A written history of all the transactions related to the title for a specific tract of land. An abstract of title covers the period from the original source of title (often the original land grant from the Ghana government to an individual) to the present time and summarizes all subsequent documents that have been recorded against that tract.
A buyer’s or seller’s agreement to enter into a contract and be bound by the terms of the offer.
A payment made by a borrower of more than the scheduled principal amount due in order to reduce the outstanding balance on the loan, to save on interest over the life of the loan and/or pay off the loan early.
A mortgage in which your interest rate and monthly payments may change periodically during the life of the loan, based on the fluctuation of an index. Lenders may charge a lower interest rate for the initial period of the loan. Most ARMs have a rate cap that limits the amount the interest rate can change, both in an adjustment period and over the life of the loan. Also called a variable-rate mortgage.
A limit to how much a variable interest rate can increase or decrease in a single adjustment period.
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
The period of time between adjustment dates for an adjustable-rate mortgage (ARM).
A preliminary analysis of a borrower’s ability to afford the purchase of a home that takes into consideration factors such as income, liabilities and available funds, as well as the type of home loan, the likely taxes and insurance for the home and the estimated closing costs.
The gradual reduction in the principal amount owed on a debt. During the earlier years of the loan, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.
A timetable or schedule that gives you a breakdown of your monthly payments into principal and interest. You can use this schedule to figure out the amount of principal you’ll be repaying during your mortgage term.
The amount of time required to amortize (pay off) the loan, expressed in months. For example, for a 15-year fixed-rate mortgage, the amortization term is 180 months.
A limit on how much the variable interest rate on a loan can increase or decrease each year.
The annual cost of a loan to a borrower. Like an interest rate, the APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees (such as mortgage insurance, most closing costs, discounts points and loan origination fees) to reflect the total cost of the loan. Since all lenders must follow the same rules to ensure the accuracy of the APR, borrowers can use the APR as a good basis for comparing the costs of similar credit transactions.
Nonrefundable fees paid when you apply for your loan. These fees may include charges for items such as, for example, a credit profile or a property appraisal.
A contingency in a sales contract that the property must appraise at a value that is equal to or greater than your offering price.
An informed estimate of the value of a property. When made in connection with an application for a loan secured by a home, a professional appraiser usually performs the appraisal.
An increase in the value of property over time. Important factors in a home’s appreciation are its location, condition and the selling price of similar homes in the area. Appreciation increases the amount of equity, which may also increase the amount you can borrow for a home equity line of credit.
The number of months that it will take to pay off your loan. The approved term is used to determine the payment amount, repayment schedule and total interest paid over the life of the loan.
The number of months that it will take to pay off your loan. The approved term is used to determine the payment amount, repayment schedule and total interest paid over the life of the loan.
The value of a property, established by a public tax assessor. The assessed value is used to determine property taxes.
The method of transferring a right or contract, such as the terms of a loan, from one person to another.
A loan that may be transferred to someone else while maintaining the same terms. For example, if you have an assumable loan (not all loans are assumable) and you sell your home, you may be able to transfer that loan to the new owner with no change in the interest rate and repayment schedule, though you may need to pay a fee in order to do so.
A loan that provides you with lower-than-usual monthly payments for a set period of time followed by a payment larger than usual at the end of your loan repayment period. While a balloon loan may lower your monthly payments it can also mean you make higher interest payments over the life of the loan.
An interest rate that is used as a benchmark, or index, for pricing variable-rate loans such as adjustable-rate mortgages, auto loans and credit cards.
An amount equal to 1/100th of a percentage point. For example, a fee calculated as 50 basis points of GHS200,000 would be 0.50% or GHS1,000.
The point at which total income equals total expenses. Also used in connection with decisions related to purchasing discount points on a mortgage. Calculating the break even point will identify how many months it will take to recoup the costs associated with paying for the discount point amount under consideration. In other words, if $3,600 is paid toward discount points to reduce the interest rate and the reduced rate would decrease the monthly mortgage payment by $100, it would take 3 years to break even on the choice to pay the discount point amount.
