A 1031 exchange is a real estate transaction in which the buyer and seller effectively swap properties in order to avoid paying capital gains tax on the sale. For example, let’s assume that John Doe wants to sell his commercial property for $600,000, which he bought for $400,000 as an investment.
An abstract of title is a history of a piece of property. For example, let's say John Doe wants to buy the house at 123 Main St.
An adjustable rate mortgage (ARM) is a type of mortgage using a varying interest rate calculated by adding a premium to a specific benchmark rate.These loans are also called variable-rate mortgages or floating-rate mortgages.
Assessed value refers to the value of an asset -- usually real estate -- as determined by an assessor for tax purposes.The assessed value is often computed by incorporating the purchases and sales of similar properties in nearby areas.
A balloon mortgage is a mortgage with a large payment made near or at the end of a loan term. Unlike a loan whose total cost (interest and principal) is amortized -- that is, paid incrementally during the life of the loan -- most or all of a balloon mortgage's principal is paid in one sum at the end of the term.
A buydown, also known as paying points, is a way to lower the interest rate on a mortgage. Let's say John Doe wants to borrow $100,000 to buy a house from Jane Smith.
In real estate, a capitalization rate is a measure of return on investment.The formula for capitalization rate is: Capitalization Rate = (Expected Income from Property – Fixed Costs – Variable Costs)/Property Value Let's say Jane Doe buys a house to rent out for extra income.
The Case-Shiller Home Price Index refers to a set of indices released by Standard and Poor's that tracks changes in the value of residential real estate. There are several "Case-Shiller" indices to track changes in a variety of markets.
A cash out refinance (also called a cash out refinance loan or cash out refinance mortgage) is a type of mortgage loan that lets you to turn the equity you have in your home into cash, similar to a home equity loan or HELOC.A cash out refinance offers a low-interest way to borrow money for anything, including to pay off credit card debt, make home improvements, go to college, or buy a car. Cash out refinance loans are attractive to homeowners because they can offer annual percentage rates (APRs) that are half as high as credit cards or personal loans, which can save borrowers tens of thousands of dollars in interest charges over several years.
Closing costs are fees and expenses paid by both the buyer and the seller when a transaction is completed.Closing costs are common expenses in real estate transactions.
A coinsurance clause in regards to property insurance specifies a minimum percentage of a property's assessed cash or replacement value that it must be insured for (typically 80% or 90%).If the insured property owner does not maintain that level of insurance on the property and there is a claim, the insured may be asked to pay a portion of the claim.
Commercial real estate is any property that is exclusively used for business activity. Commercial real estate is any non-residential property used for commercial profit-making purposes.
A condominium, often shortened to condo, is a multi-unit property where units are individually owned.Ownership typically includes an interest in common properties, like sidewalks, lobbies, and pools, controlled by the condominium management.
Sometimes referred to as a “self build loan,” a construction loan is a loan that is used to finance the construction of a new home or some other type of real estate project.The loan is made to the homebuyer, builder, or developer on a short-term basis to cover the total cost of the construction.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency.Also known as a conventional mortgage, conventional loans are usually fixed-rate loans.
A deed is an ownership document that entitles its holder to specific rights to a property based on a set of explicit conditions. In most cases, a deed establishes proper ownership of a piece of property such as a home or automobile.
A deed of trust, most commonly used in real estate transactions, is an agreement between a borrower and a lender that the title to the property purchased by the loan will be held in trust by a neutral third party, a trustee, until the loan is paid in full.Once executed, the document is filed as a public record.
A distressed sale occurs when a sale must be made under unfavorable conditions for the seller. In a distressed sale, the seller is affected by unfavorable conditions that force the sale.
A down payment is the initial payment a borrower puts toward a large purchase, and is usually a specified percentage of the total purchase price.Down payments are typically used for real estate, cars and other big-ticket items that are not usually paid in full at the time of purchase; the remainder of the purchase amount is paid back over time through a loan.
Earnest money is a good faith deposit, typically on a house purchase.It is not the same as a down payment.
An easement is a legal right to trespass. Let's say John Doe owns five acres of land.
An easement in gross is a legal right to use another person's land for as long as the owner owns that land or the holder of the easement dies. Let's say John Doe owns five acres of land, which includes a good fishing pond.
Eminent domain is a legal strategy that allows a federal or local government to seize private property for public use.The seizing authority must pay fair market value for the property seized.
Escrow is a financial arrangement whereby a third party holds funds in safekeeping pending the completion of a contract or other obligation. For example, let's assume a situation where someone is purchasing a home.
