Personal Finance Chapter 9

Appraisal

an estimate of the current value of the property, can provide a good indication of the price you should set.

Buy down

an interest rate subsidy from a home builder or a real estate developer that reduces the mortgage payments during the first few years of the loan.

Motrgage brokers

can help home buyers obtain financing

Prefabricated home

components built in a factory and then assembled at the housing site.

Balloon Mortgage

fixed monthly payments and a very large final payment (after 3, 5, or 7 years.)

Adjustable - rate morgage

has an interest rate that increases or decreases during the life of the loan.

The Real Estate Settlement Procedures Act

helps home buyers understand the closing process and closing costs.

Lifestyle

how you spend your time and money.

Payment cap

keeps the payments on an adjustable-rate mortgage at a given level or limits the amount to which those payments can rise.

Escrow account

money usually deposited with the lending institution, for the payment of property taxes and homeowner's insurance.

Refinance

obtain a new mortgage at a lower rate.

Title Insurance

one closing cost. Before being purchased they make sure the property is free of claims such as unpaid real estate taxes. During the mortgage term, it protects the buyer and lender from loss.

Points

prepaid interest charged by the lender.

Reverse Mortgage

provide elderly homeowners with tax-free income in the form of a loan that is paid back (with interest) when the home is sold or the homeowner dies.

buyer agents

represent the buyer's interest, and may be paid by either the seller or the buyer.

Homeowners Protection Act

requires that a PMI policy be terminated automatically when a homeowner's equity reaches 22 percent of the property value at the time the mortgage was executed.

zoning laws

restrictions on how property in an area can be used.

Rate Cap

restricts the amount by which the interest can increase or decrease during the ARM term.

Mobile homes (second type of Manufactured home)

scary

amortization

the balance owed is reduced with each payment

deed

the document that transfers ownership of property from one party to anther.

Equity

the home value less the amount owed on the mortgage

Conventional Mortgage

usually has equal payments over 15, 20, or 30 years based on a fixed interest rate.

purchase agrement

A contract that states your legal offer to purchase the home

Cooperative housing

A form of housing in which a building containing a number of housing units is owned by a nonprofit organization whose members rent the units.

Manufactured homes

A housing unit that is fully or partially assembling in a factory before being moved to the living site.

Lease

A legal document that defines the conditions of a rental agreement.

Mortgage

A long term loan on a specific piece of property such as a home or other real estate.

Earnest Money

A portion of the home price that they buyer deposits as evidence of good faith to indicate a serious purchase offer.

Condominium

An individually owned housing unit in a building with several such units.

Closing Costs

Charges paid when a real estate transaction is completed

Security Deposit

Given before you move in to cover any possible damages you may cause.

PMI

Private mortgage insurance, protects the lender from financial loss due to default.

dual agent

a real estate agent working for both the buyer and seller

second mortgage

allows a homeowner to borrow on the paid-up value of the property.

Subletting

allows you to have another person take over rent payments and live in the rental unit.