A type of mortgage financing between the termination of one loan and the start of another loan. For example, a bridge loan might be taken out by a borrower and secured by that borrower’s present home so that the closing on a new house can take place before the present home is sold.
A third party who arranges funding or negotiates a contract between parties, but does not lend the money. DCANS Mortgage is a direct lender and not a broker.
Fees charged by a real estate broker or a mortgage broker for providing assistance in a real estate transaction.
The lump-sum prepayment of all or a portion of your mortgage interest by a lender or homebuilder in order to lower your monthly mortgage payment, typically for a period of 1-3 years.
A provision in a loan that gives the lender the right to accelerate the debt and require full payment of the loan immediately at the end of a specified period or for specified reason.
A limit on how much a variable interest rate can increase. Many adjustable-rate mortgages have both annual (or semiannual) rate caps and lifetime caps. They limit the amount your payments can increase in an adjustment period and over the life of the loan.
Borrower funds that are available to cover down payment and closing costs. If lending guidelines require the borrower to have cash reserves at the time the loan closes or that the down payment come from specified sources, the borrower’s cash available for closing does not include cash reserves or money from those specified sources.
The amount a homebuyer needs in cash at the closing of the loan. This typically, this includes down payment and closing costs.
A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement or any other purpose.
The maximum interest rate that can accrue on a variable rate loan or adjustable-rate mortgage (ARM).
A statement provided by an abstract company, title company or attorney stating who holds title to real estate based on the public record.
The history of all of the documents affecting title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Titles that are marketable and are free of liens or disputed legal questions as to ownership of the property.
The Close step is the date you will sign and execute your new loan documents.
A status of closed indicates that no further action is required on this item.
The time and place, at which all documents for your loan are signed, dated, and notarized.
Closing costs, also known as settlement costs, are the costs incurred when obtaining your loan. For new purchases, these costs also include ownership transfer of any collateral property from the seller to you. Costs may include and are not limited to: attorney's fees, preparation and title search fees, discount points, appraisal fees, title insurance, and credit report charges. They are typically about 3% - 5% of your loan amount, and are often paid at closing or just before your loan closes.
Funds often needed to close a loan, such as homeowners insurance, property taxes, and escrow impound account funds, aren't included in closing costs and are considered separate. You should be prepared to pay these costs before your loan closes.
The date you will sign your new loan documents.
An accounting of funds given to both buyer and seller before real estate is sold.
An additional person who assumes equal responsibility for repayment of a loan and is fully obligated under the terms of the loan. This person also has equal rights to the proceeds of the loan.
A second person who signs your loan and assumes equal responsibility for payment of the loan but receives no benefit from the loan proceeds.
A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.
An asset, such as a car or a home, used for securing the repayment of a loan. The borrower risks losing the asset if the loan is not repaid.
The efforts used to bring a delinquent loan current and, if necessary, to file legal papers and notices to proceed with foreclosure.
A combination loan pairs a conforming first mortgage with a home equity second mortgage for up to 80% of the property's value in a single application with 1 down payment. Combination loans may help you avoid the higher rates of a jumbo first mortgage. Combination loans are made up of 3 parts: 70% first mortgage, 10% home equity second mortgage and 20% down payment.
The outstanding balance of all mortgages held on a property. Used to determine the total available equity when considering the appraised value of the property less total combined or outstanding liens.
The ratio between the unpaid principal amount of your first mortgage, plus your credit limit if you have a home equity line of credit, and the appraised value of your home. Expressed as a percentage.
Interest paid on the principal balance and on the accrued and unpaid interest.
A short-term interim loan for financing the cost of home construction. The lender makes payments to the builder at periodic intervals as the work progresses.
A specified condition in a sales contract that must be satisfied before the home sale can occur. When buying a home, the 2 most common contingencies are that the house must pass inspection and that the borrower must be approved for a loan.
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate loan at specified times during the life of the loan.
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate loan at specified times during the life of the loan.
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate loan under specified conditions.
To transfer or deliver title to property from one to another by deed or contract. When an item becomes a part of the transfer of title, it is conveyed with the property.
