Coldwell Banker King Thompson - Home Buyers Guidebook - 2017 | Page 21

GLOSSARY OF REAL ESTATE TERMS
Understanding the Language
CRS
Certified Residential Specialist. This
designation is recognized industry-wide
as the symbol of excellence in residential
sales and is the highest designation awarded
in the residential real estate sales industry.
Debt Ratios
The comparison of a buyer’s housing cost
to his or her gross or net effective income,
and the comparison of a buyer’s long-term
debt to his or her gross or net effective
income. The first ratio is housing ratio; the
second ratio is total debt ratio.
Due-On-Sale Clause
A clause that requires a full payment of
a mortgage or deed of trust when the
secured property changes ownership.
Earnest Money
The portion of the down payment
delivered to the seller or escrow agent
by the purchaser with a written offer as
evidence of good faith.
Escrow
A procedure in which a third
party acts as a stakeholder for both
the buyer and the seller, carrying out
both parties’ instructions and assuming
responsibility for handling all of the
paperwork and distribution funds.
Equity
The difference between what is owed and
what the property could be sold for.
FHA Loan
A loan insured by the Federal Housing
Administration (of the Department of
Housing and Urban Development).
Federal Home Loan Mortgage
Corporation (FHLMC)
Called “Freddie Mac”; a part of the
secondary market, particularly used to
purchase loans from savings and loan
lenders within the Federal Home Loan
Bank Board.
Federal National Mortgage Association
(FNMA)
Popularly known as “Fannie Mae”; a
privately owned corporation created
by Congress to support the secondary
mortgage market. It purchases and sells
residential mortgages insured by the
FHA or guaranteed by the VA, as well as
conventional home mortgages.
Fee Simple
An estate in which the owner has
unrestricted power to dispose of the
property as he wishes, including leaving
by will or inheritance. It is the greatest
interest a person can have in real estate.
Finance Charge
The total cost a borrower must pay,
directly or indirectly, to obtain credit
according to Regulation Z.
Fixed Rate Mortgage
A conventional loan with a single interest
rate for the life of the loan.
Fully Indexed Rate
The maximum interest rate on an ARM
that can be reached at the first adjustment.
Gift Letter
A letter from a relative stating that an
amount will be gifted to the buyer, and
that said amount is not to be repaid.
Government National Mortgage
Association (GNMA)
Called “Ginnie Mae”; a government
part of the secondary market that deals
primarily in recycling VA and FHA
mortgages, particularly those that are
highly leveraged.
Graduated Payment Mortgage
A residential mortgage with monthly
payments that start at a low level and
increase at a predetermined rate.
GRI
Graduate, Realtors Institute. A
professional designation granted to a
member of the National Association of
Realtors who has successfully completed
courses covering Law, Finance and
Principles of Real Estate.
Home Inspection Report
A qualified inspector’s report on a
property’s overall condition. The report
usually includes an evaluation of both the
structure and mechanical systems.
Home Warranty Plan
Protection against failure of mechanical
systems within the property. Usually
includes plumbing, electrical, heating
systems and installed appliances.
Index
A measure of interest rate changes used
to determine changes in an ARM’s interest
rate over the term of the loan.
Initial Interest Rate
The introductory interest rate on a loan;
signals that there may be rate adjustments
later in the loan.
Jumbo Loans
Mortgage loans that exceed the loan
amounts acceptable for sale in the
secondary market; these jumbos must
be packaged and sold differently to
investors and therefore have separate
underwriting guidelines.
Lien
A legal hold or claim on property
as security for a debt or charge.
Loan Commitment
A written promise to make a loan for a
specified amount on specified terms.
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