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. 25