Glossary of Closing Cost Terms
The mortgage world has unique terms and calculations that we feel every First Time Home Buyer should be aware of as well as the context that most mortgage terms might be used. Here are the most common terms you should know if youâre seeking down payment assistance.
A Cloud on title is a deal stopper!
A cloud on title is defined as an actual or apparent outstanding claim on the title to real property. "Clouds" can include old mortgages or deeds of trust with no recording showing the secured debt was paid off, a failure to properly transfer all interests in the real property (such as mineral rights) to a former owner, a previous deed which was improperly written or signed, an unresolved legal debt or levy by a creditor or a taxing authority, or some other doubtful link in the chain of title. A few of the examples of Clouds on Title would be: Insufficient Deed: The form and/or content of a deed are insufficient to actually convey the property. This may result in the conveyance being nullified. Marriage: A single person is selling or mortgaging property, but the title search reveals there are two persons on the deed and it says they are married. Death: The children of a widowed woman, who is now deceased, mortgaged the property, but the title search reveals there is no recorded will or deed from the decedent's estate to these children. Money liens: A man who had purchased the property before marriage thereafter mortgaged the property. He then gets married. Florida recognizes a spouse's interest in this property if it is classified as homestead property. Mechanic's lien: An owner fails to pay the contractor who built the pool in the backyard. This contractor can place a lien on the property for his/her unpaid labor. Tax liens: The owner failed to pay his/her taxes and a certificate was sold in the amount of the unpaid taxes. Often the "cloud on title" can be removed by the institution of a quiet title action, by the execution and recordation of a valid deed, or by the recordation of a document proving a debt has been paid. Open Permits: If theres an open permit for any type of construction such as HVAC, Plumbing, pools etc... Those permits will need to be closed by the Seller before the property can be financed. If you do not know the cloud on title exists, you purchase the property subject to this cloud.
Acceleration Clause
A contract provision that allows a lender to require a borrower to repay all or part of an outstanding loan if certain requirements are not met. An acceleration clause or demand note outlines the reasons that the lender can demand loan repayment. Also known as "acceleration covenant".
acre
Because an acre is a measure of area, not length, it is defined in square feet. An acre can be of any shapeâa rectangle, a triangle, a circle, or even a starâso long as its area is exactly 43,560 square feet. The most standard shape for an acre is one furlong by one chain, or 660 feet by 66 feet.
Ad Valorem Tax
The phrase ad valorem is Latin for "according to value". Property taxes, property owners have their property assessed on a periodic basis by a public tax assessor. The assessed value of the property is then used to compute an annual tax, which is levied on the owner by his or her municipality.
Addendum
The addendum becomes part of the legal contract. In real estate purchase agreements, an addendum is a document containing any changes or modifications negotiated in the original lease or purchase
Adjustable Rate Mortgage
An ARM, short for "adjustable rate mortgage", is a mortgage on which the interest rate is not fixed for the entire life of the loan. The rate is fixed for a period at the beginning, called the "initial rate period", but after that it may change based on movements in an interest rate index. ARMs are contrasted with fixed-rate mortgages (FRMs) on which the quoted rate holds for the entire life of the mortgage.
ALTA (American Land Title Association) Closing Disclosure Statements
An ALTA settlement statement, also known as the ALTA Settlement Statement or ALTA HUD-1, is a document used in real estate transactions, particularly for residential or commercial property sales in the United States. ALTA stands for the American Land Title Association, a national association that represents title insurance companies and professionals in the real estate industry.
The ALTA settlement statement is a standardized form that outlines the financial details of a real estate transaction. It typically includes information such as:
1. Buyer's and seller's information: names and contact details of the buyer and seller.
2. Property information: description of the property being sold, including its address and legal description.
3. Transaction details: the sale price, loan amount, and any adjustments or credits.
4. Closing costs: A breakdown of all costs associated with the transaction, including but not limited to:
5. Funds at Closing: This section details the amount of money the buyer must bring to the closing, as well as any funds that will be disbursed to the seller.
6. Loan information: If the transaction involves a mortgage loan, this section provides details about the loan, including the interest rate, loan amount, and other terms.
7. Summary of the transaction: A summary of the total amounts due from the buyer and payable to the seller at closing.
The ALTA settlement statement is typically prepared by the title company or closing agent and is provided to both the buyer and seller before the closing of the real estate transaction. It helps ensure transparency and clarity regarding the financial aspects of the transaction for all parties involved.ALTA (American Land Title Association) Closing Disclosure Statements
This form has replaced the HUD settlement statement. With every loan closing the borrower receives a detailed breakdown of closing costs.
Amortization Table
An amortization schedule is a table detailing each periodic payment on an amortizing loan (typically a mortgage), refers to the process of paying off a debt (often from a loan or mortgage) over time through regular pre calculated payments.
Appraisal Fee
The appraisal fee for a residence can vary depending on several factors, including the location of the property, the complexity of the appraisal, and the appraiser's experience. On average, as of my last knowledge update in January 2022, you can expect to pay anywhere from $300 to $600 or more for a residential appraisal in the United States. Here are some factors that can influence the cost of an appraisal for a residence:
1. Property type: The type of residence being appraised can affect the cost. Single-family homes are generally less expensive to appraise than multi-unit properties, such as duplexes or apartment buildings.
2. Property value: The higher the value of the property, the more the appraisal may cost. Luxury homes or properties in high-value markets often require more in-depth appraisals.
3. Location: Appraisal fees can vary significantly by region and even within different neighborhoods. Properties in rural areas or areas with limited access to appraisers may have higher fees.
4. Complexity: If the property has unique features, extensive renovations, or is in poor condition, the appraisal may require more time and effort, leading to a higher fee.
5. Appraiser's experience: More experienced and credentialed appraisers may charge higher fees for their services.
6. Purpose of the appraisal: The purpose of the appraisal can also affect the cost. Appraisals for mortgage financing, tax assessments, divorce settlements, or estate planning may have different requirements and, therefore, different fees.
Appraisal Fee
This is the charge to obtain a statement of property value for the lender, so that the lender can confirm if the property value is sufficient to secure the mortgage loan.
APR (Annual Percentage Rate)
The annual percentage rate is the cost of borrowing money from the lender, including certain loan closing fees. The APR is shown as a percentage of your mortgage amount, including certain items in the loan closing. The APR adds the interest rate and certain APR items (fees) that are associated with the loan closing. The APR is NOT the interest rate that is charged over the life of the loan. That is called the loan interest rate. Example: If the seller pays all the buyer's loan closing costs, the APR is exactly what the interest rate is on the mortgage. APR items on a mortgage loan include the following loan closing fees: The following are all examples of charges to close a loan. Keep in mind that this entire list is not what you would see at a typical loan closing.
Possible Fees Included in APR Finance Charges:
- 203K Permits
- 203K Consultant Fee
- 203K Inspection Fee (Lender Makes These Inspections)
- 203K Supplemental Document Fee
- 203K Supplemental Origination Fee
- Administrative Fee
- Amortization Schedule,
- Application Fee (if only sometimes charged)
- Appraisal Review (Review by Lender)
- Assignment Fee
- Assumption Fee
- Attorney Fee for Document Preparation or Closing (3rd Party)
- Bank Fee/Points
- Brokerâs Fee
- Buydown/Subsidy Fee (Borrowerâs Portion)
- Closing Coordination Fee
- Closing Fee
- Commitment Fee
- Compliance Audit
- Consultant Fee
- Conversion Fee
- Copy Fee
- Customer Identification Program (CIP) U.S Patriot Search
- Condo Certification (Lender Required)
- Courier Fee (All, Including Payoff from Title Co.)
- Credit Life Insurance (if required by Lender)
- Discount Fee
- Document Preparation (lender fee)
- Document Preparation Fee (3rd Party Fee) Some investors consider this to be a prepaid finance charge. (We will include it unless you request otherwise.)
- Document Review
- Download Fee
- Electronic Delivery
- Engineers Report (if required by Lender)
- eRecording (if paid to creditor or third party)
- Escrow Fees to Title Company
- Escrow Fees to Lender (203K)
- Escrow Waiver Fee to Lender
- Express Mail (All, Including Payoff from Title Co.)
- Final Inspection Fee (unless payable to appraiser)
- Final Inspection Fee â Post Closing
- Flood Life of Loan Monitoring
- Fulfillment Fee
- Funding Fee
- Good Funds (To Lender)
- HOA Certification (Lender Required)
- Home Inspection (if required by Lender)
- Homeownership Counseling Fee
- Home Warranty (if required by Lender)
- HUD Review Fee
- Inspection/Photo Fee (Not to Appraiser)
- Inspection and Handling Fees for the staged
- Disbursement of construction loan proceeds
- Insuring Fee
- Interest to End of Month (FHA, VA and Conv.)
