Coldwell Banker Residential Brokerage Home Buyers Guidebook - 2017 | Page 25

GLOSSARY OF REAL ESTATE TERMS
Understanding the Language
Lock-In
The fixing of an interest rate or points at
a certain level, usually during the loan
application process. It is usually done for a
certain period of time, such as 60 days, and
may require a fee or premium in the form of a
higher interest rate. Planned Unit Development (PUD)
A zoning designation for property
developed at the same or slightly
greater overall density than conventional
development, sometimes with improvements
clustered between open, common areas. Use
may be residential, commercial or industrial.
Margin
The number of percentage points the lender
adds to the index rate to calculate the ARM
interest rate at each adjustment. Point
An amount equal to one percent of the
principal amount of the investment or note.
Lender assesses loan discount points at
closing to increase the yield on the mortgage
to a position competitive with other types of
investment.
Mortgage Insurance Premium (MIP)
The mortgage insurance required on FHA
loans for the life of said loans; MIP can either
be paid in cash at closing or financed in
its entirety in the loan. The premium varies
depending on the method of payment.
Mortgage Life Insurance
A type of term life insurance often bought by
home buyers. The coverage decreases as the
mortgage balance declines. If the borrower
dies while the policy is in force, the mortgage
debt is automatically covered by insurance
proceeds.
Negative Amortization
Occurs when monthly payments fail to
cover the interest cost. The interest that
isn’t covered is added to the unpaid principal
balance, which means that even after several
payments the borrowers could owe more
than they did at the beginning of the loan.
Negative amortization can occur when
an ARM has a payment cap that results in
monthly payments that aren’t high enough to
cover the interest.
Origination Fee
A fee or charge for work involved in
evaluating, preparing, and submitting a
proposed mortgage loan. The fee is limited to
one percent for FHA and VA loans.
Payment Cap
The maximum amount the payment can
adjust in any given time frame.
Prepayment Penalty
A fee charged to a borrower who pays a loan
before its due. Not allowed for FHA or VA
loans.
Private Mortgage Insurance (PMI)
Insurance written by a private company
protecting the lender against loss if the
borrower defaults on the mortgage.
Purchase Agreement
A written document in which the purchaser
agrees to buy certain real estate and the
seller agrees to sell under stated terms and
conditions. Also called a sales contract,
earnest money contract, or agreement for
sale.
Tenancy In Common
A type of joint ownership of property by two
or more persons with no right of survivorship.
TILA-RESPA
TILA refers to the Truth in Lending Act and
RESPA stands for the Real Estate Settlement
Procedures Act. Together they require
lending institutions to disclose all fees and
costs associated with a borrower’s transaction
and settlement.
Title Insurance Policy
A policy that protects the purchaser,
mortgagee or other party against losses.
TRID
Stands for TILA-RESPA Integrated Closing
Disclosures. TRID is a newer rule which
combines the Good Faith Estimate, Truth in
Lending statement, and the HUD-1 into two
new forms: the Loan Estimate and t he Closing
Disclosure.
VA Loans
A loan, made by a private lender, that
is partially guaranteed by the Veterans
Administration.
Rate Gap
The difference between where the rate is now
and where it could adjust to on an ARM. Also
used to compare the difference between a
current conventional rate and that of an ARM.
Realtor ®
A real estate broker or associate active in
a local real estate board affiliated with the
National Association of Realtors ® .
Regulation Z
The set of rules governing consumer lending
issued by the Federal Reserve Board of
Governors in accordance with the Consumer
Protection Act.
PITI
Principal, Interest, Taxes and Insurance.
©2017 Coldwell Banker Residential Real Estate LLC. All Rights Reserved. Coldwell Banker Residential Brokerage fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Operated by a subsidiary of NRT LLC. Coldwell Banker and the Coldwell
Banker Logo are registered service marks owned by Coldwell Banker Real Estate LLC. Real estate agents affiliated with Coldwell Banker Residential Brokerage are independent contractor sales associates and are not employees of Coldwell Banker Residential Brokerage.
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