A promise in a mortgage or deed that requires or prevents certain uses of the property that, if violated, may result in loss or foreclosure (or repossession) of the property.
An organisation that gathers, records, updates and stores financial and public records of individuals (and businesses) who have been granted credit and provides this information to lenders and other authorized users for a fee.
The maximum amount you can borrow under a line of credit.
A service that offers the benefit of early detection of unauthorized activity in order to limit the amount of financial damage that a person may suffer at the hands of an identity thief.
A record of an individual’s debts and payment habits. It helps a lender determine whether or not a potential borrower is a good business risk.
The likelihood that a borrower will pay their obligations as agreed. Borrowers who pay as agreed pose less credit risk to lenders.
A number that rates the quality of an individual’s credit. The number helps predict the relative likelihood that a person will repay a credit obligation, such as a mortgage loan. In general, the higher your credit score, the more likely you are to be approved for and to pay a lower interest rate on a loan.
A person or business from whom you borrow or to whom you owe money.
The likely ability of a borrower to repay debt.
Total interest accrued.
A payment that reduces the principal balance of a loan.
A single loan to pay off multiple debts, usually over a longer term. This is a popular use for a home equity line of credit.
Your total monthly debt payments (for example: loans, credit cards and court-ordered payments) divided by your gross monthly income before taxes and expressed as a percentage.
The document used in some states instead of a mortgage; title is vested in a trustee to secure repayment of the loan.
Failure to make mortgage payments on time or to meet other terms of a loan. Default can lead to foreclosure (repossession).
Failure to make payments on time.
The amount of cash you pay toward the purchase of your home to make up the difference between the purchase price and your mortgage loan. Down payments often range between 5% and 20% of the sales price depending on many factors, including your loan, your lender and your credit history.
The process of obtaining an advance against your available line of credit.
The period during which a borrower can obtain advances (also called draws) from an available line of credit. At the end of the draw period, borrowers may be able to renew the credit line or be required to pay the outstanding balance in full or in monthly installments.
A provision in a mortgage home loan that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the loan.
A deposit made toward a down payment as a sign of good faith. The deposit is typically made when a purchase agreement is signed. So for example, if the maximum we can finance for you for a GHS100,000 house is GHS80,000 (80% LTV), you have to pay GHS20,000 out of pocket on the day of signing the paperwork for move-in.
Any lien or liability attached to a property that affects or limits the title to that property, for example unpaid taxes, mortgages and leases.
The difference between the fair market value (appraised value) of your home and your outstanding mortgage balances and other liens.
Funds deposited with a third party, to be held until a specific date is reached and/or a specific condition is met.
An escrow account is created at no cost to you to hold money to pay your homeowners insurance and property taxes on your behalf. We obtain information to determine the yearly insurance and tax amounts due on the property and include those amounts in your contractual payments to eliminate a large one-time expense to you. Escrow funds received as part of contractual payments are placed into an escrow account. When an insurance or property tax bill is received, escrow funds collected over time in the escrow account are used to pay these bills. Escrow accounts can also be referred to as Impound Accounts.
An escrow analysis is performed periodically (generally once per year or more often due to specific events, such as a loan modification) and compares the amounts collected and paid into the escrow account with the actual charges paid out of the escrow account for taxes and insurance billed.
The analysis also projects what will be paid out of escrow over the next year and calculates the escrow payment amounts that will be needed to fund your escrow account for the upcoming year.
Typically refers to an account set up by a lender in which funds to pay for real estate taxes and homeowners insurance are deposited as part of the borrower's monthly mortgage payment, then disbursed as tax and insurance payments come due.
An escrow overage will occur when your escrow account balance exceeds the required minimum balance for the account. These escrow overages typically happen when there is a decrease in your property taxes or insurance premiums. When this happens, you may receive an escrow overage refund check or funds may be applied towards a future escrow balance.
An escrow shortage will occur when the balance in your escrow account drops below the required minimum balance. These escrow shortages typically happen when there is an increase in your property taxes or insurance premiums. When this happens, you may need to make up the shortage through an increase in your contractual payment or you may elect to make a separate payment into the escrow account.
