A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
An offeree’s consent to enter into a contract and be bound by the terms of the offer.
The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
Adjustable-rate mortgage (ARM)
A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
The date the interest rate changes on an adjustable-rate mortgage
A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.
A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
Anatomy of a Murder – Movie filmed in the U.P.
Anatomy of a Murder is an American 1959 trial court drama film directed by Otto Preminger and written by Wendell Mayes. It was based on the best selling novel of the same name written by John D. Voelker using the pen name Robert Traver. The picture stars Jimmy Stewart, George C. Scott, Lee Remick, Ben Gazzara, Arthur O’Connell, Eve Arden, Kathryn Grant, Orson Bean, and Murray Hamilton. The movie, inspired by a 1952 Big Bay Lumberjack Tavern murder trial in Michigan’s Upper Peninsula was filmed in BigBay, Marquette, Ishpeming, and Michigamme, Michigan. Some scenes were actually filmed in the Thunder Bay Inn in Big Bay, Michigan, one block away from the Lumberjack Tavern, the site of a murder that had inspired much of the action in the fictional novel.
Annual percentage rate (APR)
This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, including closing costs, fees, etc. expressed as a percentage.
The form used to apply for a mortgage loan, containing information about a borrower’s income, savings, assets, debts, and more.
A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
An increase in the value of a property due to changes in market conditions,inflation, or other causes. The opposite of depreciation.
See “Art Deco”, “Bungalow”, “Cape Cod”, “Colonial”, “Contemporary”, “Craftsman”, “Dutch Colonial”, “French Provincial”, “Georgian”, “Queen Anne”, “Ranch”, “Salt Box”, “Split Level”, “Tudor”, and “Victorian”.
Architectural elements that make a residence distinct may include dormers, gable or saltbox roofs, arches, columns, molding, bay or ribbon windows. See “Roofs” and “Windows”
A vertically oriented design includes flat roofs and metal window casements.
The valuation placed on property by a public tax assessor for purposes of taxation.
The placing of a value on property for the purpose of taxation.
A public official who establishes the value of a property for taxation purposes.
Items of value owned by an individual. Assets that can be quickly converted into cash are considered “liquid assets.” These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.
When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.
A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must “qualify” in order to assume the loan. These were more common in the past then they are now. Most lenders will no longer give assumable loans.
The term applied when a buyer assumes the seller’s mortgage.
A backup offer is an alternate bid or secondary offer for a property that will be accepted if the first fails. It is wise in some situations to make a backup offer. In a competitive market for instance, your backup offer will be first in line if the primary offer falls apart. This saves you the trouble of the property going back on the market and having to compete with other buyers again. Unfortunately, backup offers usually work more to the benefit of the seller as it tends to put pressure on the primary buyer to carry through with the purchase knowing there is another buyer in line. Keep in mind that your backup offer should include a provision that allows you to withdraw. Since timing is everything in real estate, you could be waiting for the primary offer to collapse and miss out on another home that might be an even better fit.
A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.
The final lump sum payment that is due at the termination of a balloon mortgage.
By filing in federal bankruptcy court, an individual or individuals can restructure or relieve themselves of debts and liabilities. Bankruptcies are of various types, but the most common for an individual seem to be a “Chapter 7 No Asset” bankruptcy which relieves the borrower of most types of debts. A borrower cannot usually qualify for an “A” paper loan for a period of two years after the bankruptcy has been discharged and requires the re-establishment of an ability to repay debt.
Bill of sale
A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.
A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty year mortgage. Most of the time you can make these biweekly payments yourself to your mortgage company without setting it up to be billed bi-weekly which can sometimes cost extra.
Usually refers to the daily buying and selling of thirty year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing. The same factors that affect the Treasury Bond market also affect mortgage rates at the same time. That is why rates change daily, and in a volatile market can and do change during the day as well.
Not used much anymore, bridge loans are obtained by those who have not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment. One reason for their fall from favor is that there are more and more second mortgage lenders now that will lend at a high loan to value. In addition, sellers often prefer to accept offers from buyers who have already sold their property.
Broker has several meanings in different situations. Most Realtors are “agents” who work under a “broker.” Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. As a general definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.
A forerunner of the craftsman style, you’ll find rustic exteriors and sheltered-feeling interiors. Bungalows have low-pitched gabled or hipped roofs and small covered porches at the entry. The style became so popular that you could order a bungalow kit from Sears and Roebuck catalog and was popular during the Great Depression.
Usually refers to a fixed rate mortgage where the interest rate is “bought down” for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower’s payment is calculated at the note rate. In order to buy down the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower’s monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A “lender funded buy down” is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buy down adjustments) will be higher than the current market rate. One reason for doing this is because the borrower may get to “qualify” at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now.
A Buyer’s Market is when the housing market conditions favor the buyers. With more sellers than buyers in the market, sellers may be forced to make a substantial price reduction in order to attract the buyer.