- Lenderâs Inspection Fee
- Loan Delivery Fee
- Loan Docs. (fees for preparing deeds, mortgages and similar documents if to 3rd party lawyer)
- Loan Level Pricing Adjustment (LLPA)
- Lock-In
- Lock Extension Fee
- Long Distance (To Lender)
- MCC Fee
- MERS File Registration Fee
- Mobile Signing Fee
- Modification Fee
- MIP (mortgage insurance premium)
- Mortgage Insurance
- Origination Fee
- Per Diem Interest
- Plan Review Fee
- PMI (Initial Premium)
- PMI (Reserves)
- Post Closing Fee
- Pre-Plan Inspection Fee
- Processing Fee
- Rate Lock or Extension Fee
- Rebate Fee
- Refinance Fee
- Release Fee
- Review Fee/Attorney Review Fee
- Supplemental Discount
- Supplemental Origination
- Tax Research Fee (if tax service fee)
- Tax Service Fee (for life of loan)
- TitleâClosing Protection Letter Fee
- TitleâCommitment Fee
- Title Service Fee
- Transaction Fee
- Transfer Fee
- Underwriting Fee
- USDA Guarantee Fee (Upfront and Monthly)
- VA Funding Fee
- VA No-Bid Fee
- Warehouse Fee
- Warranty Deed
- Wire Fee
- For Salary/Hourly Pay individuals, most recent pay stub (must be most recent within 30 days)
- For Independent Contractors such as 1099 individuals, Most recent pay stub or pay invoice with a year to date total amount (must be recent within 30 days) possibly accept 3 months of most recent pay stub/invoices or bank statements
- For self Empoyed individuals, 3 most recent months of bank statements, Proof of Business Ownership. This can be a document from the Secretary of State, a recent tax return, or any official document that shows both your name and the name of your registered business.
- For individuals recieving Alimony or Social Security, Court order documents, 3 most recent months proof of payment SSI or VA Benefits Most recent Benefits Letter (dated within 1 year), Year end SSA-1099, or Year end 1099-R(must be most recent within 30 days)
- People who recently got a new job in the last 3 months, last pay stub from previous job, most recent pay stub from current job
APR (Annual Percentage Rate)
The annual percentage rate is the cost of borrowing money from the lender INCLUDING certain Loan Closing fees. The APR shown as a percentage of your mortgage amount INCLUDING certain items in the loan closing. The APR adds the interest rate and certain APR items (fees) that are associated with the loan Closing. The APR is NOT the interest rate that is charged over the life of the loan. That is called the Loan Interest rate. Example: If the Seller pays all the Buyers Loan Closing Costs, the APR is exactly what the Interest Rate is on the mortgage. APR items on a mortgage loan include the following loan closing fees. The following are all the examples that might be charges to Close a loan. Keep in mind, that this entire list is NOT what you would see on a typical Loan Closing.Possible Fees Included in APR Finance Charges: 203K Permits, 203K Consultant Fee, 203K Inspection Fee (Lender Makes These Inspections), 203K Supplemental Document Fee, 203K Supplemental Origination Fee, Administrative Fee, Amortization Schedule, Application Fee (if only sometimes charged), Appraisal Review (Review by Lender), Assignment Fee, Assumption Fee, Attorney Fee for Document Preparation or Closing (3rd Party), Bank Fee/Points, Brokerâs Fee, Buydown/Subsidy Fee (Borrowerâs Portion), Closing Coordination Fee, Closing Fee, Commitment Fee, Compliance Audit, Consultant Fee, Conversion Fee, Copy Fee, Customer Identification Program (CIP) U.S Patriot Search, Condo Certification (Lender Required), Courier Fee (All, Including Payoff from Title Co.), Credit Life Insurance (if required by Lender), Discount Fee, Document Preparation (lender fee), Document Preparation Fee (3rd Party Fee) (Some investors consider this to be a prepaid finance charge. We will include it unless you request otherwise), Document Review, Download Fee, Electronic Delivery, Engineers Report (if required by Lender), eRecording (if paid to creditor or third party), Escrow Fees to Title Company, Escrow Fees to Lender (203K), Escrow Waiver Fee to Lender, Express Mail (All, Including Payoff from Title Co.), Final Inspection Fee (unless payable to appraiser), Final Inspection Fee â Post Closing, Flood Life of Loan Monitoring, Fulfillment Fee, Funding Fee, Good Funds (To Lender), HOA Certification (Lender Required), Home Inspection (if required by Lender), Homeownership Counseling Fee, Home Warranty (if required by Lender), HUD Review Fee, Inspection/Photo Fee (Not to Appraiser), Inspection and Handling Fees for the staged, disbursement of construction loan proceeds, Insuring Fee, Interest to End of Month (FHA, VA & Conv.), Lenderâs Inspection Fee, Loan Delivery Fee, Loan Docs. (fees for preparing deeds, mortgages and similar documents if to 3rd party lawyer), Loan Level Pricing Adjustment (LLPA), Lock-In, Lock Extension Fee, Long Distance (To Lender), MCC Fee, MERS File Registration Fee, Mobile Signing Fee, Modification Fee, MIP (mortgage insurance premium), Mortgage Insurance, Origination Fee, Per Diem Interest, Plan Review Fee, PMI (Initial Premium), PMI (Reserves), Post Closing Fee, Pre-Plan Inspection Fee, Processing Fee, Rate Lock or Extension Fee, Rebate Fee, Refinance Fee, Release Fee, Review Fee/Attorney Review Fee, Supplemental Discount, Supplemental Origination, Tax Research Fee (if tax service fee), Tax Service Fee (for life of loan), Title â Closing Protection Letter Fee, Title â Commitment Fee, Title Service Fee, Transaction Fee, Transfer Fee, Underwriting Fee, USDA Guarantee Fee (Up-Front and Monthly), VA Funding Fee, VA No-Bid Fee, Warehouse Fee, Warranty Deed, Wire Fee,
ARM (Adjustable Rate Mortgage)
An ARM is an Adjustable Rate Mortgage. It is a loan in which the interest rate, and the payment, changes over the life of the loan. The interest rate is adjusted to match the rise and fall of a pre-selected index (Treasury Index, Libor (London Interbank Offered Rate etc...and the borrower's payments will increase and decrease accordingly. There are different caps on the rate increases depending on the loan program. Different ARMs are adjusted at different frequencies. Some ARMs have limits on how much interest rates and payments may change at each adjustment, as well as on the maximum interest rate. The starting interest rate on ARM loans is usually low, which permits you to purchase a home that might otherwise be unaffordable with fixed-rate mortgage. However, there is always a risk of higher payments later on. An ARM can be an attractive arrangement for people who plan on being in the home for five years or less, or if the buyer thinks that interest rates will be coming down.
ARM (Adjustable Rate Mortgage)
An ARM is an Adjustable Rate Mortgage. It is a loan in which the interest rate, and the payment, changes over the life of the loan. The interest rate is adjusted to match the rise and fall of a pre-selected index (Treasury Index, Libor (London Interbank Offered Rate etc...and the borrower's payments will increase and decrease accordingly. There are different caps on the rate increases depending on the loan program. Different ARMs are adjusted at different frequencies. Some ARMs have limits on how much interest rates and payments may change at each adjustment, as well as on the maximum interest rate. The starting interest rate on ARM loans is usually low, which permits you to purchase a home that might otherwise be unaffordable with fixed-rate mortgage. However, there is always a risk of higher payments later on. An ARM can be an attractive arrangement for people who plan on being in the home for five years or less, or if the buyer thinks that interest rates will be coming down.
Binder vs Earnest Money Deposit
If the buyer withdraws from a real estate deal after all Buyer contingencies have expired, he/she sometimes forfeits the earnest money. A Binder is commonly called earnest money deposit or EMD for short.
Buy Down
A buydown is a mortgage financing technique which the buyer obtains a lower interest rate for at least the first few years of the mortgage buy "buying down " the interest rate. A buy down is a sum of money paid to the lender at closing to reduce the borrower's out-of-pocket monthly payment. A typical buy down is a two/one (2/1) which means the interest rate is bought down during the first year by two percentage points below the note rate, and during the second year by one percentage point. Starting with the third year, and continuing through the 30 year life of the loan, the rate will remain the same. A buy down can be very attractive to someone who needs a lower rate to qualify for the loan and may require lower payments the first few years. The negative side is that the cost for buy down is usually 2.5% of the loan amount, and the borrower ends up with a higher rate starting in year three than if they went with a fixed rate and used the 2.5% to obtain a lower rate.
Buy Down
A buydown is a mortgage financing technique which the buyer obtains a lower interest rate for at least the first few years of the mortgage buy "buying down " the interest rate. A buy down is a sum of money paid to the lender at closing to reduce the borrower's out-of-pocket monthly payment. A typical buy down is a two/one (2/1) which means the interest rate is bought down during the first year by two percentage points below the note rate, and during the second year by one percentage point. Starting with the third year, and continuing through the 30 year life of the loan, the rate will remain the same. A buy down can be very attractive to someone who needs a lower rate to qualify for the loan and may require lower payments the first few years. The negative side is that the cost for buy down is usually 2.5% of the loan amount, and the borrower ends up with a higher rate starting in year three than if they went with a fixed rate and used the 2.5% to obtain a lower rate.