When you pay more than your contractual payment, the additional amount that is paid, can either pay your next month's contractual payment or reduce the unpaid principal balance of your mortgage after satisfying any other amounts that are due (for example, outstanding fees, etc.). This may reduce the interest assessed in the future.
The likely selling price of a home. The fair market value is usually determined by an appraisal.
A mortgage that is the senior lien against a property.
A home loan with a predetermined fixed interest rate for the entire term of the loan.
A loan rate for which the lender has not "locked" or committed to lend at a particular interest rate. The floating interest rate and any discount points are not guaranteed. Your actual interest rate and discount points will be based on the market price available for your loan product at the time your interest rate is locked.
A determination by a reputable source about whether property is located within a special flood hazard zone.
Insurance that protects against loss due to floods. When available, this type of insurance is required by law when a property is located within a special flood hazard zone.
A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. See our Repayment Assistance Programme.
A legal procedure in which property securing a defaulted loan is sold by the lender in order to repay a borrower’s loan. The amount paid by a buyer at the foreclosure may not be enough to fully repay the loan and the borrower may continue to owe the lender the difference.
The loss of money, property, rights or privileges due to a breach of legal obligation.
The date on which the proceeds from a loan are available to or disbursed for the benefit of the borrowers.
A line of credit secured by the borrower's residence. This is often used for home improvements, debt consolidation or other major expenses.
Insurance to protect your home against damage from fire, hurricanes and other catastrophes. Usually, homeowners insurance also covers you against theft and vandalism, as well as personal liability in case someone is hurt or injured on your property. A lender will likely require you to name it as a payee under the insurance if you need to make a claim. Also called hazard insurance.
The collection and placement of monies by a lender into an account in order to pay the borrower’s property taxes and insurance premiums when they become due.
Regular income from earnings, commissions, investments, rental payments or other sources.
Real estate developed or improved to produce income.
The increase in price of consumer goods, usually expressed as a percentage over a specific period of time.
The process of obtaining an advance against available credit under your line of credit.
The proceeds of the home equity line of credit or construction loan up to an amount the borrower is allowed to request at closing.
The starting interest rate. Some people call this the “teaser rate,” because it gives you low interest and low monthly payments at the beginning, but may adjust up at the next adjustment period (it will usually adjust even if the index doesn’t go up, since it’s lower than index plus margin for the initial period).
A request for your credit report, made by you or a company considering you for an offer of credit.
A loan that is repaid in equal payments, known as installments.
A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.
A document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.
A mortgage that is protected by an insurer in case of default. The insurance protects the lender (not the borrower) if a borrower defaults on the loan.
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.
The annual cost of a loan to a borrower, usually expressed as a percentage. The interest rate does not include fees charged for the loan.
A limit on how much the variable interest rate can increase at any one time. Many home loans have both annual (or semiannual) caps and lifetime caps, which limit the amount your payments can increase in an adjustment period and over the life of the loan. Many caps allow a rate increase of 2-5% over the starting interest rate in an adjustment period (for example, a starting rate of 5% could increase to 7% or, depending on the loan guidelines, to as much as 10%). A lender’s lifetime interest rate cap is typically 6% over the life of the loan.
A loan for which you pay only the interest due for a portion of the loan term. This lowers your periodic payment but does not decrease your principal balance on the loan. Making interest-only payments will result in larger payments being due at the end of the interest-only payment period.
Property that is purchased to generate rental income, or to be sold once it has appreciated in value.
A decree by a court of law that one person is indebted to another for a specified amount. In some states, the court may place a lien against the debtor’s real property as collateral for payment of the judgment to the creditor.
A person’s debts or financial obligations. Liabilities include long-term and short-term debt, as well as potential losses from legal claims.
The legal claim of a creditor on a borrower’s property, to be used as security for a debt.
An individual or entity that has placed a lien on real property.
A limit on how much the variable interest rate can increase during the term of a loan.
