The ratio of aggregate monthly debt to aggregate monthly income. This is used by lenders to determine the amount of mortgage payment a buyer qualifies for.
Written instrument, which when properly executed and delivered, conveys title to real property. A legal document which affects the transfer of ownership of real estate from the seller to the buyer.
When purchasing real estate requires a loan, Texas law provides for the use of a deed of trust to secure repayment of the loan. To be valid, the trust deed must have three parties: the trustor (buyer/borrower), beneficiary (lender) and trustee. Although most deeds of trust are used in conjunction with a property sale, any monetary obligation can be secured by using a deed of trust. When the terms of the loan, as laid out in the promissory note, are not met by the borrower, the deed of trust establishes the process by which a lender can foreclose.
Depreciation is the loss in value of an asset / building over time due to wear and tear, physical deterioration and age. The cost of reproducing an income property can be recovered over the useful life of the asset which is determined by law. Depreciation is treated as an expense and is a line item on an income statement. Depreciation can only be applied to the building and not the land, since land does not wear out over time. Residential income property must be depreciated over a 27.5 year period using straight line depreciation
A loan fee charged by a lender of FHA, VA or conventional loans to increase the yield on the investment, paid at closing and lowering the interest rate on the note. One discount point = 1% of the loan amount. The corresponding reduction in interest rate varies, but is typically 1/8% to 1/4%. An origination fee is considered a discount point. Lenders typically quote interest rates including an origination fee or discount point. If the origination fee is not paid, the interest rate will be correspondingly higher.
A two unit dwelling. The owner can live in one unit and rent the other, or as an investment property both sides are rented.