An examination of the physical structure, systems and condition of a home.

Insurance that protects the homeowner from "casualty" (losses or damage to the home or personal property) and from "liability" (damages to other people or property). Homeowners insurance is required by the lender and is usually included in the monthly mortgage payment.

Money source for a lender.

A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

An agreement between a homeowner and a licensed real estate broker that authorizes the broker to market the property for sale during a given time period.

A fee charged by the lender for evaluating, preparing and submitting a proposed mortgage loan.

A commitment made by a lender to make a mortgage loan at a specified rate, pending loan approval, on or prior to a specified date.

The highest price a buyer will pay for a property and the lowest price the seller will accept.

A lien on real estate given by the buyer to secure repayment of money borrowed to purchase the real estate.

An individual or company that obtains mortgages for others by finding lending institutions, insurance companies, or private sources to lend the money; may also handle collections and disbursements.

A policy that provides protection for the lender in case of default and/or which guarantees repayment of the loan if the borrower becomes disabled or dies.

Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amortization is that the homebuyers ends up owing more than the original amount of the loan.

Also known as jumbo loans. Loans that are above the loan limits set by Fannie Mae and Freddie Mac.

A formal document in which a buyer proposes to purchase a property for a specified amount and under certain conditions. Acceptance by the seller creates a contract binding on both parties, subject to any contingencies.

A purchase where the seller provides all or part of the financing for the buyer.

The residence that the owner physically occupies and uses as his or her home.

Payment Adjustment Period - The length of time, on an Adjustable Rate Mortgage (ARM) before the member's rate/payment will be reviewed and adjusted according to the market. For example: the first adjustment period for a 5/1 ARM is after five years. All subsequent adjustments are made every year thereafter.

One of the parties to a transaction. For example, the buyer and seller are principals in the purchase of real property.

Private mortgage insurance or PMI Insurance: Insurance issued to a lender to protect it against loss on a defaulted mortgage loan. Its use is usually limited to loans with high loan-to-value ratios (generally in excess of 80%). The borrower pays the premiums.

The unpaid principal balance, accrued interest, outstanding late charges, legal fees, and all other amounts necessary to pay off the lender in full.

Stands for principal, interest, taxes and insurance - the components of a monthly mortgage payment.

The process of determining how large a loan a prospective home buyer can qualify for; this procedure is done before actually applying for the loan.

Charge levied by the lender for paying off a mortgage loan before its maturity date.

A written agreement between a buyer and seller of real property, setting forth the price and terms of sale.

A legal document requiring the buyer to buy and the seller to sell, under specified terms and conditions
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A Realtor is a real estate professional who is a member of the National Association of Realtors and subscribes to its strict Code of Ethics.

A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.

The process of obtaining a new mortgage, usually at a lower rate, to repay and replace an existing mortgage.

An owner's promise to let someone make the first offer on a property, or to match the amount offered by another party

An agent who represents the seller and owes fiduciary duties to the seller. Usually referred to as the listing agent, this agent is authorized by a property owner to find a buyer or a tenant for the property.

A written agreement between buyer and seller stating terms and conditions of a sale or exchange of property.

An additional mortgage behind the first mortgage on a property. The rights of the second mortgage holder are subordinate to the rights of the first mortgage holder.

The buying and selling of first mortgages of trust deeds by banks, insurance companies, government agencies, and other lenders.

The length of time you are given to repay a loan.

The legal document evidencing a person's right to or ownership of a property.

Insurance that protects the buyer against any future claims of ownership of a property. There is also a title insurance policy that protects the lender from the same issue. (aka - Owner's title policy, Lender's title policy, ALTA)

The process of checking public records to ensure that the seller is the legal owner and can transfer the property and that there are no liens or claims against the property. If there are, the title company discloses them and before ownership is transferred those claims have to be settled in order for title insurance to be issued.

Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.

State or local tax payable when title passes from one owner to another.

A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.

The process of evaluating a loan application to determine the risk involved for the lender. It involves an analysis of the borrower's ability and willingness to repay the debt, and the value of the property.