An agreement by a lender to extend credit up to a maximum amount for a specified time. In a home equity line of credit, the line of credit is secured by the borrower’s home.
A formal notification from a lender stating that the borrower’s loan has been conditionally approved and specifying the terms under which the lender agrees to make the loan.
Changes to one or more of the terms of a loan.
The process by which a mortgage lender makes a home loan and records a mortgage against the borrower’s real property as security for repayment of the loan.
The ratio between the unpaid principal amount of your loan, or your credit limit in the case of a line of credit, and the appraised value of your collateral. Expressed as a percentage. For example, if you have an GHS80,000 first mortgage on a property with an appraised value of GHS100,000, the LTV is 80% (GHS80,000 / GHS100,000 = 80%).
The amount of time prior to closing that you can secure an interest rate for your loan. Lock periods typically range from 30 days to more than 90 days. Generally, the longer the lock period, the more you pay in points or interest.
A structure that has been partially or entirely constructed at another location and moved onto the property (on a permanent foundation). A manufactured home may or may not be a mobile home or pre-fab homes.
The number of percentage points the lender adds to or subtracts from the index rate to determine the interest rate adjustments. The margin is constant throughout the life of the mortgage and is specified in the promissory note.
The day on which the outstanding principal, interest and fees on a loan must all be repaid.
A type of residence that’s built upon a wheeled chassis and can be transported from site to site.
A factory-built home that’s erected on-site, with the appearance and characteristics of a site-built residence.
A legal document giving a lender a lien on real estate to secure repayment of a loan. Mortgage loans generally run from 10 to 30 years, after which the loan is required to be paid off. Also called deed of trust and/or security deed.
For conventional loans, insurance that protects the lender if you default on your loan. If your down payment is less than 20%, most lenders will require you to pay mortgage insurance. Also called private mortgage insurance (PMI).
A residential property with 2 to 4 individual housing units (duplex, triplex or quadplex).
The result when monthly payments don’t cover all the interest due on the loan. The unpaid interest is added to the unpaid balance, which means the homebuyer will owe increasingly more than the original amount of the loan.
The sum of the existing credit line and the amount of additional credit requested.
A loan in which the borrower is not required to pay cash out-of-pocket at closing for the normal closing costs. The lender typically includes the closing costs in the principal balance or charges a higher interest rate than for a loan with closing costs to cover the advance of closing costs.
Properties in which the owner does not live.
A written agreement in which the signer promises to pay to a named person or company a specific sum of money at a specified date or on demand.
The interest rate stated in a mortgage note.
A formal written notice to a borrower that a default has occurred and that legal action may be taken.
A type of adjustable-rate mortgage (ARM) that offers the borrower a choice of 4 monthly payment options to help provide financial flexibility to manage payments in rising rate markets and take advantage of falling interest rates.
The date that the proceeds of a loan are disbursed.
The date on which a loan is funded or disbursed.
A fee imposed by a lender to cover certain processing expenses in connection with making a mortgage loan. Usually a percentage of the amount loaned (often 1% or more). The origination fee is stated in the form of points.
A property purchase transaction in which the property seller provides all or part of the financing. All our mortgage loans are structured as owner financing type of mortgage, which does not require any needless external regulation.
A property that the owner occupies as a principal residence.
A limit on how much a monthly payment can increase at any one time. Some adjustable-rate mortgages have payment caps in addition to annual (or semi-annual) interest rate caps and lifetime interest rate caps. Payment caps don’t limit the amount of interest charged and may cause negative amortization.
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date. The borrower is notified 30 days before the new rate and payment take effect.
Payment of the outstanding balance of a loan in full. Also, the amount required to pay the outstanding balance in full.
An acronym for principal, interest, taxes and insurance. Also referred to as the monthly housing expense.
A lender’s conditional agreement to lend a specific amount of money to a homebuyer under a specified set of terms.
A formal or informal arrangement between a lender and a borrower where the lender agrees to offer special terms (such as a reduction in the rate or closing costs) for a future refinancing as an inducement for the borrower to enter into the original mortgage transaction.
