Adjustable rate
mortgage (ARM)
A mortgage loan whose interest rate fluctuates according to the
movements of an assigned index or a designated market
indicator--such as the weekly average of one-year U.S. Treasury
Bills--over the life of the loan. To avoid constant and drastic
fluctuations, ARMs typically limit how often and by how much the
interest rate can vary.
Agent
A person authorized to act for and under the direction of another
person when dealing with third parties. The person who appoints an
agent is called the principal. An agent can enter into binding
agreements on the principal's behalf and may even create liability
for the principal if the agent causes harm while carrying out his
or her duties.
Amendment
A modification to an existing contract, mutually agreed to by all
parties. Examples might include a change in the purchase price due
to a low appraisal, or a change in the closing date.
Appraisal
A determination of the value of something, such as a house,
jewelry or stock. A professional appraiser--a qualified,
disinterested expert--makes an estimate by examining the property,
and looking at the initial purchase price and comparing it with
recent sales of similar property. Courts commonly order appraisals
in probate, condemnation, bankruptcy or foreclosure proceedings in
order to determine the fair market value of property. Banks and
real estate companies use appraisals to ascertain the worth of
real estate for lending purposes. And insurance companies require
appraisals to determine the amount of damage done to covered
property before settling insurance claims.
Asking (list) price
The price placed on property for sale.
Buyer’s agent
A licensee who has declared to represent only the buyer in a
transaction, regardless of whether compensation is paid by the
buyer or the listing broker through a commission split.
Clear title
A land title that doesn't have any liens (including a mortgage)
against it.
Closing costs
Costs the buyer must pay at the time of the closing in addition to
the down payment which may include points, title charges, credit
report fee, document preparation fee, mortgage insurance premium,
inspections, appraisals, prepayments for property taxes, deed
recording fee, and homeowners insurance. Closing costs can vary
considerably from one financial institution to another.
Closing statement
A detailed written summary of the financial settlement of a real
estate transaction, showing all charges and credits made, and all
cash received and paid out.
Contingency
A provision in a contract stating that some or all of the terms of
the contract will be altered or voided by the occurrence of a
specific event. A common example is a Buyer who enters into the
purchase of another home before his current home is sold. The
Buyer will usually ask for the Seller to make the sale contingent
upon the sale of the Buyer's current home. If the Seller receives
another offer for the property, the first Buyer must either agree
to buy the home without any contingency, or step aside and let
someone else purchase the home.
Contract
A legally enforceable agreement to do, or not to do, a particular
thing for a consideration.
Earnest money
A deposit made by the buyer as evidence of good faith in offering
to purchase real estate and to secure performance of the contract.
Earnest money is typically held by a title company, in an escrow
account, during the period between acceptance of the contract and
the closing.
Improvements
Valuable additions to the land, such as buildings, fences, roads,
etc., which increase the value of the property.
Legal description
A description of a specific parcel of real estate which is
acceptable to the courts in that state, and which will allows an
independent surveyor to locate and identify it. Usually it uses
one of the following methods; government survey (Not Used in
Texas), metes and bounds, or recorded plat (lot and block number).
|
