ADJUSTABLE MORTGAGE LOANS: Loans under which the interest rate is periodically adjusted to coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. Sometimes called (ARM’s) Adjustable Rate Mortgages.
ADJUSTMENT PERIOD: The length of time between interest rate changes on an ARM.
AMORITIZED LOAN: A loan which is paid in equal installments during its term.
ANNUAL PERCENTAGE RATE (APR): The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.
APPRAISAL: An estimate of value of a property by a licensed Appraiser.
APPRAISED VALUE: A determination of value by a licensed real estate appraiser. This is needed for obtaining a mortgage from a financial institution.
ASSESSED VALUE: The evaluation placed on property by a public tax assessor as the basis to establish property taxes.
BALLOON MORTGAGE: A mortgage that has a substantial amount of the principal due at the maturity of the note.
BI-LEVEL: Two-story entry, two levels of living area, bedrooms and living area on a second level, and family room on lower level.
CAP: The limit on how much an interest rate can change, either at each adjustment or over the life of the mortgage.
CAPE COD: Usually one and a half stories high with a high-pitched roof.
CLOSING COSTS: Expenses incurred in the closing of a real estate or mortgage transaction. Purchaser’s expenses normally include: cost of title examination, premiums for title policies, survey, attorney’s fee, lender service fees and recording charges. The purchaser may have to place money in escrow to cover accrued real estate taxes and insurance.
C.O. : Certificate of Occupancy. A document required by state law governing fire alarm systems, carbon monoxide and community control procedures reinforcing building improvements inspections. Required prior to closing.
COLONIAL: A two-story home with bedrooms on the top level. Center Hall Colonials have center staircases and are symmetric.
CONDOMINIUM: A form of real estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces serve as its boundaries.
CONTINGENCY: A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing.
EARNEST MONEY: Portion of the down payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith.
EQUITY: The owner’s value or interest in a property.
ESCROW PAYMENT: A portion of the mortgagor’s monthly payment held in trust by the lender to pay for taxes, hazard insurance, mortgage insurance and other items as they become due.
FARMHOUSE: Taken from the colonial style, farmhouses usually have clapboard siding with windows, doors and trim remaining simple. Found in many rural areas, large porches are a characteristic of these homes.
FIXED-RATE MORTGAGE: A loan that has only one stated interest rate.
LIEN: A legal claim against a property that must be paid when the property is sold.
LOAN COMMITMENT: A written promise by a lender to make a loan under certain terms and conditions. These include interest rate, length of loan, lender’s fees, annual percentage rate, mortgage and hazard insurance and other special requirements.
MARKET VALUE: The highest price a ready, willing and able buyer will pay and the lowest price a seller will accept.
MORTGAGEE: The lender of money or receiver of the mortgage document.
MORTGAGOR: The borrower of money or signor of the mortgage contract.
NOTE: A written promise to pay a certain amount of money.
ORIGINATION FEE: A charge for work involved in the evaluation, preparation and submission of a proposed mortgage loan.
PITI: Principal, Interest, Taxes and Insurance.
POINT: One percent of loan amount.
PRIVATE MORTGAGE INSURANCE (PMI): Insurance written by a private company protecting the mortgage lender against mortgage default. The premium is included in the monthly mortgage payment (under 20% down).
SALT BOX: A distinguishing characteristic of a salt box is the long slanted roof at the rear of the house. This evolved from the practice of adding a lean-to-on the back of the home for extra space. This home style is very popular on the east coast.
SPLIT LEVEL: Multi-levels of living area with bedrooms usually on a separate level from the living room.
TITLE: Often used interchangeably with the word “ownership”. It indicates the accumulation of all rights in property; the owner liens.
TUDOR: Tudors copy the half-timbered English Elizabethan style with stained timbers covering stucco on the top half of the home. These homes commonly have slate roofs and small paned windows.