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.
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.
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. Some brokers conduct their business by representing buyers only.
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.
Properties which are similar to a particular property and are used to compare and establish a value for that property.
The rejection of an offer to buy or sell that simultaneously makes a different offer, changing the terms in some way. For example, if a Buyer offers $160,000 for a home, and the Seller replies that he wants $175,000, the Seller has rejected the Buyer’s offer of $160,000 and made a counteroffer to sell at $175,000. The legal significance of a counteroffer is that it completely voids the original offer, so that if the Seller decided to sell for $160,000 the next day, the Buyer would be under no legal obligation to pay that amount for the property.
Covenants, Conditions & Restrictions (CC&Rs)
The restrictions governing the use of real estate, usually enforced by a homeowners’ association and passed on to the new owners of property. For example, CC&Rs may tell you how big your house can be, how you must landscape your yard or whether you can have pets. If property is subject to CC&Rs, buyers must be notified before the sale takes place.
An amount of money the buyer pays which is the difference between the purchase price and the mortgage amount.
A trust arrangement by which none or more parties deposit things of value with an authorized escrow agent in accordance with the terms of a real estate agreement.
Fixed Rate Mortgage
A mortgage with an interest rate and monthly payment that doesn’t vary for the term of the loan.
A legal process instituted by a mortgagee or lien creditor after the debtor’s default.
Good Faith Estimate
A written estimate of closing costs which a lender must provide you within three days of submitting an application.
An opportunity for prospective buyers to view a house in a low pressure environment.
Taxes that are paid yearly on real property. Property taxes are ad valorem, based on the assessed value of the real property. In Texas the assessed value is determined by the County Appraisal District. Each taxing authority multiplies this appraised value by its annual tax rate. Taxing authorities include local school districts, counties, cities, water districts(MUD’s, PUD’s, LID’s, etc.), and other special tax districts.
Short Sale (of house)
A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes. See also deed in lieu (or foreclosure).
(1) A Buyer’s on-site inspection of the property being purchased, just prior to closing.
(2) A detailed inspection of a new construction home, in which punch list and cosmetic items are addressed, prior to final acceptance.