Monday, 25 July 2011
Real Estate Definitions D
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balloon mortgage
A mortgage loan that requires the
remaining principal balance be paid at a specific point in time. For example, a
loan may be amortized as if it would be paid over a thirty year period, but
requires that at the end of the tenth year the entire remaining balance must be
paid.
remaining principal balance be paid at a specific point in time. For example, a
loan may be amortized as if it would be paid over a thirty year period, but
requires that at the end of the tenth year the entire remaining balance must be
paid.
balloon payment
bankruptcy
By filing in federal bankruptcy
court, an individual or individuals can restructure or relieve themselves of
debts and liabilities. Bankruptcies are of various types, but the most common
for an individual seem to be a "Chapter 7 No Asset" bankruptcy which relieves
the borrower of most types of debts. A borrower cannot usually qualify for an
"A" paper loan for a period of two years after the bankruptcy has been
discharged and requires the re-establishment of an ability to repay debt.
court, an individual or individuals can restructure or relieve themselves of
debts and liabilities. Bankruptcies are of various types, but the most common
for an individual seem to be a "Chapter 7 No Asset" bankruptcy which relieves
the borrower of most types of debts. A borrower cannot usually qualify for an
"A" paper loan for a period of two years after the bankruptcy has been
discharged and requires the re-establishment of an ability to repay debt.
bill of sale
A written document that transfers
title to personal property. For example, when selling an automobile to acquire
funds which will be used as a source of down payment or for closing costs, the
lender will usually require the bill of sale (in addition to other items) to
help document this source of funds.
title to personal property. For example, when selling an automobile to acquire
funds which will be used as a source of down payment or for closing costs, the
lender will usually require the bill of sale (in addition to other items) to
help document this source of funds.
biweekly mortgage
A mortgage in which you make
payments every two weeks instead of once a month. The basic result is that
instead of making twelve monthly payments during the year, you make thirteen.
The extra payment reduces the principal, substantially reducing the time it
takes to pay off a thirty year mortgage. Note:there are independent companies
that encourage you to set up bi-weekly payment schedules with them on your
thirty year mortgage. They charge a set-up fee and a transfer fee for every
payment. Your funds are deposited into a trust account from which your monthly
payment is then made, and the excess funds then remain in the trust account
until enough has accrued to make the additional payment which will then be paid
to reduce your principle. You could save money by doing the same thing yourself,
plus you have to have faith that once you transfer money to them that they will
actually transfer your funds to your lender.
payments every two weeks instead of once a month. The basic result is that
instead of making twelve monthly payments during the year, you make thirteen.
The extra payment reduces the principal, substantially reducing the time it
takes to pay off a thirty year mortgage. Note:there are independent companies
that encourage you to set up bi-weekly payment schedules with them on your
thirty year mortgage. They charge a set-up fee and a transfer fee for every
payment. Your funds are deposited into a trust account from which your monthly
payment is then made, and the excess funds then remain in the trust account
until enough has accrued to make the additional payment which will then be paid
to reduce your principle. You could save money by doing the same thing yourself,
plus you have to have faith that once you transfer money to them that they will
actually transfer your funds to your lender.
bond
market
market
Usually refers to the daily
buying and selling of thirty year treasury bonds. Lenders follow this market
intensely because as the yields of bonds go up and down, fixed rate mortgages do
approximately the same thing. The same factors that affect the Treasury Bond
market also affect mortgage rates at the same time. That is why rates change
daily, and in a volatile market can and do change during the day as well.
buying and selling of thirty year treasury bonds. Lenders follow this market
intensely because as the yields of bonds go up and down, fixed rate mortgages do
approximately the same thing. The same factors that affect the Treasury Bond
market also affect mortgage rates at the same time. That is why rates change
daily, and in a volatile market can and do change during the day as well.
bridge
loan
loan
Not used much anymore, bridge
loans are obtained by those who have not yet sold their previous property, but
must close on a purchase property. The bridge loan becomes the source of their
funds for the down payment. One reason for their fall from favor is that there
are more and more second mortgage lenders now that will lend at a high loan to
value. In addition, sellers often prefer to accept offers from buyers who have
already sold their property.
loans are obtained by those who have not yet sold their previous property, but
must close on a purchase property. The bridge loan becomes the source of their
funds for the down payment. One reason for their fall from favor is that there
are more and more second mortgage lenders now that will lend at a high loan to
value. In addition, sellers often prefer to accept offers from buyers who have
already sold their property.
broker
Broker has several meanings in
different situations. Most Realtors are "agents" who work under a "broker." Some
agents are brokers as well, either working form themselves or under another
broker. In the mortgage industry, broker usually refers to a company or
individual that does not lend the money for the loans themselves, but broker
loans to larger lenders or investors. (See the Home Loan Library that discusses
the different types of lenders). As a normal definition, a broker is anyone who
acts as an agent, bringing two parties together for any type of transaction and
earns a fee for doing so.
different situations. Most Realtors are "agents" who work under a "broker." Some
agents are brokers as well, either working form themselves or under another
broker. In the mortgage industry, broker usually refers to a company or
individual that does not lend the money for the loans themselves, but broker
loans to larger lenders or investors. (See the Home Loan Library that discusses
the different types of lenders). As a normal definition, a broker is anyone who
acts as an agent, bringing two parties together for any type of transaction and
earns a fee for doing so.
buydown
Usually refers to a fixed rate
mortgage where the interest rate is "bought down" for a temporary period,
usually one to three years. After that time and for the remainder of the term,
the borrower's payment is calculated at the note rate. In order to buy down the
initial rate for the temporary payment, a lump sum is paid and held in an
account used to supplement the borrower's monthly payment. These funds usually
come from the seller (or some other source) as a financial incentive to induce
someone to buy their property. A "lender funded buydown" is when the lender pays
the initial lump sum. They can accomplish this because the note rate on the loan
(after the buydown adjustments) will be higher than the current market rate. One
reason for doing this is because the borrower may get to "qualify" at the start
rate and can qualify for a higher loan amount. Another reason is that a borrower
may expect his earnings to go up substantially in the near future, but wants a
lower payment right now.
mortgage where the interest rate is "bought down" for a temporary period,
usually one to three years. After that time and for the remainder of the term,
the borrower's payment is calculated at the note rate. In order to buy down the
initial rate for the temporary payment, a lump sum is paid and held in an
account used to supplement the borrower's monthly payment. These funds usually
come from the seller (or some other source) as a financial incentive to induce
someone to buy their property. A "lender funded buydown" is when the lender pays
the initial lump sum. They can accomplish this because the note rate on the loan
(after the buydown adjustments) will be higher than the current market rate. One
reason for doing this is because the borrower may get to "qualify" at the start
rate and can qualify for a higher loan amount. Another reason is that a borrower
may expect his earnings to go up substantially in the near future, but wants a
lower payment right now.
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