There are over 2 million acres of land in the Upper Peninsula that are enrolled under the Commercial Forest Act (CFA) – and all of that land is open to deer hunting. The CFA is a tax act that has been in effect since 1925. The purpose of the act is to provide the opportunity for long-term timber management on private forest land. A property tax reduction is the incentive for landowners to enroll in this type of management. The public gets some benefits in exchange for the lower land taxes paid by property owners who take advantage of the CFA. One of the requirements under the act is that landowners enrolled in the program must allow “reasonable access” to their property by hunters and anglers. The bulk of the CFA lands in the U.P. are owned by large corporations, such as Mead Westvaco and International Paper, who maintain commercial forests. They manage timber for eventual harvest to feed their mills and make paper products. They view the CFA as mutually beneficial to themselves and the public. Although the bulk of the CFA land in the U.P. is owned by large companies, some of it is also deeded to private individuals who decide to manage their property for timber production. Keep in mind that lands may be withdrawn from CFA listing at any time and new properties are also added. Some corporations identify lands they feel they no longer need and sell them. The lands are still private lands in every way except the public has the privilege of access for hunting and fishing. That does not include leaving trash, vehicular use, camping, building blinds, trapping, picking mushrooms, hiking, or use at other times than hunting and fishing season unless the owner allows it. Most owners don’t object as long as lands are respected. Since property owners who have land enrolled under the CFA are only required to allow foot access, some CFA lands may be gated against vehicle access. Examples of additional activities that require landowner permission on CFA lands are target shooting, dragging roads and cutting trees for shooting lanes or to create trails for ORVs. Permanent blinds of any type and screw-in tree steps are illegal on CFA lands. Blinds made of natural materials or portables that are carried in and out on a daily basis are legal. DNR forestry offices that administer the CFA in the U.P. are the Baraga office 906-353-6651 and the Gladstone office 906-786-2351.
Comparative market analysis or competitive market analysis. A CMA is a report that shows prices of homes that are comparable to a subject home and that were recently sold are currently on the market or were on the market, but not sold within the listing period.
Similar to the acceleration clause.
Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan, and are referred to as “caps.” Some ARMs, although they may have a life cap, allow the interest rate to fluctuate freely, but require a certain minimum payment which can change once a year. There is a limit on how much that payment can change each year, and that limit is also referred to as a cap.
A true classic, Cape Cod homes have gabled roofs and unornamented fronts. A 20th-century Cape Cod is square or rectangular with one or one-and-a-half stories and steeply pitched, gabled roofs. It may have dormers and shutters. The siding is usually clapboard or brick.
When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as ”cash out refinance.”
Certificate of deposit
A time deposit held in a bank which pays a certain amount of interest to the depositor.
Certificate of deposit index
One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.
Certificate of Eligibility
A document issued by the Veterans Administration that certifies a veteran’s eligibility for a VA loan.
Certificate of Reasonable Value (CRV)
Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV.
Chain of title
An analysis of the transfers of title to a piece of property over the years.
A title that is free of liens or legal questions as to ownership of the property.
The “closing” is a meeting usually at a title company, bank or real estate office where all of the documents are signed, money changes hands, and keys are usually handed over between buyer and seller.
The entire package of miscellaneous expenses paid by the buyer and seller when the real estate deal closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney’s settlement charges, transfer taxes, recording fees, title insurance and so on. Closing costs generally are paid through escrow. Closing costs are separated into what are called “non-recurring closing costs” and “pre-paid items.” Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. “Pre-paids” are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.
See HUD 1 Settlement Statement.
Cloud on title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.
An additional individual who is both obligated on the loan and is on title to the property.
In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.
When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to “collection.” As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.
When we speak of the Colonial style, we often are referring to a rectangular, symmetrical home with bedrooms on the second floor. The double-hung windows usually have many small, equally sized square panes.
Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. The typical Realtor commission for the list and sale of a home is 6% and is paid by the seller.
Common area assessments
In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
An unwritten body of law based on general custom in England and used to an extent in some states.
In some states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances. This is an outgrowth of the Spanish and Mexican heritage of the area.
Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as “comps.”
A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned. These are often found in resort areas like Hawaii.
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Unmistakably modern, this style has odd-sized windows, little ornamentation and unusual mixtures of wall materials–stone, brick, and wood, for instance. Architects designed Contemporary-style homes (in the Modern family) between 1950 and 1970, and created two versions: the flat-roof and gabled types. The latter is often characterized by exposed beams. Both breeds tend to be one-story tall and were designed to incorporate the surrounding landscape into their overall look.
A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer’s contractual right to obtain a professional home inspection before purchasing the home.
An oral or written agreement to do or not to do a certain thing.
Refers to home loans other than government loans (VA and FHA).
An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
Cost of funds index (COFI)
One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.
Popularized at the turn of the 20th century the style, which was also widely billed as the “California bungalow” featured overhanging eaves, a low-slung gabled roof, and wide front porches framed by pedestal-like tapered columns. Material often included stone, rough-hewn wood and stucco. Many homes have wide front porches across part of the front, supported by columns.
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
A record of an individual’s repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.
A person to whom money is owed.
A report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.
An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.
Legal document with which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing.
Short for “deed in lieu of foreclosure,” this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.
Deed of trust
Some states, like California, do not record mortgages. Instead, they record a deed of trust which is essentially the same thing.
Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.
Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a “late fee” for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.
A sum of money given in advance of a larger amount being expected in the future. See “earnest money deposit.”
A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.
In the mortgage industry; this term is usually used in only in reference to government loans, meaning FHA and VA loans. Discount points refer to any “points” paid in addition to the one percent loan origination fee. A “point” is one percent of the loan amount.
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage. These days most mortgages are Due-on-sale rather than assumable.
A hallmark of the style is a broad gambrel roof with flaring eaves that extend over the porches, creating a barn-like effect. Early homes were a single room, and additions were added to each end, creating a distinctive linear floor plan. End walls are generally of stone, and the chimney is usually located on one or both ends. Double-hung sash windows with outward swinging wood casements, dormers with shed-like overhangs, and a central Dutch double doorway are also common. The double door, which is divided horizontally, was once used to keep livestock out of the home while allowing light and air to filter through the open top. The style enjoyed a revival during the first three decades of the 20th century as the country looked back with nostalgia to its colonial past
Earnest money deposit
Earnest money is a deposit made by a buyer towards their down payment in evidence of good faith when the purchase agreement is signed. The earnest money becomes part of the down payment if the offer is accepted. If the offer is rejected, the earnest money is given back. Earnest money is forfeited if the buyer pulls out of the deal. The deposit is usually held in escrow by the Real Estate Company who listed the home and is usually credited to the buyer on the settlement statement at closing.
