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Mortgage
Terminology
NOTE
Document signed by borrower stating terms of the loan; amount,
time for repayment, interest rate.
PITI
Abbreviation for "principal, interest, taxes and insurance",
the four basic house expenses involved in negotiations for
a mortgage.
PLAT
Map or chart of a lot, subdivision or community.
PREPAYMENT
Payment of mortgage loan (or part of it) before due date.
Mortgage agreement may restrict the right of prepayment either
by limiting the amount that can be prepaid in any one year,
or by charging a penalty for prepayment.
PRINCIPAL
The amount borrowed or remaining unpaid; also, that part of
the monthly payment that reduces the outstanding balance of
a mortgage.
PRIVATE MORTGAGE INSURANCE (PMI)
Insurance provided by non-government insurers that protect
lenders against loss if a borrower defaults.
PURCHASE AGREEMENT
A written contract signed by the buyer and seller stating
the terms and conditions under which a property will be sold.
QUALIFYING RATIOS
Guidelines applied by lenders to determine how large a loan
to grant a home buyer. Typically compares housing payment
(PITI) and debts to gross monthly income.
REAL PROPERTY
Land plus improvements - anything built on it, affixed to
it or growing in it.
REFINANCING
Process of paying off one loan with the proceeds from another
loan. Refinancing may be desirable if interest rates fall
or property has increased in value enough so that more equity
can be taken out in cash. However, paying off the loan may
involve a prepayment penalty.
RIPARIAN RIGHTS
Privileges ( such as fishing and boating ) that go along with
the land bordering a lake, stream or other body of water.
SALES CONTRACT
Basic legal agreement between buyer and seller. It should
represent an exact list of items included with the house;
make provisions for paying hazard insurance, taxes and utilities;
enumerate closing costs; define the conditions of sale and
the provisions of releasing each party from the agreement
if contingencies are not met; set a date for the closing.
Also known as purchase agreement.
SECOND MORTGAGE
A mortgage or other lien position subordinate to the first
mortgage.
SETBACK
Distance from the property line, usually along the front or
side of a lot, which limits the positioning of a building
on the lot.
SETTLEMENT COSTS
An all-inclusive term for costs paid by both seller and buyer
in the transfer of property. In addition to closing costs
paid by buyer, settlement costs include real estate agent's
fee, prepayment penalty, and points, if any paid by seller.
SPECIAL ASSESSMENT
Tax levied against real property for a specific purpose, such
as providing sewers or paved streets.
State Equalized Value
The valuation placed upon property by a public tax assessor
for the purpose of taxation. This is also known as the Assessed
Value.
SURVEY
On-site measurement of lot lines, dimensions and position
of house on lot, including determination of possible encroachments
or existing easements. A survey is often required by the lender
to assure him that a house is actually sited on the land according
to its legal description.
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Licensed Mortgage Banker and/or Authorized Lender in all 50 states and
the District of Columbia