M.S. Barnett Funding - Mortgage Terms

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Mortgage Terms:

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ABSTRACT: A summary; an condensed version

ABSTRACT OF TITLE: An assembling of the recorded documents relating to a parcel of land, from which an attorney may give an opinion as to the condition of title.

ACRE: A measure of land equal to 43,560 square feet.

ACKNOWLEDGMENT: Formal declaration before a public official that one has signed a document. Prior to recording real estate legal documents such as grant deeds and deeds of trust, a Notary Public acknowledges the person's signature on the document.

ADJUSTABLE RATE MORTGAGE (ARM): A mortgage where the interest rate is not fixed for the life of the loan. These mortgages adjust periodically based on an index that changes with market conditions. The rate of interest is the sum of the index plus a margin. The margin remains fixed for the life of the loan. Most ARMs have a periodic interest rate and payment caps as well as life cap.

AGREEMENT OF SALE: An agreement between parties for the sale of real estate.

ALIENATION CLAUSE: Provision in a mortgage document stating that the loan must be paid in full if ownership is transferred, sometimes contingent upon other occurrences such as transfer of ownership of secured property.

AMORTIZE: Gradual payment of debt through regular installments that cover both interest and principal.

ANNUAL PERCENTAGE RATE (APR): A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges.

APPRAISED VALUE: An opinion of the value of a property at a give time, based on facts regarding the location, improvements, etc., of the property and surroundings.

APPRAISAL REPORT: Estimate of real estate value. An appraisal evaluates the property at a given time based on facts regarding the location, improvements, neighborhood, and comparable sales. Generally, the value is based on: cost, market, and income.

APPRECIATION: Increase in value or worth of property.

ARREARS: Payment made after its due is in arrears. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance.

"AS IS": A clause that is used sometimes in the transfer of property. It means that the present property is being transferred with no guarantee or warranty provided by the seller.

ASSESSED VALUE: Value placed on property as a basis for levying property taxes; not identical with appraised or market value.

ASSIGNMENT: Transfer of a contract from one party to another.

ASSUMPTION OF MORTGAGE: Agreement by a buyer to assume the liability under an existing note secured by a mortgage or deed of trust.

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BALLOON NOTE: A note calling for periodic payments which are insufficient to fully amortize the face amount of the note prior to maturity, so that a principal sum know as a "balloon" is due at maturity.

BALLOON PAYMENT: The final payment of a mortgage which is larger that the regular payment; it usually pays off the debt.

BANKRUPTCY: A court action to restructure or erase debt.

BENEFICIARY: The lender named on the mortgage note.

BLANKET MORTGAGE: A mortgage covering multiple properties.

BRIDGE LOAN: A form of interim loan, generally made between a short term loan and a long term loan, when the borrower needs to have more time before taking on long term financing.

BROKER: A person that represents another for a fee in real estate transactions. Mortgage brokers help consumers locate suitable real estate loans and are paid a fee for their services.

BUYDOWN: A reduction of the rate of interest of the monthly payments borrowers pay to the lender.

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CAPS: Are used on adjustable rate mortgages to limit the interest rate and/or the payment.

CAPITAL GAIN: Taxable profit on the sale of an appreciated asset.

CERTIFICATE OF REASONABLE VALUE (CRV): An appraisal of property for the purpose of insurance for a VA loan.

CERTIFIED COPY: A true copy, attested to be true by the officer holding the original.

CHATTEL: Personal property.

CLOSING: Conclusion of a real estate sale, where the title of the property is transferred to the new owners and funds are transferred to the appropriate parties.

CLOSING AGENT: A third neutral party that performs the real estate transaction.

CLOSING COSTS: Expenses incurred by the buyer/borrower and the seller in a real estate or mortgage transaction.

CLOSING STATEMENT: Statement prepared for the buyer and sell itemizing all of the cost of a real estate transaction.

CLOUD ON TITLE: An invalid encumbrance on real property, which if valid, would affect the rights of the owner.

COMMISSION: The fee paid to the broker or other entity for services rendered.

COMMITMENT: A written promise to make or insure a loan for a specified amount and on specified items.

COMPARABLES: Properties used as comparisons to determine the value of a specified property.

CONDITIONAL COMMITMENT: A lenders promise to issue a loan subject to certain conditions.

CONSTRUCTION LOAN: Short term financing of real estate construction. Generally followed by the long term financing.

CONTINGENCY: Condition, which must be satisfied before the buyer can consummate the purchase of a property.

CONTRACT OF SALE: A purchase transaction in which the buyer receives possession of the property, but the seller retains title.

CONVENTIONAL LOAN: A mortgage loan this not guaranteed or insured by the government.

CONVENTIONAL MORTGAGE: A loan neither insured by the FHA nor guaranteed by the VA.