A right of way giving persons other than the owner access to or over a property. If there are Easements on a property, they are usually found by the title company when they do the title work.
An appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age due to good or bad upkeep.
The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
An improvement that intrudes illegally on another’s property.
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
Escanaba in da Moonlight is a 2001 movie starring Jeff Daniels. It’s a comedy about hunting and hunting traditions. It’s set (and filmed) in the Escanaba, Michigan area. The movie is the film adaptation of the play of the same name, which premiered at Jeff Daniels’ Purple Rose Theatre in Chelsea, Michigan.
An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.
Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner’s insurance when they come due. The lender pays them with your money instead of you paying them yourself.
Once each year your lender will perform an “escrow analysis” to make sure they are collecting the correct amount of money for the anticipated expenditures.
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
The lawful expulsion of an occupant from real property.
Examination of title
The report on the title of a property from the public records or an abstract of the title.
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time. Three, six, and nine months are typical terms for listing contracts.
A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. “Executrix” is the feminine form. (
Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.
Fair market value
Real estate fair market value is a term used to describe an appraisal of a property, which is required by a lender before loan approval. A fair market value is based on an estimate of what a buyer could be expected to pay and what a seller could be expected to accept. Property location, age, lot size, local market demand, condition, financing and other related factors all go in to determining the fair market value of a home. The fair market value of a home becomes important when you are refinancing a home, putting a home up for sale or when a home is taxed by local assessors.
Fannie Mae (FNMA)
The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation’s largest supplier of home mortgage funds.
Fannie Mae’s Community Home Buyer’s Program
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family’s buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.
Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
The greatest possible interest a person can have in real estate.
Fee simple estate
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.
A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.
Firm commitment (letter of commitment/letter of intent)
A lender’s agreement to make a loan to a specific borrower on a specific property.
The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions.
A mortgage in which the interest rate does not change during the entire term of the loan.
Anything of value that is permanently attached to or a part of real property. (Real estate is legally called “real property,” while movables are called “personal property.”) Examples of fixtures include installed wall-to-wall carpeting, light fixtures, window coverings, landscaping and so on. Fixtures are a frequent subject of buyer and seller disputes. When in doubt, get it in writing. Personal property that becomes real property when attached in a permanent manner to real estate.
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Shorthand notation for “four bedrooms and two bathrooms.” In order to be recognized as a “conforming bedroom” the sleeping area must include a window and a closet. A “full bathroom” is a room with a toilet, a sink and a bathtub. A “three-quarter bathroom” has a toilet, a sink and a shower, and a “half bathroom” has only a toilet and a sink.
An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not for profit organizations.
Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans. Loans against 401K plans are an acceptable source of down payment for most types of loans.
Balance and symmetry are the ruling characteristics of this formal style. Homes are often brick with detailing in copper or slate. Windows and chimneys are symmetrical and perfectly balanced, at least in original versions of the style. Defining features include a steep, high, hip roof; balcony and porch balustrades; rectangle doors set in arched openings; and double French windows with shutters. Second-story windows usually have a curved head that breaks through the cornice.
Another famous person from the U.P. From Laurium in Michigan’s Upper Peninsula, Gipp became one of college football’s greatest all-around players. A runner, passer, defensive back, punter, kicker and kick returner, he amassed over 4,100 total yards in rushing and passing and another 4,100 plus yards in kickoffs and punts. He scored more than 150 points including touchdowns, point after attempts and field goals, never allowing a completed pass while playing defensive back. Named Notre Dame’s first All-American in 1920, he did not survive to celebrate the honor. His death on December 14, 1920 resulted from pneumonia. Ronald Reagan played the part of Gipp in the 1940 film Knute Rockne: All American making “Win one for the Gipper” a famous quote.
Befitting a king–in fact, the style is named for four King Georges of England–Georgian homes are refined and symmetrical with paired chimneys and a decorative crown over the front door. Modeled after the more elaborate homes of England, the Georgian style dominated the British colonies in the 1700s. Most surviving Georgians sport side-gabled roofs, are two to three stories high, and are constructed in brick. Georgian homes almost always feature an orderly row of five windows across the second story. Modern-day builders often combine features of the refined Georgian style with decorative flourishes from the more formal Federal style.
Realtor Designation stands for Graduate of the REALTOR Institute
Government loan (mortgage)
A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.
Government National Mortgage Association (Ginnie Mae)
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans. The difference is that Ginnie Mae provides funds for government loans (FHA and VA)
The person to whom an interest in real property is conveyed.
The person conveying an interest in real property.
Home appreciation is a term used to describe the increase in market value of real estate, or the increase in value of your house or property over time. Most areas of the country have an average of 5% home appreciation rate per year. If the average home appreciation rose five percent this year your home would be worth five percent more, raising your home equity without paying anything toward the principal.
Home Equity Conversion Mortgage (HECM)
Usually referred to as a reverse annuity mortgage, what makes this type of mortgage unique is that instead of making payments to a lender, the lender makes payments to you. It enables older home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property.
Home equity line of credit (HELOC)
A mortgage loan, usually in second position, which allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.
A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.
A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.
HUD median income
Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).
HUD-1 Settlement Statement (Closing Statement)
A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions; loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller’s net proceeds and the buyer’s net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the “closing statement” or “settlement sheet.”