Buyers breach of contract
When a buyer breaches a real estate purchase contract, the seller still retains the property, which can be used in any manner the owner desires and may be sold to another buyer. Typically the Buyer loses all their earnest money deposit if the financing contingency time period has passed. First time homebuyers should read and understand the real estate contract and discuss the situation with thier Realtor so they understand that the money they have already spent in Inspections, appraisals will definately not be recoverable but also the Earnest Money that the put down to Bind the contract will probably also be lost.
Buyers Closing Costs you'll want to know about.
These are the typical Buyers Closing Costs that you will see on an ALTA Settlement Statement or Closing Disclosure; total mortgage fees, settlement fees, owners tile insurance, owners title search fee, lenders policy, pud or condo HOA annual payment, Florida form 9, state and/or county recording fee, intangible tax, appraisal fee, documentation stamps on deed, survey. In the case of SOME Down Payment Assistance program, the intangibles tax and Deed/Doc stamps are exempt such as the State of Florida conventional or FHA Bond Loan programs.
Buyers market definition
A buyer's market is a situation in which housing supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. Buyer's Market is commonly used to describe real estate markets. It means that the advantage go to the Buyers in the negotiations because there are more houses for sale than Buyers. This is a great market for 1st time homebuyers because the Sellers are anxious to sell thier property.
Call Provision in morgage lending notes
Cashiers Checks for real estate and mortgage transactions.
A cashier's check is a draft guaranteed by a bank, drawn from the bank's own funds and signed by an authorized cashier or teller. It's used in place of cash, personal checks, credit cards or money orders because of the security of the backing by financial institutions. Because of the risk of fraud and uncertainty of funds, in todayâs real estate market this instrument isnât used as often for Closings as wired funds into the Title companies Escrow account. Certified Checks or Certified Funds are often used as Real Estate Binder or Earnest Money Deposits if the EMD is a significant amout of money above $7500. The Cashierâs Check is now used as the Earnest Money deposit on REO Properties or high deposit residential or commerical transactions.
Caveat Emptor means Buyer beware!
A principle in Real Estate that means, let the buyer beware: the principle that the seller of a product or property cannot be held responsible for its quality unless it is guaranteed in a warranty. This is particularly important for First Time Homebuyers to understand. Sellers don't always disclose the material facts about thier property and if you don't have the home thoroughly inspected, theres a good chance you'll have a not so good surprise when you move in!
CDD or Community Development District
CDD stands for Community Development District. These are small corporations that Subdivision Developer have that enable land developers and Builders to develop land with street lights, road, amenity centers, playgrounds and such, with the future Home Owners paying for all the expenses to build and maintain these subdivision features. The Counties bill the Homeowners back when they pay thier taxes. In theory this arrangement develops the land, provides infrastructure and amenities, maintains the community and its amenities, and works to provide a higher standard of living for homeowners. It helps the Developer by not having to pay these upfront building costs. Not all communities have CDD fees; most typically, you will find them in communities with amenities. CDD fees are a way to offset the cost of community amenities and infrastructure development or improvement required when building new communities. CDDs help to keep the purchase price of new homes lower because of the deferred infrastructure cost.
Certificate of Eligibility
For all VA loans, You must have suitable credit, sufficient income, and a valid Certificate of Eligibility (COE) to be eligible for a VA-guaranteed home loan. The home must be for your own personal occupancy. This document must be obtained by the veteran whether or not they are first time home buyers or not. If they have use the COE before and this is not their first home purchase with a COE, the Veteran may have to reapply for the COE.
Certificate of occupancy
In Florida, a certificate of occupancy is a legal recognition issued by a local governing body, (such as the local building Inspector) that states a structure is ready to be used and occupied. The certificate may also outline the uses and restrictions of the structure. It distinguishes whether the building can be used for commercial or residential purposes.
Certificate of title
A Certificate of Title is a legal document that is used to establish the ownership of a piece of property. While identifying the ownership, the Certificate of Title has other information relevant to the property. This may include easements and buildings. The Certificate of Title is an effective tool for potential buyers when determining whether to continue with the transaction.
Certificate of Title
A Certificate of Title is a legal document that is used to establish the ownership of a piece of property. While identifying the ownership, the Certificate of Title has other information relevant to the property. This may include easements and buildings. The Certificate of Title is an effective tool for potential buyers when determining whether to continue with the transaction.
Chain of title
A chain of title is a list of the people who have owned a piece of real estate. In a typical chain of title, the owner of the property (âAâ) will convey the property by a properly executed deed which is recorded in the public records to a buyer (âBâ). Subsequently there will be a recorded deed from B to C, then from C to D, and so on. If there is a gap in the ownership chain, there may be a problem or a "Cloud" on Title.
Clear Title of property
A critical step for the sale of any home is the review of the propertyâs title report. A buyer, their mortgage lender and the title insurance company will want to review the current title history of the property to make sure that the next buyer can purchase the property free of any unnecessary liens and encumbrances. Property taxes are an ongoing lien that cannot be removed, and there are many title restrictions that will stay with the property if it has easements, condo restrictions or other agreements with neighbors or municipalities. It is important for all Buyers, not just first time homebuyers to make sure they have clear title before closing on their new home.
Closing Agent in your Real Estate Transaction
The Title Company in a residential property sale is the Closing Agent. The actual closing is conducted by the Title Officer of the company.
Closing Costs
Closing costs are all costs incurred by either the buyer or the seller of a home in conjunction with the closing of the purchase and sale of real property. They include items that are payable in connection with the buyer's loan, such as fees for loan origination, loan discount, appraisals, credit reports, lender's inspection, mortgage insurance, tax service, document preparation, and underwriting. They also include title and closing charges, such as fees to the settlement agent, title search fees and title insurance premiums for Owners and Mortgages title insurance policies. These costs include documentary stamps and intangible taxes imposed by state law on deeds, notes and mortgages, as well as the costs imposed by state law to record all the documents in the public records. In addition to the above, closing costs may also include survey costs, pest inspections and other expenses or items incurred by the seller, buyer or lender in conjunction with the transaction, below are examples of all Closing Costs.
Fees Included in APR Finance Charges: 203K Permits 203K Consultant Fee 203K Inspection Fee (Lender Makes These Inspections) 203K Supplemental Document Fee 203K Supplemental Origination Fee Administrative Fee Amortization Schedule Application Fee (if only sometimes charged) Appraisal Review (Review by Lender) Assignment Fee Assumption Fee Attorney Fee for Document Preparation or Closing (3rd Party) Bank Fee/Points Brokerâs Fee Buydown/Subsidy Fee (Borrowerâs Portion) Closing Coordination Fee Closing Fee Commitment Fee Compliance Audit Consultant Fee Conversion Fee Copy Fee Customer Identification Program (CIP) U.S Patriot Search Condo Certification (Lender Required) Courier Fee (All, Including Payoff from Title Co.) Credit Life Insurance (if required by Lender) Discount Fee Document Preparation (lender fee) Document Preparation Fee (3rd Party Fee) (Some investors consider this to be a prepaid finance charge. We will include it unless you request otherwise) Document Review Download Fee Electronic Delivery Engineers Report (if required by Lender) eRecording (if paid to creditor or third party) Escrow Fees to Title Company Escrow Fees to Lender (203K) Escrow Waiver Fee to Lender Express Mail (All, Including Payoff from Title Co.) Final Inspection Fee (unless payable to appraiser) Final Inspection Fee â Post Closing Flood Life of Loan Monitoring Fulfillment Fee Funding Fee Good Funds (To Lender) HOA Certification(Lender Required) Home Inspection (if required by Lender) Homeownership Counseling Fee Home Warranty (if required by Lender) HUD Review Fee Inspection/Photo Fee (Not to Appraiser) Inspection and Handling Fees for the staged disbursement of construction loan proceeds Insuring Fee Interest to End of Month (FHA, VA & Conv.) Lenderâs Inspection Fee Loan Delivery Fee Loan Docs. (fees for preparing deeds, mortgages and similar documents if to 3rd party lawyer) Loan Level Pricing Adjustment(LLPA) Lock-In Lock Extension Fee Long Distance (To Lender) MCC Fee MERS File Registration Fee Mobile Signing Fee Modification Fee MIP Mortgage Insurance Origination Fee Per Diem Interest Plan Review Fee PMI (Initial Premium) PMI (Reserves) Post Closing Fee Pre-Plan Inspection Fee Processing Fee Rate Lock or Extension Fee Rebate Fee Refinance Fee Release Fee Review Fee/Attorney Review Fee Supplemental Discount Supplemental Origination Tax Research Fee (if tax service fee) Tax Service Fee (for life of loan) Title â Closing Protection Letter Fee Title â Commitment Fee Title Service Fee Transaction Fee Transfer Fee Underwriting Fee USDA Guarantee Fee (Up-Front and Monthly) VA Funding Fee VA No-Bid Fee Warehouse Fee Warranty Deed Wire Fee Fees NOT Included in APR Finance Charges: Abstractorâs Certificate Application Fee â (if charged to all persons seeking credit, whether or not credit is actually extended.) Appraisal Fee Appraisal Retype Appraisal Review (3rd party appraiser) Attorney Retained by Borrower Fee for File Review Credit Report Fee Credit Alert (CAVIR) Document Stamps Engineerâs Report (if not required by Lender) Escrow Repairs (Rehab. amounts) Flood Certification (if part of survey fee) Flood Determination/Inspection (initial determination) Flood Insurance Gap Check Fee (title) HOA Cert (Requested by title company) HOA Dues HOA Transfer Fee Home Inspection Insurance Reimbursement Intangible Tax Interest Collected for Old Loan Pay-Off In Refinance MIP Refund Modification Filing Fee Notary Fees Points â Paid by Seller Recertification Fee (To Appraiser) Recording Fee/Filing Fee Redraw Fee for doc prep lawyer Restriction Fees (To Title Company) Revenue Stamps Survey Fee State Tax Stamps Statement of Ownership and Location (SOL) Application Tax Certificate Tax Deletion (To Title Company) Tax Research Fee (4506-T) Tax Service Fee â Initial examination Tax Transfer Fee Tax Transcript Fee (4506-T) Termite/Pest Inspection Title Binder Title Guaranty Fee Title Endorsements Title Inspection (To Title Company) Title Insurance (Lenders or Owners) Title Opinion/Policy (To Title Company) Transfer Tax Verifications â Cost of verifying or confirming info re: non APR itemClosing Costs
Closing costs are all costs incurred by either the buyer or the seller of a home in conjunction with the closing of the purchase and sale of real property. They include items that are payable in connection with the buyer's loan, such as fees for loan origination, loan discount, appraisals, credit reports, lender's inspection, mortgage insurance, tax service, document preparation, and underwriting. They also include title and closing charges, such as fees to the settlement agent, title search fees and title insurance premiums for Owners and Mortgages title insurance policies. These costs include documentary stamps and intangible taxes imposed by state law on deeds, notes and mortgages, as well as the costs imposed by state law to record all the documents in the public records. In addition to the above, closing costs may also include survey costs, pest inspections and other expenses or items incurred by the seller, buyer or lender in conjunction with the transaction, below are examples of all Closing Costs.