CONVERSION CLAUSE: A provision in some ARMs that allows you to change the ARM to a fixed-rate loan at some point during the term. Usually the conversion is allowed at the end of the first adjustment period.

CONTRACT SALES PRICE: The full purchase price as stated in the contract.

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DEED OF TRUST: An instrument given by the borrower to a third party (trustee) vesting title to the property in the trustee as security for the borrower's repayment of the mortgage loan.

DEED RESTRICTION: Provision placed in deed to control use and occupancy of the property by future owners.

DEFAULT: Failure to make mortgage payment or violation of other provisions of the mortgage note.

DEFICIENCY JUDGEMENT: Personal claim against the debtor, when foreclosed property does not yield enough at the sale to pay off the loans and interest against it.

DEPRECIATION: Decrease in value to real property improvements caused by deterioration or obsolescence.

DISCOUNT: A loan funded below par. Lenders or investors will fund loans at a discount in order to increase the overall yield on the note.

DISBURSEMENTS: Payments made during the course of an escrow or at closing.

DOCUMENTARY TAX STAMPS: Stamps, affixed to a deed, showing the amount of transfer tax.

DOWN PAYMENT: Cash to be paid by the buyer at closing to consummate a real estate transaction.

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EARNEST MONEY: Cash to be paid by the buyer at closing.

EASEMENT: A right created by grant, reservation, agreement, prescription, or necessary implication, which one has in the land of another.

EMINENT DOMAIN: a government right to acquire private property for public use.

ENCROACHMENT: Construction onto the property of another.

ENCUMBRANCE: Unauthorized intrusion of a building or improvement onto another's land. A claim attached to and binding real property.

EQUITY: The difference between the market value of the property and the homeowners mortgage debt.

ESCROW: Funds given to a third party to be held until a specific occurrence. A Lender collecting and paying the taxes and insurance on behalf of the borrower.

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FANNIE MAE (FNMA): Federal National Mortgage Association. FNMA is one of the major secondary market investors that purchase loans from mortgage companies and other depository institutions.

FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC/FREDDIE MAC): A government sponsored agency that is also a publicly traded company. They purchase mortgage loans from mortgage bankers and financial depository institutions.

FEDERAL HOUSING ADMINISTRATION: A federal agency, which insures first mortgages, enabling lenders to loan a very high percentage of the sales price.

FEDERAL TAX LIEN: A lien attached to property for nonpayment of a federal tax.

FEE SIMPLE: Highest possible degree of ownership of land.

FIDUCIARY: A person in a position of rust or responsibility with specific duties to act in the best interest of the client. Real estate brokers and mortgage brokers are fiduciaries.

FIRST MORTGAGE: Mortgage holding priority over the claims of subsequent lenders against the same property.

FIXTURE: Personal property that has become part of the real estate.

FORECLOSURE: A proceeding in or out of court, to extinguish all rights, title, and interest, of the owner(s) of a property in order to sell the property and satisfy a lien against it.

FREDDE MAC: Federal Home Loan Mortgage Company. A federal agency purchasing first mortgages, both conventional and federally insured, from members of the Federal Reserve System, and the Federal Home Loan Bank System.

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GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA/GINNIE MAE): A government owned agency that acts as a secondary market conduit for FHA & VA loans. GNMA guarantees the timely principal and interest payments to investors.

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HAZARD INSURANCE: Insurance on a property against fire and similar risk.

HOMEOWNER'S POLICY: Policy, which expands the insurance for a homeowner.

HOUSING AND URBAN DEVELOPMENT (HUD): The federal government agency that oversees mortgage loans.

HUD 1: A closing document required by HUD that outlines the settlement cost of a loan. The closing agent generally prepares the document.

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INDEX: A published rate or benchmark measure of current interest rate levels used to calculate periodic changes in rates charged on adjustable rate mortgages.

INTEREST PAYMENT NOTIFICATION (FORM 1098): A federal tax form that lenders use at year end to notify borrowers of the interest that was paid on their mortgage over the last year.

INTEREST RATE: A percentage of an amount of money, which is paid for its use for a specified time.

INVESTMENT PROPERTY: A property that is not occupied by the owner and in most cases receives income off the property.

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JOINT TENANCY: An undivided interest in property, taken by two or more joint tenants. Upon death of joint tenant the interest passes to the surviving joint tenants, rather that to the heirs of the deceased.

JUDGEMENT: The decision of a court of law. Money judgements, when recorded, become a lien on real property of the defendant.

JUNIOR MORTGAGE: A mortgage subordinate to another mortgage.

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LAND CONTRACT: Installment plan for buying a house. It is used as an alternate to obtaining a loan from a traditional source.

LATE CHARGE: A penalty for failure to pay an installment on time.

LEASE WITH OPTION TO PURCHASE: A lease under which the lessee has the right to purchase the property.

LEGAL DESCRIPTION: An expanded and unique description of a property that is used on legal documents such as a deed.

LENDER: A general term encompassing all mortgages and beneficiaries under deed of trust.

LIEN: An encumbrance against property for money, either voluntary or involuntary.

LIFE ESTATE: An estate in real property for the life of a living person. The estate then reverts back to the grantor or on to a third party.

LIS PENDENS: A notice that litigation is pending on a property.

LOCK: Guarantee that the borrower will receive the rate in effect at the time of loan application.

LOAN-TO-VALUE RATIO (LTV): The ratio of the mortgage loan amount to the property appraised value.

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MARGIN: The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

MARKET VALUE: The most likely price a given property will bring if widely exposed on the market, assuming fully informed buyer and seller.

MECHANICS LIEN: A lien created by statue for the purpose of securing priority of payment for work performed and materials furnished in construction or repair.

MORTGAGE: A lien or claim against real property given as security for a loan.

MORTGAGEE: The lender of money.

MORTGAGOR: The borrower of money.

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NEGATIVE AMORTIZATION: Occurs when the monthly payments do not cover all the interest. This results in the principal balance increasing over the term of the loan.

NOTE: A written promise to repay a certain sum of money on specified terms.

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OPEN END MORTGAGE: A mortgage permitting the mortgagor to borrow additional money under the same mortgage.

ORIGINATION FEE: A fee or charge for work involved in the evaluation, preparation and submission of a proposed mortgage loan.

OWNERS POLICY: Title insurance for the owner of property, rather than a lien holder.

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PAPER: A mortgage, deed of trust, or land contract, which is given instead of money.

PARTIAL RELEASE: A release of a portion of property covered by a mortgage.

PITI: An abbreviation for principal, interest, taxes and insurance.

PLAT: A map or chart of a lot, subdivision or community, showing boundary lines, buildings and easements.

PMI: An abbreviation for private mortgage insurance. Insuring part of the first mortgage, enabling a lender to make a conventional loan of a higher percentage of the property value.

POINTS: A Point is equal to one percent of the principal amount of a mortgage.

PREPAID INTEREST: Prepaid interest is the interest charged to borrowers at loan closing to pay for the cost of borrowing for a partial month.

PREPAYMENT: Full payment of the principal before the due date.

PREPAYMENT PENALTY: Charge levied by the lender for paying off a mortgage loan before its maturity date.

PRIMARY RESIDENCE: Considered the permanent location or residency.

PROPERTY TAX: A tax levied by the local municipality or county on real property.

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QUICK CLAIM DEED: A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property.

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REAL ESTATE: Land and anything permanently affixed to the land, and those things attached to the building.

REFINANCING: The repayment of debt from the proceeds of a new loan using the same property as security.

RELEASE: An instrument releasing property from the lien of the mortgage, judgement, etc.

RESPA (REAL ESTATE SETTLEMENT PROCEDURES ACT): A federal statue requiring disclosure of certain costs in the sale or refinance of residential property.

REVERSE MORTGAGE: A special program that provides income until death. Payment requirements are arranged through the increase in the principal amount of the loan.

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SECOND HOME: Commonly known as a vacation home.

SECONDARY MARKET: The buying and selling of mortgage notes.

SECURITY: Real or personal property pledged by a borrower, as additional protection for the lender's interest.

SETTLEMENT STATEMENT: A statement prepared by lender giving a complete breakdown of the costs involved in a real estate transaction.

SURVEY: Map made by a licensed surveyor who measures the land and charts its boundaries, improvements and relationship to the property surrounding it.

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TAX LIEN: Lien for nonpayment of taxes.

TENANCY BY THE ENTIRETY: A form of ownership by husband and wife whereby each owns the entire property. In event of death of one, the survivor owns the property without probate.

TITLE: It indicates the accumulation of all rights in property by the owners and others.

TITLE INSURANCE: An insurance policy, which protects the insured against loss, arising from defects in title.

TITLE SEARCH: A review of the public records to make sure that no adverse claims affect the value of the title.

TRUTH IN LENDING STATEMENT (REGULATION Z): A federal government regulation that provides details of the cost of obtaining a mortgage loan.

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WARRANTY DEED: Most valuable type of deed, in which the grantor makes formal assurance of title.

W2's: Tax form that is provided by employers to employees that states the income and taxes paid in a calendar year.

Location:
1713 State Road 60 East, Valrico, FL 33594

Phone & Fax:
Toll Free: 877-655-1999

Phone: 813-655-1999

Fax: 813-655-1996

Email:
info@msbarnettfunding.com