The Huron Mountain Club is a private club whose land holdings in the Big Bay area of MarquetteCounty, in the Upper Peninsula of Michigan, constitute one of the largest tracts of primeval forest in the Great Lakes region. Formed circa 1890, the Club consists of 50 wooden cabins and support structures clustered inside about 30,000 acres of land, encompassing much of the Huron Mountainsarea. The purpose was to establish a remote hunting and fishing club for outdoor enthusiasts. The original charter limited membership to 50 partners. Much of the Club’s land has been maintained as strictly protected natural area encompassing several lakes and 10,000 acres of old-growth forest. The club is private, and access is strictly controlled by private security. It’s membership includes a number of old and influential families, predominantly from the Detroit and Chicago areas. Henry Ford was once a member. Most memberships have remained in the same families for several generations.
The Huron Mountains are located in the Upper Peninsula of the U.S. state of Michigan, mostly inMarquette and BaragaCounties, overlooking Lake Superior. Their highest peak is Mount Arvon which, at 1,979 feet above sea level, is the highest point in the state of Michigan.
Like your car, your home must be insured with Hazard Insurance. This is required in order to secure a loan. Private mortgage insurance and/or Flood Insurance may also be required by your lender.
Ishpeming is a city in MarquetteCounty in the Upper Peninsula of the U.S. state of Michigan. Home toBellHospital, Empire Mines, and the National Ski Hall of Fame, the population was 6,686 at the 2000 census. IshpemingTownship is located to the northwest of the city. Ishpeming is considered the birth place of organized skiing in the United States. The name Ishpeming comes from a Native American term (Chippewa tribe) that means “on the summit” or “Higher elevation.” Ishpeming is Ojibwe for “Heaven.” A statue of a Native American figure has stood in the town square since 1884 that is referred to as “Old Ish.”
A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.
A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor’s real property as collateral for the judgment’s creditor.
A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. Other states use non-judicial foreclosure.
A loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits. As of January 2006 the conforming loan limit is $417,000. A Jumbo is also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
Real estate land contracts are deals made between the buyer and seller where the seller’s mortgage remains in place and the buyer makes payments towards it instead of arranging a new mortgage loan upon “purchase.” Land purchase contracts like these usually require the buyer to pay installments to a liaison who forwards the payments to the seller’s mortgage. Complete ownership of the property and title transaction does not become official until all payments are made or until the buyer refinances the mortgage in his or her name. The dangerous part about land contracts is that such an agreement usually violates a lender policy; discovery of such transactions can empower your lender to demand full payment of the loan. The draw of land contracts and owner financing comes from the fact that the buyer is not able to qualify for a loan at the time of the deal. It is understood that within a certain amount of time the buyer will be able to obtain a new mortgage and pay off whatever amount the land contract requires.
The penalty a borrower must pay when a payment is made a stated number of days. On a first trust deed or mortgage, this is usually fifteen days.
A notable attraction near Sundell off of Hwy 94 is the Laughing Whitefish Falls Scenic Site. TheLaughing Whitefish River is located in the Upper Peninsula of the U.S. state of Michigan. The river rises in eastern Marquette County and flows east and then north through Alger County to the mouth on Lake Superior at 46°31′30″N, 87°01′43″W a few miles north of Deerton, Michigan. The total watershed of the Laughing Whitefish River is 36 square miles. Author John D. Voelker wroteLaughing Whitefish in 1965 under the pen name Robert Traver. Volker was a locally revered author and avid trout fisherman.
A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.
A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.
An alternative financing option that allows home buyers to lease a home with an option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price. You must find a seller who can afford to purchase a new home without benefit of payment in full on their old home to use this option.
A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.
A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as “lenders.”
A person’s financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.
Insurance coverage that offers protection against claims alleging that a property owner’s negligence or inappropriate action resulted in bodily injury or property damage to another party. It is usually part of a homeowner’s insurance policy.
A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the mortgage.
Line of credit
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower.
A cash asset or an asset that is easily converted into cash.
An agreement between a real estate broker and a home owner that allows the broker to market and arrange for the sale of the owner’s home. The word “listing” is also used to refer to the for-sale home itself. A home being sold by the owner without a real estate agent isn’t a “listing”.
A listing agent is the real estate professional who represents the seller and helps you sell your home. Listing agents handle a variety of tasks on the selling end, but their most important concern is marketing your home to potential buyers. When you hire a real estate listing agent you are generally required to sign a listing agreement.
A sum of borrowed money (principal) that is generally repaid with interest.
Also referred to by a variety of other terms, such as lender, loan representative, loan “rep,” account executive, and others. The loan officer serves several functions and has various responsibilities: they solicit loans, they are the representative of the lending institution, and they represent the borrower to the lending institution.
How a lender refers to the process of obtaining new loans.
After you obtain a loan, the company you make the payments to is “servicing” your loan. They process payments, send statements, manage the escrow/impound account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are made on the property, handle pay-offs and assumptions, and provide a variety of other services.
The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).
Locked key-holding device affixed to a for-sale home so real estate professionals can gain entry into the home after obtaining permission from the listing agent.
An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
The time period during which the lender has guaranteed an interest rate to a borrower.
Multiple Listing Service. An MLS is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. Membership isn’t open to the general public, although selected MLS data may be sold to real estate listings Web sites. MLSs are local or regional. There is no one MLS covering the whole country. See Multiple Listing Service for more detailed definition.