Fees Included in APR Finance Charges: 203K Permits 203K Consultant Fee 203K Inspection Fee (Lender Makes These Inspections) 203K Supplemental Document Fee 203K Supplemental Origination Fee Administrative Fee Amortization Schedule Application Fee (if only sometimes charged) Appraisal Review (Review by Lender) Assignment Fee Assumption Fee Attorney Fee for Document Preparation or Closing (3rd Party) Bank Fee/Points Brokerâs Fee Buydown/Subsidy Fee (Borrowerâs Portion) Closing Coordination Fee Closing Fee Commitment Fee Compliance Audit Consultant Fee Conversion Fee Copy Fee Customer Identification Program (CIP) U.S Patriot Search Condo Certification (Lender Required) Courier Fee (All, Including Payoff from Title Co.) Credit Life Insurance (if required by Lender) Discount Fee Document Preparation (lender fee) Document Preparation Fee (3rd Party Fee) (Some investors consider this to be a prepaid finance charge. We will include it unless you request otherwise) Document Review Download Fee Electronic Delivery Engineers Report (if required by Lender) eRecording (if paid to creditor or third party) Escrow Fees to Title Company Escrow Fees to Lender (203K) Escrow Waiver Fee to Lender Express Mail (All, Including Payoff from Title Co.) Final Inspection Fee (unless payable to appraiser) Final Inspection Fee â Post Closing Flood Life of Loan Monitoring Fulfillment Fee Funding Fee Good Funds (To Lender) HOA Certification(Lender Required) Home Inspection (if required by Lender) Homeownership Counseling Fee Home Warranty (if required by Lender) HUD Review Fee Inspection/Photo Fee (Not to Appraiser) Inspection and Handling Fees for the staged disbursement of construction loan proceeds Insuring Fee Interest to End of Month (FHA, VA & Conv.) Lenderâs Inspection Fee Loan Delivery Fee Loan Docs. (fees for preparing deeds, mortgages and similar documents if to 3rd party lawyer) Loan Level Pricing Adjustment(LLPA) Lock-In Lock Extension Fee Long Distance (To Lender) MCC Fee MERS File Registration Fee Mobile Signing Fee Modification Fee MIP Mortgage Insurance Origination Fee Per Diem Interest Plan Review Fee PMI (Initial Premium) PMI (Reserves) Post Closing Fee Pre-Plan Inspection Fee Processing Fee Rate Lock or Extension Fee Rebate Fee Refinance Fee Release Fee Review Fee/Attorney Review Fee Supplemental Discount Supplemental Origination Tax Research Fee (if tax service fee) Tax Service Fee (for life of loan) Title â Closing Protection Letter Fee Title â Commitment Fee Title Service Fee Transaction Fee Transfer Fee Underwriting Fee USDA Guarantee Fee (Up-Front and Monthly) VA Funding Fee VA No-Bid Fee Warehouse Fee Warranty Deed Wire Fee Fees NOT Included in APR Finance Charges: Abstractorâs Certificate Application Fee â (if charged to all persons seeking credit, whether or not credit is actually extended.) Appraisal Fee Appraisal Retype Appraisal Review (3rd party appraiser) Attorney Retained by Borrower Fee for File Review Credit Report Fee Credit Alert (CAVIR) Document Stamps Engineerâs Report (if not required by Lender) Escrow Repairs (Rehab. amounts) Flood Certification (if part of survey fee) Flood Determination/Inspection (initial determination) Flood Insurance Gap Check Fee (title) HOA Cert (Requested by title company) HOA Dues HOA Transfer Fee Home Inspection Insurance Reimbursement Intangible Tax Interest Collected for Old Loan Pay-Off In Refinance MIP Refund Modification Filing Fee Notary Fees Points â Paid by Seller Recertification Fee (To Appraiser) Recording Fee/Filing Fee Redraw Fee for doc prep lawyer Restriction Fees (To Title Company) Revenue Stamps Survey Fee State Tax Stamps Statement of Ownership and Location (SOL) Application Tax Certificate Tax Deletion (To Title Company) Tax Research Fee (4506-T) Tax Service Fee â Initial examination Tax Transfer Fee Tax Transcript Fee (4506-T) Termite/Pest Inspection Title Binder Title Guaranty Fee Title Endorsements Title Inspection (To Title Company) Title Insurance (Lenders or Owners) Title Opinion/Policy (To Title Company) Transfer Tax Verifications â Cost of verifying or confirming info re: non APR itemCommon areas exist in all townhouse and condo complexes and many Planned Urban Development communities
There are common areas for all Apartments, Townhome and Condominium Communties as well as many Planned Urban Development subdivisions for single family homes. Common Areas means all real property within a community which is owned or leased by an association or dedicated for use or maintenance by the association or its members, including, regardless of whether title has been conveyed to the association: (a)âReal property the use of which is dedicated to the association or its members by a recorded plat; or (b)âReal property committed by a declaration of covenants to be leased or conveyed to the association.
Community Reinvestment Act or CRA established to help provide for Down Payment Assistance.
The Community Reinvestment Act (CRA), enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25, 228, 345, and 195, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate. This act is the basis for all down payment assistance programs for first time home buyers. Many of the larger Commercial Banks have several down payment assistance options and many are involved with State run Housing Authorites such as the Florida Housing Authority.
Comparitive Market Analysis is used selling and buying real estate.
When you purchase a home, you will come to appreciate neighborhood sold comparables or comps for short. These comps are regarded as the single-best tool in determining a home's value. They contrast criteria from recently-sold properties in a neighborhood, such as sale price, age of house, size, swimming pools and square footage. Real estate agents use comps to prepare a Comparative Market Analysis (CMA) for their clients. Every address has a set of nearby recently sold homes, generally less than 1 mile and homes that have sold in the most recent 6 months. Since these homes might not exactly match yours, value adjustments should be made for any differences when your realtor gathers the comps.. For example, there might be a recently-sold home nearby just like yours, but it has one more bedroom, has more square footage, has a pool, recently updated, etcâŠ.Therefore, that house would probably be valued higher and might not be a good comp.
Consumer Mortgage Disclosures are a Federal Regulation.
Mortgage Disclosures are part of all residential Mortgage transactions to comply with Federal Laws. In some real estate transactions, Disclosures are added to reveal or make known certain material facts of the property. Mortgage and Real Estate disclosures are separate documents and are designed to make the Buyers aware of ceratin facts that pertain to the physical condition of the property. They are also used as a risk reduction tool for all Mortgage Lenders.
Contract Extension in a real estate transaction
Real estate purchase and sales contracts typically state deadlines for attorney reviews, home inspections, mortgage approvals, and closings dates. Buyers and sellers can agree to extend deadlines by amending their purchase agreements to reflect new dates for completing tasks. Buyers and sellers should also consult with third parties who may be affected by contract extensions. For example, a buyer's lender may have conflicting expiration dates for things such as interest rate guarantees or mortgage approvals.
Cosigners of loans usually may not be on the property title.