The expenses that are usually paid in advance, such as escrows for taxes and insurance (which are paid at closing).
Interest collected at closing of a first mortgage, covering the period from the date of disbursement to the start of the next payment period.
An amount paid to reduce the principal balance of a loan before the principal is due.
A penalty assessed by some lenders if a loan is paid off before the specified term. This is a lump-sum amount due and payable in addition to the loan balance, and is usually limited to the early years of a mortgage.
The process of providing financial and other information (such as employment history and proposed collateral) by a prospective borrower in order for the lender to preliminarily estimate how much the borrower may obtain for the purchase of a home. A prequalification is not a commitment to lend.
The interest rate that banks (or non-banks if they like) charge their best customers when lending them money.
The principal is the amount of money borrowed on a loan. The interest is the charge paid for borrowing money. Principal and interest account for the majority of your mortgage payment, which may also include escrow payments for property taxes, homeowners insurance, mortgage insurance and any other costs that are paid monthly, or fees that may come due.
The unpaid portion of the loan amount. The principal balance does not include interest or any other charges.
Portion of your monthly payment that reduces the principal balance of a home loan. This term also refers to prepayments you make to the principal balance.
A fee charged to cover the administrative costs of processing a loan request.
A written promise to repay a specified amount over a specified period of time.
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Calculations that are used to determine whether a borrower can qualify for a mortgage. They consist of 2 separate calculations: a housing expense (PITI) as a percent of income and total debt obligations (DTI) as a percent of income.
The amount of interest on a loan, expressed as a percentage.
A commitment issued by a lender to a borrower guaranteeing a specific interest rate for a specified period of time. Rate lock periods are for a fixed number of days, and rate lock expiration occurs when that period has passed, subjecting the interest rate on the loan to market fluctuations since the date of the initial rate lock. When a rate lock expires, you will need to contact your lending specialist to establish a new rate lock prior to closing your loan.
A commitment issued by a lender to a borrower guaranteeing a specific interest rate for a specified period of time. Rate lock periods are for a fixed number of days, and rate lock expiration occurs when that period has passed, subjecting the interest rate on the loan to market fluctuations since the date of the initial rate lock. When a rate lock expires, you will need to contact your lending specialist to establish a new rate lock prior to closing your loan.
A provision in a fixed-rate mortgage that gives the borrower the option to reduce the interest rate at a later date without having to refinance. Exercising a rate reduction option typically does not require requalifying for the loan.
To take the remaining balance of a mortgage loan and establish a new period of amortization after which the principal balance will be zero. Typically used after the end of the term of an interest-only loan.
A charge for a public official (typically a Registrar of Deeds) noting in the public record the terms of a legal document affecting title to real property such as a deed, a security instrument, a satisfaction of mortgage or an extension of mortgage.
A charge for a public official (typically a Registrar of Deeds) noting in the public record the terms of a legal document affecting title to real property such as a deed, a security instrument, a satisfaction of mortgage or an extension of mortgage.
A charge for a public official (typically a Registrar of Deeds) noting in the public record the terms of a legal document affecting title to real property such as a deed, a security instrument, a satisfaction of mortgage or an extension of mortgage.
A method used to determine income when qualifying a borrower for a loan. Borrower(s) provide their income, however no verification documentation is typically required.
Paying off your existing loan with the proceeds from a new loan, generally using the same property as collateral, in order to take advantage of lower monthly payments, lower interest rates or save on financing costs.
The time you have to fully repay your outstanding balance, according to your payment terms. In a home equity line of credit, for example, the repayment period (typically 20 years) is the loan term that follows the draw period (typically 10 years).
The cancellation of a contract. In certain real estate-secured transactions that involve the refinance of a primary residence, applicants have 3 business days to cancel the transaction.
The amount of savings, separate from the down payment, that a homebuyer sets aside in case of unforeseen events or emergencies. During the loan approval process, many lenders require reserves (typically the equivalent of 2 monthly mortgage payments) to be verified.
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.
A property occupied part-time by a person in addition to his or her primary residence.