A manufactured home, also known as a mobile home, is a dwelling that is built to the Manufactured Home Construction and Safety Standards. Unlike a modular home, these standards are set by the U.S. Department of Housing and Urban Development (HUD). Manufactured homes are built in a controlled setting, typically a manufacturing plant or a factory, and are transported in 1 or 2 pieces (single or double-wide) on a permanent steel chassis to a location using its own wheels. Every manufactured home has a data plate (HUD Tag) that is readily accessible and visible, usually near the main electrical panel. The data plate contains information including: the manufacturing plant in which the manufactured home was assembled, the serial number and the date the unit was manufactured. Manufactured homes are often confused with modular homes. Modular homes are built from 3 or more pieces, assembled onsite, and built on a permanent foundation. Modular homes resemble traditional single family homes and do not have a HUD tag. It is far easier to get a conventional mortgage on a Modular or conventionally built home than a Manufactured home.
The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.
Marquette County is a county in the U.S. state of Michigan. As of the 2000 census, the population was 64,634. The county seat is the city of Marquette. Marquette County is the largest county in land area inMichigan, and the most populous county in the Upper Peninsula (U.P.) of Michigan. Marquette Countyincludes the cities of Marquette, Ishpeming, and Negaunee and the unincorporated communities ofArnold, BigBay, Gwinn, Harvey, Michigamme, Palmer, Republic, TrowbridgePark, and West Ishpeming.
Marquette is a city in the U.S. state of Michigan. As of the 2000 census, the city population was 19,661, with a 2005 population estimate of 20,714. It is the county seat of Marquette County.Marquette is a major port on Lake Superior, primarily for shipping iron ore, and is the home ofNorthern Michigan University. It is the largest city in the Upper Peninsula. The city of Marquetteaverages about 170 inches of snow per year, making it the second snowiest city in the contiguousUnited States.
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
Merged credit report
A credit report which reports the raw data pulled from two or more of the major credit repositories. Contrast with a Residential Mortgage Credit Report (RMCR) or a standard factual credit report.
Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.
A modular home, unlike a manufactured (mobile) home, is a home that adheres to the same construction codes as a site-built home. Modular homes are typically constructed at a manufacturing plant or facility, in 3 or more pieces, and then transported to a permanent site on a flatbed truck to be assembled on a permanent foundation. Modular homes are often confused with manufactured homes. Manufactured homes are built in a controlled setting, typically a manufacturing plant or a factory and are transported in 1 or 2 pieces (single or double-wide) on a permanent steel chassis, to a location using its own wheels. Manufactured homes always have a data (HUD) tag. Modular homes resemble traditional single family homes and, unlike manufactured homes, do not have a HUD tag.
A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.
For a more complete discussion of mortgage banker, see “Types of Lenders.” A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae. However, firms rather loosely apply this term to themselves, whether they are true mortgage bankers or simply mortgage brokers or correspondents.
A mortgage company that originates loans, then places those loans with a variety of other lending institutions with which they usually have pre-established relationships.
The lender in a mortgage agreement.
Mortgage insurance (MI) Often Referred to as PMI
Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Mortgages above 80% LTV that call themselves “No MI” are usually a made at a higher interest rate. Instead of the borrower paying the mortgage insurance premiums directly, they pay a higher interest rate to the lender, which then pays the mortgage insurance themselves. Also, FHA loans and certain first-time homebuyer programs require mortgage insurance regardless of the loan-to-value. The mortgage insurance premium is paid until the loan is paid down to 80% loan to value. You may need to request that the insurance be removed when you reach 80%.
Mortgage insurance premium (MIP)
The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
Mortgage life and disability insurance
A type of term life insurance often bought by borrowers. The amount of coverage decreases as the principal balance declines. Some policies also cover the borrower in the event of disability. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds. In the case of disability insurance, the insurance will make the mortgage payment for a specified amount of time during the disability. Be careful to read the terms of coverage, however, because often the coverage does not start immediately upon the disability, but after a specified period, sometime forty-five days.
The borrower in a mortgage agreement.
Properties that provide separate housing units for more than one family, although they secure only a single mortgage. These include Duplex, Triplex, Quads, etc. Fannie Mae and Freddie Mac recognize 2, 3, and 4, unit dwellings as applicable for residential loans. Anything with more units will usually require a commercial loan.
Multiple Listing Service or MLS (also Multiple Listing System or Multiple Listings Service) is a database which allows real estate brokers representing sellers under a listing contract to widely share information about properties with real estate brokers who may represent potential buyers or wish to cooperate with a seller’s broker in finding a buyer for the property. The MLS combines the listings of all available properties that are represented by brokers who are both members of that MLS system and of NAR. RE/MAX 1st Realty and myself as a RE/MAX 1st Realty Associate Broker REALTOR are members of the National Association of REALTORS (NAR), the Michigan Association of REALTORs (MAR), the Upper Peninsula Association of REALTORS (UPAR) and the Upper Peninsula North Central MLS.
The purpose of the MLS is to enable the efficient distribution of information so that, when a real estate agent is introduced to a potential home buyer, he/she may search the MLS system and retrieve information about all homes for sale in a given area or price range, whether under a listing contract by that agent’s brokerage or by all participating brokers.
The MLS systems are governed by private entities, and the rules are set by those entities with no state or federal oversight, beyond any individual state rules regarding real estate. MLS systems set their own rules for membership, access, and sharing of information, but are subject to nationwide rules laid down by NAR. An MLS may be owned and operated by a real estate company, a county or regional real estate Board of REALTORS or Association of REALTORS, or by a trade association. Membership of the MLS is generally considered to be essential to the practice of real estate brokerage.
Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called “deferred interest.” The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization. The idea is that as long as your home is building equity you will never end up “upside down” on you loan. These should only be considered in strong home markets.
No cash-out refinance
A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a “rate and term refinance.”
Many lenders offer loans that you can obtain at “no cost.” You should inquire whether this means there are no “lender” costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a “no-point” loan, the interest rate will be higher than if you obtain a loan that has costs associated with it. Also verify if it is truly “no-cost” or if the lender is rolling the costs into your loan amount.
Northern Michigan University is a four-year university, established in 1899, located in Marquette,Michigan, on Michigan’s Upper Peninsula. The school is home to over 9,000 students. Their TLC program, which is the largest in the country, gives every student an IBM laptop. Accredited undergraduate and graduate degree programs are offered by the College of Arts and Sciences, theCollege of Business, and the College of Professional Studies. Graduate education was inaugurated in 1928 when courses at the master’s degree level were offered in cooperation with the University ofMichigan. In 1960, Northern established its own graduate program. NMU also has the world’s largest wooden dome.
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
The interest rate stated on a mortgage note.
Notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.
On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called “discount points.” One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.
A property purchase transaction in which the property seller provides all or part of the financing.
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department.
Payment change date
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date.
Periodic payment cap
For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period.
Periodic rate cap
For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.
Any property that is not real property.
Pioneer Surgical Technology
Pioneer Surgical Technology, headquartered in Marquette, Michigan, is a leading innovator in the design and manufacture of spinal and orthopedic implants. Founded in 1992, Pioneer has positioned itself as a true surgeon-driven spinal device company that promotes responsiveness through customer intimacy, surgeon-to-surgeon relationships, and a commitment to long-term innovation. In 2005 Pioneer Surgical Tech launched the following spinal implant systems in addition to receiving the CE mark for the NUBAC™ Intradiscal System: Quantum Spinal Rod, Pioneer Anterior Cervical Plate and its PEEK-Plus Vertebral Replacement Devices. Pioneer Surgical Tech is expanding its 70,000 square foot facility in Marquette as it continues to grow its spinal and orthopaedic products. Pioneer currently employees over 200 employees worldwide and has been awarded 30 patents. You can find a link to Pioneer Surgical’s website on my Community Links Page.
This stands for principal, interest, taxes and insurance. If you have an “impounded” loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an impounded account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio.
A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
Planned unit development (PUD)
A type of ownership where individuals actually own the building or unit they live in, but common areas are owned jointly with the other members of the development or association. Contrast with condominium, where an individual actually owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development or association.
A point is 1 percent of the amount of the mortgage. Many lenders charge a point as an origination fee or offer to buy down your rate with a point.
The Porcupine Mountains or Porkies, are a group of small mountains spanning across the northwestern Upper Peninsula of Michigan in Ontonagon and Gogebic counties, near the shore ofLake Superior. The area is part of the Porcupine Mountains Wilderness State Park. The PorcupineMountains were named by the native Ojibwa people, supposedly because their silhouette had the shape of a porcupine.
Power of attorney
A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification
Any amount paid to reduce the principal balance of a loan before the due date i.e. payment in full on a mortgage that may result from a sale of the property, the owner’s decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.
A fee that may be charged to a borrower who pays off a loan before it is due.
This usually refers to the loan officer’s written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.
The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.
The amount borrowed or remaining unpaid balance. The principal payment is the part of the monthly payment that reduces the remaining balance of a mortgage.
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.
Principal, interest, taxes, and insurance (PITI)
The four components of a monthly mortgage payment on impounded loans. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.
Private mortgage insurance (MI) see also Mortgage Insurance
Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
A written promise to repay a specified amount over a specified period of time.
A meeting in an announced public location to sell property to repay a mortgage that is in default.
Planned Unit Development (PUD)
A project or subdivision that includes common property that is owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.
The purchase agreement is the contract signed by the buyer and the seller stating the terms and conditions under which a property will be sold. Purchase agreements indicate the amount of your offer and may also include, for instance, which appliances stay and when you’d like to take possession, etc. The purchase agreement is generally required when you apply for a home loan. It’s possible to get approved based on your income and asset information, but having a signed purchase agreement will make the process faster and easier. Usually, along with the purchase agreement, you’ll put down what is called “earnest money,” a deposit to show that you’re willing and financially able to buy the home. This money is later applied as part of your down payment.
Purchase money transaction
The acquisition of property through the payment of money or its equivalent.
Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. The “top” or “front” ratio is a calculation of the borrower’s monthly housing costs (principle, taxes, insurance, mortgage insurance, and homeowner’s association fees) as a percentage of monthly income. The “back” or “bottom” ratio includes housing costs as well as all other monthly debt. These ratios are “debt to income ratios” also call “DTI”.
A sub-style of the late Victorian era, Queen Anne is a collection of coquettish detailing and eclectic materials. Steep cross-gabled roofs, towers, and vertical windows are all typical of a Queen Anne home. Inventive, multistory floor plans often include projecting wings, several porches and balconies, and multiple chimneys with decorative chimney pots. Wooden “gingerbread” trim in scrolled and rounded “fish-scale” patterns frequently grace gables and porches. Massive cut stone foundations are typical of period houses. Created by English architect Richard Norman Shaw, the style was popularized after the Civil War by architect Henry Hobson Richardson and spread rapidly, especially in the South and West.
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
Sometimes called the California ranch style, this home in the Modern family, originated there in 1930s. It emerged as one of the most popular American styles in the 1950s and 60s, when the automobile had replaced early 20th-century forms of transportation, such as streetcars. Now homebuyers could move to the suburbs into bigger homes on bigger lots. The style takes its cues from Spanish Colonial and Prairie and Craftsman homes, and is characterized by its one-story, pitched-roof construction, built-in garage, wood or brick exterior walls, sliding and picture windows, and sliding doors leading to patios.
A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.
Land including whatever is made part of or attached to it by man or nature, as trees, houses, etc. Abbr. R.E. Commonly misspelled as one word realestate.
Real estate agent
A person licensed to negotiate and transact the sale of real estate in a particular state. Not all real estate agents are Realtors (active members of the National Association of Realtors or NAR)
Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.