In mortgage lending, an individual other than the borrower who signs a promissory note and thereby assumes equal liability for it. This person is also called co-maker. With regard to down payment assistance, many mortgage programs do not allow cosigners on loans. Generally speaking FHA allows Cosignors, but Conventional mortgage do not allow Cosigners. Cosigners are generally not allowed on Title in Real Estate transaction. Please check with your Lender.
Counter Offer
A higher or lower offer made in reply to the original offer. A conmtract is not executed until all Parties of the contract agree in writing and the Offer is sent back to the Listing Agent.
Creditor
The entity or person to whom the Borrower owes the debt. In real estate and mortgage closing statements, that which is due and payable to either the mortgage company, the bank Lender, or even the buyer or seller depending who is loaning the money. The Lender in a real eastate transaction is called the mortgagee.
Days on market or DOM
On Real Estate MLS sheets, this refers to days on market which is how long the property has been exposed on Multiple Listing Service.
Debit on a mortgage Closing statement or closing disclosure
This is a charge on a Closing statement or Closing Disclosure, accounting statement or balance sheet (appearing on the left hand column) the opposite of a credit. This term is also used along with credit when preparing the Closing Disclosure.
Debit on a Settlement Statement
A charge on an accounting statement or balance sheet (appearing on the left hand column) the opposite of a credit. This term is also used along with credit when preparing the Closing Disclosure on a Mortgage Settlement Statement in a real estate transaction. This statement is also known as the ALTA statment.
Debt service is the minimum of what amount of credit you owe to creditors per month.
The amount of money needed to meet the periodic payments of principle and interest on a loan or debt that is being amortized. Your mortgage payment would be part of the amount of your overall debt service. If your down payment assistance loan has a 0% interest and no regular payments have to be made, then your debt service would not include any amount from the down payment assistance loan.
Declaration of Deed restrictions for HOA's.
This is a statement of all the covenants, restrictions and conditions that runs with the land and is always found in an organized HOA if one exists for your subdivision. These restrictions are aimed for uniformity in the buildings and exterior appearances of the properties of the subdivisions and they are filed at the local courthouse.
Deed in lieu of foreclosure
The act of giving or transferring a property back to the lender without undergoing foreclosure. While the end result is the same - the lender regains possession of the property and the expense and repercussions of the foreclosure proceedings are avoided. This is also called a voluntary foreclosure. Lending guidelines view Deed in lieu of foreclosure, Short Sale and Involuntary foreclosure as the same.
Deed restrictions in HOA's
Deed restrictions are rules and regulations that govern one or more lots or parcels of land. Deed restrictions âbindâ land. Typically, a deed restriction is created in a document that is recorded with the county register of deeds records where the property is located. Many times this is the basis of neighborhood HOAâs and CDD's.
Definition of Option to Buy
An agreement to keep open, for a set period, an offer to sell or lease a property. An example an Option can used to give the Buyer or Tenant time to resolve financing, credit issues, title issues, zoning or feasibility to purchase the property before committing the Buyer to purchase the property.
Demand note
A promissory note that permits the holder, upon notice to debtor, to call in the loan at any time. A typical FHA, FHLMC or FNMA mortgage loan does not have this clause unless the Borrower defaults ion the loan. Demand notes are also termed Aceleration clauses
Discharge of Contract
Cancellation and Termination of a real estate contract occurs when the Buyer elects to not move forward in the purcahse of the property that is currently under contract. Some common grounds on which the obligations of the contract may be discharged are mutual cancellation; recession; performance or non-performance, accord and satisfaction, illegality, and in some circumstances when the court will not enforce the contract. In the approved Florida State Real Estate Contract, there is also a provision if all parties agree to release the money back to the Buyer. This form is known as the Cancellation and Release of Contract form.
DOC Stamps on Deed (aka state tax/stamps)
In real estate transactions, this equals 70 cents per thousand dollars based on the purchase price of the property. A revenue stamp attached to deeds, wills, and the like for payment of taxes. This money is due to the County Clerk in the county that the property is located.
DOC Stamps on Deed (aka state tax/stamps)
In real estate transactions, this equals 70 cents per thousand dollars based on the purchase price of the property. A revenue stamp attached to deeds, wills, and the like for payment of taxes. This money is due to the County Clerk in the county that the property is located.
DOC Stamps on Mortgage (aka state tax/stamps)
In real estate transactions, this equals 35 cents per thousand dollars based on the total loan amount on the property. This money is due to the County Clerk in the county that the property is located.
DOC Stamps on Mortgage (aka state tax/stamps)
In real estate transactions, this equals .35 cents per thousand dollars based on the total loan amount on the property. This money is due to the County Clerk in the county that the property is located.
Document Preparation Fee
Covers preparation of final legal papers including the mortgage, deed, etc.
Document Preparation Fee
Covers preparation of final legal papers including the mortgage, deed, etc.
Down Payment Assistance Grants
This has a dual meaning. The first is where the Seller, (Grantor) conveys or transfers or âgrantsâ the Buyer (Grantee) title to the property. The second meaning has come to mean that in some forms of down payment assistance programs, the sponsoring lending or governmental entity âgrantsâ part of the down payment to the Buyer. A true down payment assistance grant does not have to be repaid provided the Borrower fulfills the down payment assistance loan program guidelines. A grant sometimes has a clause that the Buyer has to live in the property, for the full grant to be forgiven. Florida has some of the best First Time Home Buyer grant programs in the entire country.
Due on Sale Clause
The "due on sale" (aka "acceleration clause") is a provision in a mortgage document that gives the lender the right to demand payment of the remaining balance of the loan when the property is sold. It is a contractual right, not a law. This means that if title to the property is transferred, the bank may (or may not), at its option, decide to "call the loan due." An "assumable" loan is one that is secured by a mortgage which contains no "due on sale" provision. FHA-insured mortgages originated before Dec. 1989 and VA-guaranteed loans originated before Feb. 1988 donât contain such provisions. Nearly all loans originated today contain a standard "due on sale" clause, which usually reads something like: "If all or any part of the property herein is transferred without the lender's prior written consent, the lender may require all sums secured hereby to be immediately due and payable." Banks began inserting "due on sale" clauses in their mortgages in the 1970s when interest rates rose dramatically. Home buyers were assuming existing loans rather than borrowing new money from banks because the interest rates on existing loans were lower. The banks used the clause as a way to kill their own worst competition. They argued that the reason for the restriction was to be able to police who was living in the property -- the collateral for their loan.
Early Occupancy or Move in early
This term refers to the practice of allowing buyers to take possession of real property before closing. Such a practice should be carefully evaluated because of risks like: mechanics liens, buyerâs remorse, inadequate insurance coverage. If this is done, both parties should sign a written agreement before it happens. First time home buyers frequently want to do this because they can become frustrated how long the Lending process can take. However, most Sellers will not allow this to take place for many of the reasons above.
Effective Age of House or building in a Real Estate transaction
This is the apparent improved age of a building that is in better condition than the chronological age would be. Homes that have been renovated and sold have a much newer effective age than a building in its original condition.
Encroachment
In real estate, it is the unwanted or unauthorized intrusion of an improvement or other real property onto anotherâs. Examples are driveways and fences that are placed on someone elseâs land.
Encumbrance
This refers to any lien, claim, charge or liability attached to and binding on real property that might lessen its value or burden or obstruct or impair the use of the property but not necessarily prevent the transfer of title.
Escrow
Escrow is a deposit of money made by the buyer to the lender for the purpose of paying future items as they become due, specifically hazard insurance premiums, property taxes, CDD assessments, mortgage insurance premiums and flood insurance premiums, if required. The total amount of these items is calculated for the year then divided by 12 so that one twelfth of the amount can be added to the monthly payment made by the buyer to the lender. The lender then deposits this money into an escrow account on behalf of the buyer where it is held until the time that the taxes or insurance payments are due. The lender pays these items directly for the buyer.
escrow
Escrow is a deposit of money made by the buyer to the lender for the purpose of paying future items as they become due, specifically hazard insurance premiums, property taxes, CDD assessments, mortgage insurance premiums and flood insurance premium, if required. The total amount of these items is calculated for the year then divided by 12 so that one twelfth of the amount can be added to the monthly payment made by the buyer to the lender. The lender then deposits this money into an escrow account on behalf of the buyer where it is held until the time that the taxes or insurance payments are due. The lender pays these items directly for the buyer.
Escrow Officer
The individual from the title company who is charged with reconciling the lender's loan package with the property taxes, home insurance, flood insurance, title insurance, and various loan closing costs.
Escrow Officer
The individual from the title company who is charged with reconciling the lender's loan package with the property taxes, home insurance, flood insurance, title insurance, and various loan closing costs.
Evidence of title
In the County records and in personal possession, it is the Proof of ownership of real estate or personal property.
Executed contract in real estate
A contract is said to have been executed when both parties have completed their obligations. In the case of a real estate contract, that milestone comes at closing. Until payment and title change hands, the contract is merely "executory" - capable of being executed.
Executed Offer in real estate
To execute an Offer or document means to sign it. People who refer to an executed real estate contract actually mean that the document - the paper or digital copy of the contract has been signed. In this sense, the date of execution is the date on which all parties' signatures appear on the contract. It's the contract's starting date.
