A term used in the Truth in Lending Act. It represents the relationship of the total finance charge (interest, discount points, origination fees, loan broker, commission, etc.) to the amount of the loan. When these fees are taken into account, the A.P.R. for the lender is usually higher than the interest rate stated on the note.
A summary of the history of ownership for a property along with any documentation of any changes affecting the title during that history. This is prepared by an abstractor, usually an attorney and is in lieu of a title policy, which is prepared by a title company. Abstracts of title are generally not used for residential real estate purchases, as they do not provide insurance coverage.
A clause in a mortgage allowing the lender to demand the entire remaining balance to be paid in full all at once. This usually occurs in response to the borrower failing to meet their obligations under the terms of the loan.
Latin for “according to value.” It’s a tax levied on real estate by local authorities based on the value of the land and improvements.
An addition to a contract. A supplemental form that becomes part of the contract. An example might be a Third Party Financing addendum if there is a loan involved with the purchase. Common TREC (Texas Real Estate Commission) promulgated addendums are for HOA transfers, temporary lease backs, Lead-based paint disclosure, Addendum for Sale of Other Property by Buyer, etc.
A mortgage that permits the lender to adjust the mortgage’s interest rate periodically on the basis of changes in a specified index. The Interest rate may move up or down with the index. The LIBOR (London Interbank Offered Rate) is the most commonly used index for adjustable rate mortgages.
The possession of land belonging to someone else. The possession must be open, visible and hostile. Most states have laws which allow the possessor to gain actual rights to the property once they have possessed the property continuously for a certain number of years. The phrase “possession is nine-tenths of the law” was made for this type of circumstance
A fiduciary relationship in which a person or entity act, by mutual consent, for the benefit of another. Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker, in contrast to a buyer’s agent. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly. A broker has a legal obligation to put their client’s interests first.
If the broker represents the owner, the broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written- listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owners agent anything they do not want the owner to know because the owner’s agent must disclose to the owner any material information to the agent.
If the broker represents the buyer, the broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyers agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell the buyer’s agent anything that the owner wouldn’t want the buyer to know because a buyer’s agent must disclose to the buyer any material information known to the agent.
Licensed representative who assists the buyer or seller with the purchase or sale of real estate.
a modification to an existing contract, mutually agreed to by all parties in writing.
During the option period an Amendment may be added to the contract to change the terms of the original contract. An amendment can be used to make changes to the sales price, closing costs, repairs, closing date, etc.
A loan in which both principal and interest are payable in installments. The payments are usually monthly for amortized mortgages.
A schedule showing the principal and interest payments throughout the life of the loan.
An estimate of real estate value, usually issued to standards of FHA, VA, and/or FHMA. Recent comparable sales in the neighborhood are the most important factor in determining value. Current Federal law limits the relationship between a lender and an appraiser.
An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings. A market appraisal is a measure of appraised value.
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage.