PITI
Principal,
interest, taxes, and insurance. Also called
monthly housing expense.
Points
See
Discount Points
Power of Attorney
A
legal document authorizing one person to
act on behalf of another.
Prepaids
Expenses
necessary to create an escrow account or
to adjust the seller's existing escrow
account. Can include taxes, hazard insurance,
private mortgage insurance and special
assessments.
Prepayment
A
privilege in a mortgage permitting the
borrower to make payments in advance of
their due date.
Prepayment Penalty
Money
charged for an early repayment of debt.
Prepayment penalties are allowed in some
form (but not necessarily imposed) in 36
states and the District of Columbia.
Principal
The
amount of debt, not counting interest,
left on a loan.
Private Mortgage
Insurance (PMI)
In
the event that you do not have a 20 percent
down payment, lenders will allow a smaller
down payment - as low as 5 percent in some
cases. With the smaller down payment loans,
however, borrowers are usually required
to carry private mortgage insurance.
Real Estate Settlement
Procedures Act (RESPA)
RESPA
is a federal law that allows consumers
to review information on known or estimated
settlement costs once after application
and once prior to or at settlement. The
law requires lenders to furnish information
after application only.
Realtor
A
real estate broker or an associate holding
active membership in a local real estate
board affiliated with the National Association
of Realtors.
Recording Fees
Money
paid to the lender for recording a home
sale with the local authorities, thereby
making it part of the public records.
Renegotiable Rate
Mortgage (RRM)
A
loan in which the interest rate is adjusted
periodically. See Adjustable Rate Mortgage.
Rescission
The
cancellation of a contract. With respect
to mortgage refinancing, the law that gives
the homeowner three days to cancel a contract
in some cases, once it is signed, if the
transaction uses equity in the home as
security.
Reverse Annuity
Mortgage (RAM)
A
form of mortgage in which the lender makes
periodic payments to the borrower using
the borrower's equity in the home as security.
Servicing
All
the steps and operations a lender performs
to keep a loan in good standing, such as
collection of payments, payment of taxes,
insurance, property inspections and the
like.
Settlement
See
Closing.
Settlement Costs
See
Closing Costs.
Shared Appreciation
Mortgage (SAM)
A
mortgage in which a borrower receives a
below-market interest rate in return for
which a lender (or another investor such
as a family member or other partner) receives
a portion of the future appreciation in
the value of the property. May also apply
to mortgages where the borrower shares
the monthly principal and interest payments
with another party in exchange for a part
of the appreciation.
Survey
A
measurement of land, prepared by a registers
land surveyor, showing the location of
the land with reference to known points,
its dimensions, and the location and dimensions
of any building.
Term Mortgage
See
Balloon Payment Mortgage.
Title
A
document that gives evidence of an individual's
ownership of property.
Title Insurance
A
policy, usually issued by a Title Insurance
company, which insures a homebuyer against
errors in the title search. The cost of
the policy is usually a function of the
value of the property, and is often borne
by the purchaser and/or seller.
Title Search
An
examination of municipal records to determine
the legal ownership of property. Usually
is performed by a title company.
Truth-in-Lending
A
federal law requiring disclosure of the Annual
Percentage Rate to homebuyers shortly
after they apply for the loan.
Underwriting
The
decision whether to make a loan to a potential
homebuyer based on credit, employment,
assets, and other factors and the matching
of this risk to an appropriate rate and
term or loan amount.
Variable Rate
Mortgage (VRM)
See
Adjustable Rate Mortgage.
Verification of
Deposit (VOD)
A
document signed by the borrower's financial
institution verifying the status and balance
of his/her financial accounts.
Verification of
Employment
A
document signed by the borrower's employer
verifying his/her position and salary.
|