External Obsolescence
This is a factor that reduces the value of a improvement because of something external to the property itself. It's not about whether the house is outdated or not, but rather something outside of the home that is causing a lower value. It's usually something that cannot be cured.
Fair Market value in real estate
This is the price that a specific property would bring in the marketplace at an "arms length distance", if the following conditions are true: Prospective buyers and sellers are reasonably knowledgeable about the asset; they are behaving in their own best interests and are free of undue pressure to trade. A reasonable time period is given for the transaction to be completed. Given these conditions, an asset's fair market value should represent an accurate valuation or assessment of its worth.
Fannie Mae also means Federal National Mortgage Corporation
Fannie Mae (FNMA) is the federal national mortgage corporation and is an active buyer of mortgages on the mortgage secondary market. They have their own set of lending guidelines that are more conservative and restrictive than FHA. Fannie Mae and FHA guidelines are used for determing whether or not First Time Homebuyers are qualified to receive down payment assistance loans and/or grants.
Federal Home Loan Bank or FHLB
Commonly known in banking sectors as FHLB, its is an organization of federally chartered savings institutions and banks that provide a credit reserve for its member institutions. There are 12 Federal Home Loan Bank districts or regions that provide credit reserve to each of its member institutions. There are down payment assistance programs sponsored by FHLB that serve the low to lower moderate income borrower.
Federal tax lien
A federal tax lien that attaches to the residential or commercial property of someone who is delinquent in payment of their federal taxes. This lien must be cleared or satisfied with the consent of the IRS before it can be lawfully sold. Real Estate tax liens take precedence over all other Liens.
Fee Simple in Real Estate
This is the maximum possible âestateâ that one can own. Fee Simple in real estate terms means that the owner(s) of the property has complete rights to the property. A fee This is the maximum possible âestateâ that one can own. A fee simple estate is the least limited interest and most complete ownership of land. This âestateâ normally applies to single Family homes, and some townhomes. Rarely does it apply to condominiums. is the least limited interest and most complete ownership of land. This âestateâ normally applies to single Family homes, and some townhomes. Rarely does it apply to condominiums. Down Payment Assistance programs almost always require the property to be Fee Simple to purchase.
FHA Direct Endorsement
Certain financial institutions that offer FHA-insured loans are termed "Direct Endorsement Lenders." What this signifies is that the lender has previously met HUD regulations and obtained prior approval from the FHA. To become designated as a Direct Endorsement Lender, the financial institution submits a certain number of its loan files for FHA review, which HUD calls "test case" loans. Once these loans meet the agency's approval, the lender qualifies for Direct Endorsement selection, after which the lender can approve loans for FHA backing prior to submitting the paperwork for review. Although the FHA grants Direct Endorsement status to the lender and not the actual underwriters, the financial institution must employ a registered Direct Endorsement underwriter to assess and review each loan application. Also termed âFull Eagleâ Lenders are direct endorsement lenders. Not all Lenders are direct endorsement lenders. For the most part, all approved and qualified Florida Down Payment Assistance Lenders are direct Endorsement Lenders.
FHA is a an acronym for Federal Housing Administation
A Federal Housing Administration (FHA) loan is a consumer home mortgage that is insured by the government and issued by a bank or other lender that is approved to Originate FHA Loans to the general public. FHA loans require a lower minimum down payment (3.5%) than many conventional loans. There are two forms of mortgage Insurance with an FHA Mortgage Loan and applicants may have lower credit scores than are required for a Conventional Mortgage. The FHA loan is designed to help low- to moderate-income families attain homeownership. Most Down Payment Assistance programs are based with FHA Loans. Many first time homebuyers use FHA Loans.
FICO 5-4-2 version scores.
These are mathematical scores developed by the Fair Isaac Company that are used by the three credit bureauâs. Fico scores are used by Lenders to evaluate the risk associated in lending money. The higher the score, the less the risk. Most Down Payment Assistance programs today require a FICO version 5-4-2 score of at least a middle 640 score.
First Time Home Buyer
A First Time Home Buyer is considered by HUD to be any natural person who has not owned a principal residence in the past 3 years. The question generally arises when someone is attempting to receive down payment assistance to purchase a principal residence.
First Time Home Buyer
A First Time Home Buyer is considered by HUD to be any natural person who has not owned a principal residence in the past 3 years. The question generally arises when someone is attempting to receive down payment assistance to purchase a principal home residence.
First Time Homebuyer grants
Some forms of First Time Homebuyer are actually financial grants that don't have to be paid back. These are also known as down payment assistance Grants. A first Time Homebuyer Grant can only come from a State or Federal Government Agency, not a Seller. The sponsoring lending or governmental entity âgrantsâ part of the down payment to the First Time Homebuyer. These Grants do not have to be repaid provided the Borrower fulfills the First Time Homebuyer program guidelines. A grant sometimes has a clause that the Buyer has to live in the property, for the full grant to be forgiven, sometimes its an immediate Grant at the Closing table. Florida has the best First Time Home Buyer grant programs in the entire country.
Florida Bond Down Payment Assistance programs
The Florida Bond money is accumulated through the State Bond program by receiving a portion of the deed stamps from all the properties that are sold with the exception of the Florida State Bond Down Payment Assistance programs. The Down payment assistance mortgage bond is secured as a second mortgage at either 0% interest or a very low second mortgage interest rate and is paid back at the time the First Time Homebuyer decides to sell that property. This is a great situation for a 1st time homebuyer because he/she gets to use money at either 0% or very low interest to purchase a house and doesn't have to pay it back until the house is sold. Sometimes there are no payments necessary until the home is sold by the 1st time homebuyer and then the bond money is paid back from the proceeds. That is called a "Deferred" 2nd Mortgage. Once the money is paid back to the State of Florida, it goes back into the Down Payment Assistance programs for someone else to use. 2nd mortgage Bond down payment assistance money usually is coupled with an FHA 1st mortgage.
Freddie Mac - Federal Home Loan Mortgage Corporation (FHLMC)
Freddie Mac (FHLMC), along with Fannie Mae (FNMA), Freddie purchases mortgages on the secondary market and they too have their own set of Lending guidelines, which are similarly restrictive as FNMA guidelines.
Gap in Title in real estate terms.
This is a break in the chain of title, such as when records donât reflect a transfer to a particular grantor (person or entity). This could happen if the Grantor failed to record the deed after the last sale. Typically the Title Company or Closing Attorney assumes this task.
Garnishment of wages and Federal Tax refunds
This legal process is designed to provide a means to creditors to be made whole from Borrowers who fail to pay their legal debts. Wages and property can be garnished by the courts. First Time Homebuyers should understand that tax liens, child support, alimony and some bankruptcy cases, are able to use a legal Garnishment of wages or even Garnishment of Federal Tax refunds to be paid by the Borrower and may cause a decline in a mortgage loan.
Garnishment of wages and Federal Tax refunds
This legal process is designed to provide a means to creditors to be made whole from Borrowers who fail to pay their legal debts. Wages and property can be garnished by the courts. First Time Homebuyers should understand that tax liens, child support, alimony and some bankruptcy cases, are able to use a legal Garnishment of wages or even Garnishment of Federal Tax refunds to be paid by the Borrower and may cause a decline in a mortgage loan.
General liens on property
Gift letters in mortgages
This is a letter provided to the lender by the borrower acknowledging that the money being used, generally part of the down payment, to purchase real property was a gift from a relative, or close friend and has no stipulation or obligation to repay it. Typically this situation arises with First Time Home Buyers whether or not they use some form of down payment assistance. Gift letters can also come from employers under some circumstances.
Glossary of Real Estate Terms
The mortgage world has unique terms and calculations that we feel every First Time Home Buyer should be aware of and the context that most mortgage terms might be used. Here are the most common terms you should know if youâre seeking down payment assistance.
Good Faith Estimate or Loan Estimate
This was an itemized document of mortgage loan fees that the Lenders gave their borrowers when they first applied for a mortgage. This was required so the borrowers would know how much money the Lender will charge for the service of Originating their mortgage loan(s) and any other mortgage service. This document was typically sent out to the Borrower with the initial disclosure package. Per the Real Estate Settlement Procedures Act, the Lender had 3 business days to send out this disclosure after filling out a loan application. This document has been replaced by a more detailed Closing Disclosure.
Government Sponsored Entity or GSE
Fannie Mae, Freddie Mac, FHLB and the Farm Credit System. These are the financial services corporations established and chartered by the U S Congress. Although they seem to be departments of the Federal Governments, GSE Securities are not backed by the âfull faithâ and âcreditâ of the Federal Government. They are Agencies that are used to purchase individual residential mortgages and have their own guidelines.
Gross Income for mortgages.
This term refers to the entire pre-tax income which has been derived by wages, business, income producing property, child support etcâŠWhen applying for down payment assistance, the gross income from all sources is always used for down payment Assistance qualification.
Ground water
This is water just below the surface of the earth. Because of the high water table in Florida, a First Time home buyer should be aware if thereâs water below their feet.
