A Real Estate Agent is a licensed person who is a representative of his employing broker. Real estate agents are the people you deal with online or in person when buying or selling property.
Compares a home to recent closed sales of similar properties to figure out what it is worth at that time.
The amount calculated by the appraiser. It usually matches the contract price, but it can be higher or lower.
Hired by the lender to check if the contract price is fair and check to see if the property meets the lenders guidelines for safe occupancy.
The amount used to calculate real estate tax by the county recorder. A property value is re-assessed every time it is sold, based upon the contract price and any adjustments noted on the contract. Depending upon financial conditions, property values are adjusted for cost of living annually. Once an owner reaches the age of 55, they are permitted a one-time transfer of their existing tax rate to a new property, if the sale and purchase meet the County guidelines. This can save a person a lot of money, if they have been in the house for many years. The most common rule is that new property must be the same or less cost than the old one.
The person or company that arranges real estate transactions between a buyer and seller, and is paid a commission by the seller. When you are working with a real estate agent or Realtor®, their broker is actually the person responsible.
When a new loan is for a higher amount than the old loan’s payoff, the extra money is paid to the property owner.
When the owner of a property owns it free and clear of loans and liens.
Escrow closing is the day when home ownership is recorded under the new owner and possession is transferred to the buyer.
The variety of fees and costs above and beyond the price of the property itself, paid before close of escrow.
COMMON AREA ASSESSMENTS
Homeowners' Association (HOA) dues paid by each homeowner in their community for maintenance and management.
When the buyer or seller need to complete something before a home sale can go through. Every home is California is sold on some type of contingency today, whether it’s a home inspection, loan approval, etc. It is becoming more unusual, but sometimes a sale may be contingent on the sale or purchase another home.
A mortgage for $625,000 or less that is not insured or guaranteed by the FHA or VA.
Your total expected housing costs, including mortgage, insurance, real estate taxes, HOA dues; divided by your total family earnings. Most loan programs today require a debt ratio under 45% to qualify a buyer for a loan amount.
Conveys ownership from the old owner (the grantor) to the new owner (the grantee).
Default occurs when a borrower does not make their monthly payment(s) on time.
When the owner of a property does not pay their Real Estate Taxes or Homeowners' Association Dues on time.
An Earnest Money Deposit is given to escrow by the buyer, usually within three days of their offer’s acceptance. In residential real estate transactions, this remains the buyer’s property until all contingencies are released.
Payment to a lender that reduces the interest rate on a loan, lowering the monthly payment, but increasing the upfront cost.
The portion paid by the buyer when the rest is covered by a loan. On a 30-year loan, a down payment of at least 20% is required to avoid payment of mortgage insurance.
EARNEST MONEY DEPOSIT
See DEPOSIT, above.
The right to use a portion of someone else’s property without possessing it, such as when a driveway crosses a neighbor’s land.
Using a portion of someone else’s property without legal easement rights.
Something that lowers a property’s value but does not stop its sale.
An independent trusted third party that receives and disburses money and/or documents for buyers and sellers and their brokers, then records the sale after closing. In many cases, they also provide the notary services to verify signatures.
Removing a tenant from rental property or removing prior owners or squatters after a foreclosure.
FAIR MARKET VALUE
What a buyer is willing to pay and a seller is willing to accept at a specific time if there are no outside forces affecting the their decisions.
FANNIE MAE (FNMA)
A government-backed company that guarantees and/or buys conventional loans from lenders.
Complete property ownership of home and land (with no land lease) that is limited only by government powers and deed conditions.
A mortgage, currently up to $729,000 in higher priced areas such as LA and Orange Counties, insured against loss by the Federal Housing Administration, with the borrower paying an upfront and monthly mortgage insurance premium.
The first mortgage placed on a property and usually the largest that has priority over all other mortgages and liens except those imposed by law.
Optional specific insurance coverage against property loss from ground water or overflowing rivers and drains.
The process of taking possession of a mortgaged property as a result of someone's failure to make timely mortgage payments.
A loan subsidized and/or guaranteed by the government, which protects lenders against defaults on payments, usually offering borrowers lower interest rates or easier credit guidelines.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE)
The government national mortgage association guarantee investors the timely payment of principal and interest on mortgages backed by federally insured or guaranteed loans.
This is a non-invasive, non-destructive physical examination of interior and exterior of a home. Inspectors must limit their activities to readily accessible areas only.
A corporation formed by a real estate developer for the purpose of managing a group of homes, townhomes, or condominiums in a residential subdivision. Their role varies from one tract to the next, depending upon the Covenants, Conditions and Restrictions (CC&Rs), which are the rules that should be followed in the community.
Also called Fire Insurance, this is property and liability insurance that covers any loss relating to real estate.
This protects the homeowner against defects for (usually) the first year of home ownership. The company sends out a technician to investigate your problem upon payment of a deductible (about $50-$60). They will repair or replace any appliance, plumbing, or electrical issue covered by the warranty. Most of these may be extended for additional years and I advise all homeowners to pay this. There are optional coverages for pools, air conditioners, refrigerators, roofs, etc. which may be added to the policy.
HUD-1 SETTLEMENT STATEMENT
This is used to inform a buyer about their expected total lender and closing costs to purchase or refinance a property.