A real estate agent, broker or sales associate who is an active member of the National Association of REALTORS® headquartered in Chicago. It’s possible to have a real estate license, but not be a REALTOR®. Commonly misspelled as Realator or Realitor.
Same diffinition as Real Estate. Commonly misspelled as Reality or Realaty.
The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”
The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
The process of paying off one loan with the proceeds from a new loan using the same property as security.
As per the National Association of Realtors the following states make up each of the four national regions. Northeast consists of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. The Midwest consists of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. The South consists of Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. The West consists of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
Register of Deeds
The amount of principal that has not yet been repaid. See principal balance.
The original amortization term minus the number of payments that have been applied.
Rent loss insurance
Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
An arrangement made to repay delinquent installments or advances.
Replacement reserve fund
A fund set aside for replacement of common property in a condominium, PUD, or cooperative project — particularly that which has a short life expectancy, such as carpeting, furniture, etc.
A credit arrangement, such as a credit card, that allows a customer to borrow against a pre-approved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
Right of first refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
Right of ingress or egress
The right to enter or leave designated premises.
Right of survivorship
In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.
Roofs serve an important utilitarian purpose: keeping rain, snow, and debris out of the house. But they also add to a home’s character and style. The material of roof is an important element of design and an indication of how long the roof will last. A slate roof, for example, can last from 70 to 125 years and is relatively expensive; whereas an asphalt tile roof is less expensive and will last typically from 15 to 20 years.
Cross gable roofs have two or more gable rooflines that intersect. A house with a basic gable roof will have a rectangular shape, but a house with a cross gable roof can have a more complex shape and therefore a more complex layout.
Front-gabled houses have a gable roof and the front door is under the gable. The gable is the area at the front and back of the house beneath the pitched roof that follows the roofline – it is typically triangular. A gable roof is very common and has two sloping planes that meet in a central ridge.
Gambrel roofs have a shallow slope over a steep slope. It is typical of the Dutch colonial architectural style and also frequently seen on barns.
Hipped roofs slope in four directions. The “hip” is the angle formed where two sloped sides meet. This roof is used with many different architectural styles and is said to stand up to hurricane winds better than a gable roof.
MansardMansard roofs have four sloping sides, like a hipped roof, and each side has a shallow slope over a steep slope, similar to a gambrel roof. There are almost always dormers in a mansard roof. Mansard is named after the French architect Francois Mansart (1598-1666), who was known to use this style of roof. This roof style was particularly popular in the latter half of the 19th century, and is often seen on Victorian row houses.
Pavilion HippedPavilion-hipped roofs have four sloping planes that meet in a single point. They are sometimes also called pyramid-hipped roofs and are typically used on smaller buildings such as a garage or pool house.
Saltbox roofs are typical of colonial architecture in New England. A saltbox house is two stories high in the front and has a low sloping roofline in the back of the house. It is named after its resemblance to saltboxes used in colonial times.
This New England Colonial style got its name because the sharply sloping gable roof that resembled the boxes used for storing salt. The step roofline often plunges from two and one-half stories in front to a single story in the rear. In Colonial times, the lower rear portion was often used as a partially enclosed shed, which was oriented north as a windbreak. These square or rectangular homes typically have a large central chimney and large, double-hung windows with shutters. Exterior walls are made of clapboard or shingles. In the South this style is known as a “cat’s slide” and was a popular in the 1800s.
A mortgage that has a lien position subordinate (2nd lien position) to the first mortgage.
The buying and selling of existing mortgages, usually as part of a “pool” of mortgages.
A loan that is backed by collateral.
The property that will be pledged as collateral for a loan.
An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. Not done as often as it used to be.
Also known as seller contributions, it is an agreement between the home buyer and the seller where the seller pays for certain costs on behalf of the buyer at the mortgage closing. Closing costs can include (but are not limited to) discount points, title insurance, appraisal fees, origination and/or processing fees, fees for pulling credit, and attorney fees, and are typically paid during the mortgage closing. The amount charged can vary depending on which fees may be required and by geographic location where the property exists. How much a seller can contribute toward the transaction-which can be anywhere from two to nine percent of the home’s purchase price or appraised value-depends on the size of the loan, type of mortgage and type of occupancy. There are advantages for both buyer and seller: the buyer’s immediate out-of-pocket costs to buy the home are reduced and certain fees are tax-deductible*; the seller can sell his or her home quicker, collect on the profits from the sale and, if need be, close on his or her new home faster.
A seller’s market is simply when the housing market conditions favor sellers. More buyers in the market than sellers will create a competitive environment, and likely force home prices up as buyers fight to out-bid one another.
An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
See HUD1 Settlement Statement
Split-Level or Split Level Ranch
A Modern style that architects created to sequester certain living activities–such as sleeping or socializing–split levels offered an multilevel alternative to the ubiquitous style in the 1950s. The nether parts of a typical design were devoted to a garage and TV room; the midlevel, which usually jutted out from the two-story section, offered “quieter” quarters, such as the living and dining rooms; and the area above the garage was designed for bedrooms. Found mostly in the East and Midwest, split-levels, like their Ranch counterparts, were constructed with various building materials.
SubdivisionA housing development that is created by dividing a tract of land into individual lots for sale or lease.
Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.
Tenancy in common
As opposed to joint tenancy, when there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death.
A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
Another famous sports person from The Upper Peninsula of Michigan. Luge slider; silver medallist in 1998 winter Olympics; 2002 winter Olympics participant; lives in Marquette, MI.
A legal document evidencing a person’s right to or ownership of a property.
A company that specializes in examining and insuring titles to real estate.