Hard money mortgage
This is borrowed money from a private investor at a very high interest rate that generally involves Investors as purchasers on real estate. The Investor purchasers donât mind paying the agreed upon high interest rate because they are usually short term loans and the money is generally used to purchase the property and possibly renovate it. After the property is renovated the property is sold and the high interest loan is repaid in full. Institutional down payment assistance loans from State and local government entites are not hard money.
Hazard Insurance
These are commonly known as Homeowners or HO-3 insurance policies. These cover physical destruction of the property and insure both the Lender as an additional payee, as well as the Insured who is the owner of the property. All mortgage loans including down payment assistance loans require this form of insurance.
Homeowner's or Hazard Insurance policy
Homeowners policies Protects the buyer and the lender against loss due to fire, storms and other natural disasters and multiple hazards. It may also insure against additional risks or perils including personal liability and theft.
Homeowner's or Hazard Insurance policy
Protects the buyer and the lender against loss due to fire, storms and other natural disasters and multiple hazards. It may also insure against additional risks or perils including personal liability and theft.
In Real Estate there are Offer Contingencies...
A provision or provisions in a contract that must be met for the contract to be considered enforceable. For example, a buyer may offer a contract that is contingent upon the buyer's obtaining suitable financing; if financing is not obtained, the buyer may back out of the agreement without penalty. There may also be a financing contingecy if the Buyer or the property cannot qualify for a mortgage. There are many other real estate contract contingincies.
Intangible Tax on Mortgage
Fees collected when property changes hands or when a mortgage loan is made. This fee equals .35%. They are set by, and paid for by state and local governments.
Intangible Tax on Mortgage
Fees collected when property changes hands or when a mortgage loan is made. This fee equals .35%. They are set by, and paid to, state and local governments.
Lease with Option to Buy
Larger Real Estate companies that specialize in Lease with the Option to Buy, also known as Rent with the Option to Buy typically have separate Option to Purchase or Option to Buy documents apart from the Rental Agreement. One reason is because these large compay's are reputation sensitive with regard to public opinion, such as Google reviews. These larger Companies do not want any term misunderstandings between the themselves and the Tenants. This is also one the reasons why these institutional Landlords typically don't allow for part of the Tenants rent to be used a part of a Down Payment for an Instituional Lender. Lending Guidelines are always changing, and this Seller credit may not be allowed in the Mortgage Lending guidelines. If a portion of a Tenants rent would go towards the Rent to Own or Rent with Option to Buy agreement, then that money should legally be Escrowed into a separate bank account that is known as an Escrow account or Trust account. This is an extra step for the Institutional Landlord that they normally don't want as a potential Legal dispute. The terms Rent with Option to Buy, Lease with Option to Buy, or Lease with Option to Purchase mean the same thing, it just depends how the Rental Agreement and Option to Buy is used in that Agreement. The Agreement should consistantly use the same wording throughout the Option Agreement.
Legal Description of property
The legal description pinpoints the location of a given property within its particular township, range, and section. This is the legal description of the property being sold. There are 3 common methods used to describe real estate: metes and bounds, government surveys, and lot and block.
Legal Description of property
The legal description pinpoints the location of a given property within its particular township, range, and section. This is the legal description of the property being sold. There are 3 common methods used to describe real estate: metes and bounds survey, government survey, and lot and block.
Lender Inspection Fee
Covers the cost of the appraisers final inspection to ensure the home is complete.
Lender Inspection Fee
Covers the cost of the appraiser's final inspection to ensure the home is complete.
Lenders Title Insurance aka Mortgage Title Insurance
Protects the lender against loss due to problems in connection with the title not identified by a title search. It is usually written for the amount of the mortgage loan. There are 2 forms of Title insurance with loan Closings, required Lender Title Insurance and Owners Title Insurance.
Loan Discount Fee
(Also called points): A one-time charge used to adjust the yield on the loan to what the market conditions demand. Each point is equal to one percent (1%) of the loan amount.Buyers occasionally buy down the loan rate to receive a lower interest rate. This is called a loan discount fee.
Loan Discount Fee
(Also called points): A one-time charge used to adjust the yield on the loan to what the market conditions demand. Each point is equal to one percent (1%) of the loan amount. Buyers occasionally buy down the loan rate to receive a lower interest rate. This is called a loan discount fee.
Loan Number
The loan number is associated with the borrower's loan on all closing documents and internal lending documents.
Loan Origination Fee
Covers the lender's administrative costs in processing the loan. It is often figured as a percentage of the loan amount. Typically, the percentage is 1% but different lenders allow for higher loan officer Origination fees.
Loan Origination Fee
Covers the lender's administrative costs in processing the loan. It is often figured as a percentage of the loan amount. Typically, the percentage is 1% but different lenders allow for higher Loan Officer Origination fees. This fee is generally the amount of money the loan Officer receives as compensation.
MIP (Mortgage Insurance Premium)
MIP is Mortgage Insurance Premium and is required on all FHA loans. The MIP is a payment for the government to guarantee the FHA loan to a lender in the event of a default on the part of the buyer. There is an up-front premium that can be financed and a monthly premium that is included in the total payment.
For FHA loans, the MIP is 1.75% of the loan amount. For USDA loans, the up-front mortgage insurance is 1%. This is not the same as the monthly mortgage insurance cost. The monthly mortgage insurance premium is .85% divided by 12 months of the loan amount. The USDA monthly mortgage insurance premium is.5% divided by 12 months of the loan amount.
MIP (Mortgage Insurance Premium)
MIP is Mortgage Insurance Premium and is required on all FHA loans. The MIP is a payment for the government to guarantee the FHA loan to a lender in the event of a default on the part of the buyer. There is an up-front premium that can be financed and a monthly premium that is included in the total payment.
For FHA loans, the MIP is 1.75% of the loan amount. For USDA loans, the up-front mortgage insurance is 1%. This is not the same as the monthly mortgage insurance cost. The monthly mortgage insurance premium is .85% divided by 12 months of the loan amount. The USDA monthly mortgage insurance premium is .5% divided by 12 months of the loan amount.
Mortages and tax deductions
If you are either a self employed borrower or a Borrower that has deductions that are outside the standard deductions for an easy form 1040, you have itemized deductions and many of these deductions will actually reduce the amount of home you can purchase because all deductions that are outside the standard deductions will be subtracted from your income. This is called your Adjusted Gross Income. This tax deduction technique can easily affect you mortgage lending ratios. An example: If youâre business gross sales were $100,000 in 2020, but you took itemized deductions of $45,000, then your income per underwriting guidelines is only $55,000 for 2020. Typically, a self empolyed or commissioned Borrowers income is averaged over a two year period for qualification purposes.
Mortgage Debt to income ratio
This calculation determines the amount of money the Borrower is qualified to borrow. Generally, for all Florida Down Payment Assistance programs, the Borrowers must have a debt to income ratio of less than 45%. The calculation works like this: total pre-tax Borrower income for the month, and then multiply that figure by .45%. Then subtract all Borrower obligationâs that would be reflected on a credit report along with the new Principle + Interest + Property Taxes + Hazard Insurance + Mortgage Insurance + any applicable HOA fees. If you have more than $1 left, youâre debt to income ratio should be fine and under 45%.
If however, your calculation goes into the negative side, you need to look at less expensive homes. For Borrowers with higher credit and income profiles, the debt to income or back end ratio's may be higher for FHA or Conventional loans. Every mortgage program is different and all Borrowers credit and financial profiles are different. It comes down to what Automated Underwriting approves. Very few Mortgage companies manually underwrite mortgages anymore.
Mortgage Interest payments in Arrears
Mortgage interest in the U.S. is paid in arrears, which means that in the case of monthly payments, each payment covers principal repayment and mortgage interest for the month preceding the payment due date. In other words you pay the interest and principle at the end of the month not the beginning of the month. Most First Time Home Buyers think they pay for the month to follow, but thatâs not the case.
Mortgage Loan Number
The loan number is associated with the borrower's loan on all closing documents and internal lending documents.
Mortgage Rate Caps on Adjustable mortgage loans.
An interest rate ceiling or limit on the monthly or annual adjustments made in the payments on a variable rate or Adjustable rate mortgage loans. The interest rate changes on the balance of an adjustable rate loan. Interest rate caps don't apply to fixed rate mortgage terms.
Mortgage Title Insurance
Protects the lender against loss due to problems in connection with the title not identified by a title search. It is usually written for the amount of the mortgage loan. There are 2 forms of Title insurance with loan Closings, lender title insurance and owner title insurance.
Offer Acceptance
To be accepted, a real estate Purchase Offer must at a minimum identify: 1) the Subject of the offer: the Property; 2) the Consideration: the purchase price to be paid; 3) the Time for performance: the closing date 4) it must be in writing; and 5) it must be delivered to the Seller or their authorized agent. Once a Purchase Offer is delivered, the Seller then has a âPower of Acceptanceâ. They can accept it as is or they can reject it totally; or they can respond with different terms such as a counteroffer. If the offer is accepted before another offer is presented, it must be signed by both the Seller and the Buyer to be valid.
Owner's Title Insurance
The charge for the owners to obtain title insurance protection, protecting the owners against losses due to title problems.
