income. Lenders use a housing DTI ratio (house payment divided by monthly income) and a total DTI ratio (total debt payments including the house payment divided by monthly income) to determine whether a borrower's income qualifies him or her for a mortgage.
Deed: A legal document conveying ownership of property.
Down payment: The portion of the home's purchase price the buyer pays in cash.
Due-on-sale-clause: A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.
Earnest money: The deposit given by a buyer to a seller to show that the buyer is serious about purchasing the home. Earnest money usually is refundable to homebuyers in the event a contingency of the sales contract cannot be met.
Equity: The difference between a home's value and the mortgage amount owed on the home.
Escrow: The holding of documents and money by a neutral third party prior to closing.
Escrow disbursements: The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance and other property expenses as they become due.
Escrow payment: The part of a mortgager's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due.
Exclusive right to sell listing: A contract giving an agent the exclusive right to market a property under a certain time frame.
Exclusive Agency Listing: A contract giving the broker the right to market an owner's property for a certain period of time, but also allowing the owner to sell the property during that period without commission paid.
First mortgage: The primary lien against a property.
Fixed installment: The monthly payment due on a mortgage loan, including payment of both principal and interest.
Fixed rate mortgage (FRM): A loan on which the interest rate and monthly payment do not change.
For sale by owner (FSBO): The owner sells his or her home without a broker or realtor, to avoid paying a sales commission or brokerage.
Foreclosure: A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property.
Fully amortised ARM: An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.
Source: CAR
Published Date: Apr 27, 2013
DNA Newspaper