A specific legal process in which a lender attempts to recover the balance of a loan from a borrower in default, by forcing the sale of the asset used as the collateral (security) for the loan.
Any mortgage loan that is higher than conventional conforming loan limits.
A charge that occurs when a payment that is either made late, or is not made. Loans usually have a 10-day grace period and leases (rents) usually have a 5-day grace period.
An agreement to pay rent for use of a asset.
This agreement between a property owner and tenant specifies that during or at the end of rental period, the renter has the option of purchasing the property at an agreed price and terms.
A legal claim that can be placed upon property to secure the payment of a debt.
LOAN ORIGINATION FEE
The fee charged by a lender on entering into a loan agreement to cover the cost of processing the loan.
The amount borrowed divided by a property’s purchase price or appraised value.
The time during escrow that the buyer has to accept the current interest rate.
A modification of interest rate, principal, and/or term of an existing loan made by a lender in response to a borrower's request. This is usually due to verified long-term inability to repay the loan under the current terms. The loan may be modified for a short term or occasionally a permanent change can be made.
A loan obtained using real estate as security.
MORTGAGE INSURANCE PREMIUM (MIP)
The fee paid for Mortgage Insurance.
NO CASH-OUT REFINANCE
Refinancing an existing mortgage for an amount equal to or less than the existing outstanding loan balance plus settlement costs.
A lender pays the borrower's loan settlement costs in extending a new mortgage loan.
NOTICE OF DEFAULT
A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline, or is otherwise in default on the mortgage contract.
ORIGINAL PRINCIPAL BALANCE
The total amount of principal owed on a mortgage before any payments are made.
A seller lends a buyer some or all of the money required to purchase their property.
Items owned by an individual or business, which is movable and is not affixed to or associated with the land. In the case of residential real estate, things that are screwed or nailed to the house are real property, while things that are free standing or hanging from a hook are personal property, which can be taken by the seller when they leave.
The sum of monthly principal, interest, taxes, and insurance.
A multiple of the PITI payment amount, used as the minimum amount of seasoned (existing cash) assets a borrower must use as a reserve when qualifying for a mortgage.
PLANNED UNIT DEVELOPMENT (PUD)
A zoning method used to diversify zones such that housing, recreation, commercial centers, and industrial parks, are all within a contained development or subdivision.
POWER OF ATTORNEY
Gives a person the power to act for another person in legal, financial, or health matters.
A letter provided by a lender who has reviewed a buyer’s credit worthiness to provide assurances that the borrower would be able to qualify for a loan up to a certain amount.
PRELIMINARY TITLE SEARCH
During escrow, the Title Company verifies that the seller owns the property that he or she is selling and that all liens will be satisfied during the escrow period.
Early repayment of a loan by a borrower.
This would be the cost to repay a loan early, but it is rarely used in residential loans.
A letter provided by a lender that provide assurances that the borrower should be able to qualify for a loan up to a certain amount.
PRIVATE MORTGAGE INSURANCE (PMI)
An insurance policy that compensates lenders or investors for losses due to the default of a mortgage loan. A conventional loan of 30 years with 20% down will usually not require PMI.
The set of ratios used by lenders to approve borrowers for mortgages.
A method of transferring property ownership directly to another.
The moment during escrow that the buyer accepts the current interest rate.
REAL ESTATE AGENT
A Real Estate Agent is a licensed person who is a representative of his employing broker. Real estate agents are the people you deal with face to face when buying or selling property.
A Recorder is a public official who keeps records of documents concerning real property.
Recording is the act of entering in a book of public records something that affects the title to real property.
RENT LOSS INSURANCE
Rent Loss Insurance is an insurance that protects a rental property owner from loss in rental value due to damage.
RESIDENTIAL PURCHASE AGREEMENT
The most common contract used to make an offer for real estate.
RIGHT OF FIRST REFUSAL
The right of a person or company to purchase real estate, usually at a specified price and terms, before the seller can accept another offer.
RIGHT OF INGRESS OR EGRESS
Egress is the right to leave a property and Ingress is the right to enter a property.
RIGHT OF SURVIVORSHIP
A deceased owner's share of the property automatically passes to the surviving owners.
After a sale, the old owner leases it back, continuing to use the asset but no longer owning it.
A seller lends a buyer some or all of the money required to purchase their property.
A summary of all fees and charges that both the homebuyer and seller have incurred, provided after close of escrow.
TENANCY IN COMMON
Two or more people own an undivided share of a property with no Right of Survivorship.
A legal document indicating who owns a property.
These firms research a property during escrow and ensure that all liens are clear before title is transferred to the new owner.
Protects an owner against financial losses that can occur from disputes of ownership.
Various taxes imposed by cities, counties and states that may be applicable when there is a Transfer of Ownership.
A federal law requiring lenders to fully disclose in writing the terms and conditions of a mortgage, including the annual percentage rate and other charges.
There are many different ways to hold title to real estate. The owners’ and their beneficiaries’ rights are affected by the choices made in vesting. Escrow will provide a buyer with options and their consequences during the escrow period.
©2017 Rob Jansen - All information is deemed reliable but not guaranteed.
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