An insurance policy that protects a lender’s (lender’s policy) or owner’s (owner’s policy) interest in real property from assorted types of unexpected or fraudulent claims of ownership. In the state of Michigan it is customary for the buyer to pay for the buyer’s policy and the seller to pay for the owner’s policy.
Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of a property. Title insurance is required every time a home resells.
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Transfer of ownership
Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property “subject to” the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.
State or local tax payable when title passes from one owner to another.
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury’s daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
This architecture style was popular in the 1920s and 1930s and continues to be a mainstay in suburbs across the United States. The defining characteristics are half-timbering on bay windows and upper floors, and facades that are dominated by one or more steeply pitched cross gables. Patterned brick or stone walls are common, as are rounded doorways, multi-paned casement windows, and large stone chimneys. A subtype of the Tudor Revival style is the Cotswold Cottage. With a sloping roof and a massive chimney at the front, a Cotswold Cottage may remind you of a picturesque storybook home.
An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
Two- to four-family property
A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed. Fannie Mae and Freddie Mac will consider two to four family properties for residential mortgages. Anything over four units usually requires a commercial loan.
A fiduciary that holds or controls property for the benefit of another.
Upper Peninsula of Michigan
The Upper Peninsula of Michigan is the northern of the two major land masses that comprise theU.S. state of Michigan. It is commonly referred to simply as the Upper Peninsula, the U.P., or Upper Michigan. It is bounded on the north by Lake Superior, on the east by St. Mary’s River, on the south byLake Michigan and Lake Huron, and on the west by Wisconsin. The Upper Peninsula contains almost one-third of the land area of Michigan but just 3% of the total population. Residents are frequently called Yoopers (derived from “U.P.-ers”), and have a strong regional identity. The peninsula’s largest cities are Marquette, Escanaba, Sault Ste Marie, Menominee, and Iron Mountain.
An illegal amount of interest charged in excess of the legal rate established by law.
Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.
Veterans Administration (VA)
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.
Victorian architecture dates from the second half of the 19th century, when America was exploring new approaches to building and design. Advancements in machine technology meant that Victorian-era builders could easily incorporate mass-produced ornamentation such as brackets, spindles, and patterned shingles. The last true Victorians were constructed in the early 1900s, but contemporary builders often borrow Victorian ideas, designing eclectic “neo-Victorians.” These homes combine modern materials with 19th century details, such as curved towers and spindled porches. A number of Victorian styles are recreated on the fanciful “Main Street” at Disney theme parks in Florida, California, and Europe.
A waiver is defined as a voluntary relinquishment or surrender of some right or privilege. There may be a temporary payment waiver available to borrowers who can document financial hardship due to an accident or poor health.
A walk-through is the final inspection that the buyer makes on a home to identify problems that may need to be corrected before closing. Typically, home buyers will plan to make a final walk-through just prior to closing, but after the previous owners have moved out. This is to confirm that the home is in the same condition as the day the purchase agreement was signed. During the final walk-through, you want to make sure the seller has followed through with any repairs indicated in the sale agreement, and that everything the seller was to remove and/or leave behind was removed or left behind.
Great windows are a powerful selling point. Windows bring light and air to an interior space and provide a view of the outdoor scenery. In older houses, windows may have just one layer of glass per pane, which is called single glazing. More contemporary and energy efficient windows have two layers of glass per pane, or double glazing. Low-emission glass, referred to as “Low-E” glass, has a special coating that allows light to enter a room but prevents heat from escaping; this is used to conserve energy.
Bay windows project from the side of a house, adding light and extra square footage to a room. The area inside a bay window creates a cozy nook well-suited for a window seat or a dining area.
Bow windows project from the side of a building like bay windows, only with a curved shape. It’s typically more expensive to build a bow window than a bay window.
Box BayBox bay windows project from the side of a house. They have a square shape with 90-degree angles at the corners. The shape of the window creates a shelf that’s ideal for added space in front of a kitchen sink or a desk.
Casement windows hinge on one side of the window frame so they open like a door. These are widely used in both traditional and contemporary design. Casement windows are typical of the Tudor style of architecture and are particularly convenient over a kitchen sink where it’s easier to open a window with a hand crank than to lean over a countertop and push up.
Double-hung windows have two sashes that slide up and down vertically. Early double hung windows had many panes of glass per sash and were called “12 over 12,” meaning 12 panes per sash. This is a common type of window that is quite versatile, as you can open it a little or a lot from either the top or the bottom.
Oriel windows project from the side of a building, like a bay window, but are located on the second floor or higher and supported by brackets or columns. Oriel windows bring added light and space into a room and have been used in many styles of architecture.
Paired windows are two windows next to each other often times under an arch. The support between the windows is called a mullion.
Palladian windows are named after the 16th century Italian architect Andrea Palladio, who used this window design in developing what is known as the Palladian style of architecture. This window will be a focal point in a room and has been widely used in a variety of traditional architectural styles.
Ribbon windows are a row of windows separated by vertical posts, called mullions. Ribbon windows can be used up high on a wall to bring added light to a room. Windows installed near the ceiling like this are called clerestory windows
Wire Transfer Fee
On occasion, lenders will transmit money via the inter-bank wire transfer system to the title insurance company conducting your closing. From time to time there is a wait period for the wire to come over. This is inconvenient but not uncommon. The wire is expected to and usually does arrive by the close of the business day in which the home closes. Wire transfer fees are common closing costs to buyers and sellers for incoming or outgoing funds.
Zoning Ordinance or Zoning Regulation
A zoning ordinance is a local law that establishes building codes and usage regulations for properties in a specified area. A zoning ordinance is primarily designed to keep incompatible entities a distance apart, preventing new development from harming existing residential neighborhoods or business districts. Local governments usually control zoning ordinance.