amortization The process of
paying the principal and interest on a loan through regularly scheduled
installments. Initially, most of each payment is applied toward interest owed,
and later in the loan term increasingly applied toward
principal.
appraisal An opinion of the value of a property at a given point in
time.
closing The final procedure in which documents are signed and recorded and
the property is transferred.
comparative
market analysis An estimate of the value of a
property based on an analysis of sales of properties with similar
characteristics.
credit
report A detailed account of an individual's
credit, employment, and residence history. A lender uses this report to
determine a loan applicant's creditworthiness.The three largest credit bureaus
are Trans Union Corp., Equifax, and Experian (formerly TRW).
disclosure A statement to a
potential buyer listing information relevant to a piece of property, such as the
presence of radon or lead paint.
escrow A neutral third party
holds documents and money for a real estate transaction and ensures that all
conditions of a sale are met. Also refers to a special account that a lender
uses to hold a borrower's monthly payments on property taxes and
insurance.
home
inspection An examination of a home's
construction, condition, and internal systems by an inspector or contractor
prior to purchase.
homeowner's
insurance This insurance includes hazard
coverage for any damages that may affect the value of a house, in addition to
personal liability and theft coverage.
interest rate The fee,
expressed as a percentage, charged for a loan. The interest rate also helps
determine the monthly payment. For adjustable-rate loans, the interest rate may
change from its initial level.
mortgage In casual use, a sum
of money borrowed to purchase a home at a certain interest rate using the
property as collateral. In formal use, a mortgage is the legal document that
pledges property as collateral for a loan.
multiple listing service (MLS) A service that combines listings of all available homes in an area
into one directory or database, with the exception of For Sale By Owner (FSBO)
properties.
point An amount equal to 1 percent of the loan amount. Points may be paid
by the borrower at the time the loan is made to get a lower interest rate.
Lenders offer various rate/point combinations.
prequalification A lender's
preliminary assessment of a buyer's ability to pay for a home, and an estimate
of how much the buyer may borrow.
property
tax Tax paid on privately owned property.
Property taxes are usually paid semiannually, or monthly if the lender requires.
The amount is based on local tax rates and assessed property
value.
purchase
agreement A document that details the purchase
price and conditions of the transaction.
refinancing The process of
replacing an older mortgage with a new mortgage that has better
terms.
title The legal document conferring ownership of a piece of real
estate.
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