Loans for which the borrower gives the lender a lien on property such as an automobile, boat, other personal property or real estate that will serve as collateral for the loan.
The property that will be pledged as collateral for a loan. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
The property that will be pledged as collateral for a loan. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
The completion of a property’s sale or purchase, or the completion of all steps necessary to receive the proceeds of (and create an obligation to repay) a loan.
A person or entity that conducts the settlement to transfer title of the property and to close on the mortgage loan. May be an attorney, a title insurer, a title agent or an escrow agent.
A person or entity that conducts the settlement to transfer title of the property and to close on the mortgage loan. May be an attorney, a title insurer, a title agent or an escrow agent.
A commonly used alternative to a foreclosure (repossession). If a homeowner can no longer afford to make mortgage payments and their home is worth less than they owe, a short sale allows them to sell the home to pay off the mortgage. In a short sale, the lender agrees to accept an amount less than is actually owed on the loan, based on a showing of financial hardship.
The starting interest rate for an adjustable-rate mortgage (ARM) loan or variable-rate home equity line of credit. Also known as an initial rate or intro rate. It provides lower interest and lower monthly payments at the beginning but may adjust at the next adjustment period.
Any mortgage or other lien that has a priority lower than that of the first mortgage. The subordinate loan has a claim to payment in a foreclosure only after the first mortgage is paid.
The number of years it will take to pay off a loan. The loan term is used to determine the payment amount, repayment schedule and total interest paid over the life of the loan.
Fees charged for services rendered by parties other than the borrower or the lender. Such fees may include appraisal, credit report, title and flood certifications.
Written evidence of ownership in property.
The agency that will investigate a property’s title (or deed) for discrepancies or undiscovered liens and that will issue title insurance to the lender after the title is deemed clear.
Insurance that protects an interested party, either the owner or the lender, against issues that would affect legal ownership of the property.
An examination of records used to determine the legal ownership of property and all liens and encumbrances on it. Usually performed by a title company or attorney.
The fee that may be charged each time you draw on your credit line.
A fiduciary that holds or controls property for the benefit of another.
The person who approves or denies a home loan, based on the lender’s underwriting and approval criteria.
The lender’s process of deciding whether to make a loan to a potential borrower based on credit, employment, assets and other factors, and the matching of this risk to an appropriate rate, term and loan amount.
When we use the term Unpaid Principal Balance, we mean the amount you borrowed (which may include amounts that have been added to your principal balance in connection with loan modifications) over the history of the loan that has not yet been paid back. We may charge you interest each month on the Unpaid Principal Balance (or amount owed), according to the terms of your loan.
Typically used when referring to a loan or a line of credit (unsecured loan, unsecured line of credit) that is not backed by collateral.
Typically used when referring to a loan or a line of credit (unsecured loan, unsecured line of credit) that is not backed by collateral.
The costs you must pay when applying for a loan. Typically these include loan application fees. Some lenders require some of your closing costs also be paid when you apply.
A vacation home is a single-family property that the borrower occupies in addition to his or her primary residence. The property cannot be considered income-producing and must not be part of a mandatory rental pool, but occasionally may be rented to friends and relatives. When property is classified as a second home, rental income may not be used to qualify the applicant. A 2- to 4-unit property is not eligible for second home status. Also known as second home.
An interest rate that may fluctuate or change periodically, often in relation to an index such as the prime rate or other criteria. Payments may increase or decrease accordingly.
A final inspection shortly before settlement to make sure the property is in the same condition that it was at the time the offer contract was written.
An affordability analysis that is based on a what-if scenario. A what-if analysis is useful if you do not have complete data or if you want to explore the effect of various changes to your income, liabilities, or available funds or to the qualifying ratios or down payment expenses that are used in the analysis.
A transfer of money from one person’s bank to another person’s bank account, either domestically or internationally.
The report shows how much was paid in interest during the year, as well as the remaining mortgage loan balance at the end of the year. If the bank has an impound account for you, it will also show how much was paid and reserved in property taxes. If the bank (or non-bank lender) does not have a property tax impound account, then tax details are not displayed on the report.