Owner's Title Insurance
The charge for the owners to obtain title insurance protection, protecting the owners against losses due to title problems.
PMI (Private Mortgage Insurance)
Protects the lender from loss due to payment default by the borrower. With this insurance, the lender is willing to make a larger loan, which in turn reduces the down payment amount required. This insurance should not be confused with Mortgage Life, Credit Life or Disability Insurance, which are designed to pay off a mortgage in the event of death or disability of the borrower.
PMI (Private Mortgage Insurance)
Protects the lender from loss due to payment default by the borrower. With this insurance, the lender is willing to make a larger loan, which in turn reduces the down payment amount required. This insurance should not be confused with Mortgage Life, Credit Life or Disability Insurance, which are designed to pay off a mortgage in the event of death or disability of the borrower.
Pre-Paid Items
Pre-paid items are those items which the lender requires are paid in advance, including interest from the date of closing until the last day of the month of closing, mortgage insurance premiums, the first-year hazard insurance premium and the first-year flood insurance premium, if required. In addition, although not generally thought of as a prepaid item, CDD assessments for a community are often required to be pre-paid at this time.
Pre-Paid Items
Pre-paid items are those items which the lender requires are paid in advance, including interest from the date of closing until the last day of the month of closing, mortgage insurance premiums, the first-year hazard insurance premium and the first-year flood insurance premium, if required. In addition, although not generally thought of as a prepaid item, CDD assessments for a community are often required to be pre-paid at this time.
Property Conveyance occurs when real estate or personal property is paid for and something of value is accepted by the Seller.
The transferring of a property title or personal property from one individual to another.
Real Estate and Mortgage Disclosures
Disclosures are part of all residential Mortgage transactions to comply with Federal Laws. In some real estate transactions, Disclosures are added to reveal or make known certain material facts of the property. These disclosures are designed to make the Buyers aware of certain facts that pertain to the physical condition of the property. They are also used as a recognized risk reduction tool for Real Estate Brokers.
Real Estate Backup offer
A backup offer is a âplace holderâ that tells the seller that youâve both agreed on a price and terms if the scenario arises that the sellerâs current accepted offer is cancelled. When a property receives multiple offers, if the winning purchase offer falls through, the back-up offer automatically becomes the new winning purchase offer. This is now considered a Sellers option and no longer considered an automatic conclusing for the Buyer.
Real Estate Closing process
This is the final step in executing a real estate transaction. The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, ownership of the property is transferred to the buyer.
Real Estate Counter Offer
A higher or lower offer made in reply to the original or last offer made by the opposing Party to the contract.
Rent to Own
The terms Rent to Own, Lease to Own, Lease with the Option to Buy used without context mean the exact same thing. However, the Rental Agreement that is signed by both the Landlord and the Tenant will choose which of these terms is used with that particular Rental Agreement.
Rent to Own Income documetation needed by Landlord and or Investor
The Income documentation needed for a rent to buy agreement will generally be the following documents.
Please ensure that your name, employer name, pay dates, and amounts are clear and legible on each document
.Rental Agreement
A written or oral agreement that establishes or modifies the terms, conditions, rules, regulations or any other provisions concerning the use and occupancy of a dwelling unit and premises. Oral Agreements in court are rarely enforceable.
Residential Appraisal
A home appraisal is an unbiased estimate of the true (or fair market) value of what a property is worth. All lenders order an appraisal during the mortgage loan process so that there is an objective way to assess the home's market value and ensure that the amount of money requested by the borrower is appropriate. The Buyer general pays for the appraisal before the appraiser goes to the property.
Satisfaction of Mortgage
A certificate that is issued by the mortgagee when a mortgage is paid in full. This document is called the release of mortgage or discharge of mortgage.
Satisfaction of Mortgage
A certificate that is issued by the mortgagee when a mortgage is paid in full. This document is called the release of mortgage or discharge of mortgage.
Save interest money with a Bi weekly loan payment
A biweekly mortgage interest payment is a mortgage for which one-half payment is made every other week instead of a full payment made once per month. The homeowner makes 13 payments per year instead of the usual twelve, which accelerates the loan's payoff schedule by approximately 6 years. This is a great idea for First time Homebuyers to pay off their mortgage early without consciously sacrificing income.
Survey Fee
The lender requires that a surveyor conduct a property survey to determine the exact location of the home and lot lines, as well as easements and rights of way. This is done to protect both the lender and the homebuyer.
Survey Fee
The lender requires that a surveyor conduct a property survey to determine the exact location of the home and lot lines, as well as easements and rights of way. This is done to protect both the lender and the homebuyer.
The principle of Conformity in real estate.
The principle or concept in real estate that a property will probably increase in value if its size, age, condition, and style are similar to other properties in the immediate area. Non conforming homes would be a log cabin next to a subdivision. The log cabin doesn't conform to the surrounding homes.
The process of Clearing Title
This is a process the Title goes through to make sure the title of the property is free and clear of "clouds on title. Clearing Title is a critical step for the sale of any home is the review of the propertyâs title report. A buyer, their mortgage lender and the title insurance company will want to review the current title history of the property to make sure that the next buyer can purchase the property free of any unnecessary liens and encumbrances. Property taxes are an ongoing lien that cannot be removed, and there are many title restrictions that will stay with the property if it has easements, condo restrictions or other agreements with neighbors or municipalities. It is important for all Buyers, not just first time homebuyers to make sure they have clear title before closing on their new home.
Title company Escrow account
First time homebuyers should have their Earnest Money Deposits deposited into a Title Company's Escrow or Real Estate Trust Accounts for their safety. Real estate trust fund accounts, also called earnest money or escrow accounts, are accounts that a brokerage company will set up at a bank or some other recognized depository. They are money or other things of value that are received by a broker or salesperson on behalf of an individual (usually the buyer) that is held for the benefit of others in the performance of any acts for which a real estate license is required. In Florida, it is very unusual for a Real Estate Broberage to hold Escrow or Earnest Money from the Buyers.
VA funding fee
This is similar to FHA's UFMIP, and is an insurance premium paid on a loan obtained by a veteran or qualified reservist to guarantee a portion of the loan in the event that the borrower defaults. Unlike the MIP, the funding fee decreases as the veteran puts more money down, but it does not totally disappear. Also, the funding fee may be financed. Typically, the funding fee increases each time you use a VA Loan. The Funding Fee is waived if the veteran was disabled during their service period.
VA funding fee
This is similar to FHA's UFMIP and is an insurance premium paid on a loan obtained by a veteran or qualified reservist to guarantee a portion of the loan in the event that the borrower defaults. Unlike the MIP, the funding fee decreases as the veteran puts more money down, but it does not totally disappear. Also, the funding fee may be financed. Typically, the funding fee increases additional time you use a VA Loan. The Funding Fee is waived if the Veteran was disabled during their service period.
What Associate Broker means in the world of Real Estate.
A Real Estate Sales Agent who has taken additional education classes and earned a broker's license but chooses to work under the management of a Principle or Managing Broker.
What does Escrow Agent mean when you Rent to Own a house?
An Escrow Agent is a Company or natural person who holds the Tenants deposit on a rental property. This can also be called a Lease deposit. The Escrow Ageny may also be required to hold various documents having to do with the rental agreement or the Lease with Option to Buy Agreement until the terms of the Rental Contract or Rental Agreement has been satisfied by the Tenant. A valid Escrow is set up when a binding and enforceable agreement or contract has been signed by all Paries of the Contract and funds have been deposited by the Escrow Holder or Escrow Agent.
In the case of a Lease with Option to Buy Contract, the Escrowed funds, that the Escrow Agent holds from the Tenant maybe able to be used to fund the Tenants mortgage loan closing costs or down payment, depending on the terms of the Rent to Own agreement.
What does Termination Costs mean in a Rent to Purchase Agreement?
Termination Costs can have extensive or various meanings depending on what the Rental Agreement has stated or the Rent with Option to Buy Agreement stipulates. Many times it means that the Escrow Deposit, also known as Security Deposit is automatically forfeited if the Rental Agreement is breached by the Tenant. Some other examples of provisions to the Rental Agreement that are Termination Costs may allow the Landlord to charge the Tenant Legal and/or Attorney's fees, the rehabilitation of the property, third party professional costs such as cleaning, repairing walls that were damaged by the Tenant or any other similar damages if any other provision of the contract or agreement is breached by the Tenant. Rental Agreements may also provise that even if the Escrowed Funds (Security Deposit) are greater than the damages, the remainder of the Escrow Deposit may be retained by the Landlord as Liquidated Damages. You just need to read the Agreements.
What Tenant means in a Rent to Own or Lease with Option to Purchase transaction
The definition of Tenant in a typical residential Home or Commercial building or Rental unit in a Lease with the Option to Purchase program or Rent with the Option to Purchase is someone who exclusively holds the right to possess the property, that they either have a Rental agreement with or Lease agreement with the Owner of the property. In the case of a Lease with Option to Buy the property, the Tenant has the exclusive right to purchase the property, per the terms of the Lease with Option to Purchase document. Its the Tenants option to excersize right to purchase the property.