In the real estate world, mortgage companies use escrow accounts to collect property taxes, homeowners insurance, private mortgage insurance and other payments that are required by the homeowner but are not part of principal and interest.Escrow accounts are also called impound accounts.
Fannie Mae (OTC: FNMA) is the nickname for the Federal National Mortgage Association (FNMA). Established in 1938, Fannie Mae's purpose is to create a secondary market for the purchase and sale of mortgages.
The Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") is a government-sponsored entity that buys certain types of mortgages from banks and uses them to collateralize mortgage-backed securities.Freddie Mac also supplies a variety of periodic housing and mortgage data to the public.
A first-time homebuyer an individual or couple purchasing a home for the first time.The IRS also considers someone who has not owned a home in the past two years to be a first-time homebuyer.
Foreclosure occurs when a lender seizes and sells a borrower's collateral after the borrower has failed to repay the lender.The term is most often associated with real estate.
Ginnie Mae is the nickname for the Government National Mortgage Association.Ginnie Mae guarantees the timely payment of interest and principal on certain mortgage-backed securities (MBS).
A good faith estimate is a written estimate of the fees due at closing for a mortgage. The Real Estate Settlement Procedures Act (RESPA) requires a lender has to provide a written good faith estimate to a borrower within three days of the borrower applying for a mortgage.
Good faith money is money a buyer uses to prove to a seller that he or she intends to complete a transaction.In real estate, good faith money is also called earnest money.
A habendum clause in a real estate contract transfers ownership of a piece of real estate with no restrictions.It generally pertains to oil and gas leases for pieces of property but can relate to any transfer of property.
High-ratio loans typically have higher interest rates because they are riskier.If the borrower defaults on the loan, the bank might not be able to sell the property for enough to repay the loan.
Home equity equals the value of a house less the balance owed on the homeowner's mortgage. Let's assume that John Doe pays $200,000 for a house.
A home equity line of credit (or HELOC) is a flexible loan that lets you turn your home's equity into cash whenever you need it, up to a certain amount.A HELOC uses your home as collateral just like a home equity loan or cash out refinance, but works more like a credit card because it's revolving credit. HELOCs are attractive to homeowners needing cash for spending or emergencies because they offer easy accessibility with the repayment flexibility of credit cards, but with annual percentage rates (APRs) that are half as high, potentially saving the borrower hundreds or thousands of dollars in interest charges over time.
A home equity loan (HEL), also called a second mortgage, is a loan secured by the equity in a house.Equity equals the value of the house less the balance owed on the homeowner's mortgage.
A home loan (or mortgage) is a contract between a borrower and a lender that allows someone to borrow money to buy a house, apartment, condo, or other livable property.A home loan is typically paid back over a term of 10, 15 or 30 years.
House poor is used to describe a homeowner who spends too large a portion of his or her income on home ownership, leaving too little for discretionary spending. Typically, home ownership expenses, including mortgage, insurance, and taxes should comprise no more than 28% of a family's gross income.
In the real estate world, an impound is an account that mortgage companies use to collect property taxes, homeowners insurance, private mortgage insurance and other payments that are required by the homeowner but are not part of principal and interest.Impound accounts are also called escrow accounts.
The term interest rate ceiling typically refers to the maximum lifetime interest rate charged on an adjustable rate mortgage according to the terms of a mortgage contract. A potential homebuyer contracts with a mortgage lender to secure a loan.
An interest-only adjustable-rate mortgage (interest-only ARM) is a mortgage in which the borrower only pays the interest on the loan for a set period. There are two parts to an interest-only ARM that differentiate it from traditional mortgages.
An interest-only mortgage is a mortgage in which the borrower only pays the interest on the loan for a set period. In general, an interest-only mortgage means the borrower only pays the interest on the loan for a set period.
An investment property is a real estate investment purchased with the intent of earning a return on the money used to purchase the property.The return on the investment can be earned through rental income on the property, a gain on the sale of the property, or both.
Investment real estate refers to any residential structure owned solely for the purpose of generating investment returns, either through rental income or through market value appreciation. Often, an individual may own numerous residential properties and live in only one of them.
Joint owned property is a real estate asset with two or more owners. Given the general magnitude of its cost, real estate is often owned in the name of at least two individuals.
Joint tenancy is an arrangement in which two or more individuals occupy a property.Participating tenants each share equally in the rights and responsibilities related to the property.
A jumbo loan, also called a jumbo mortgage, is a mortgage that exceeds the maximum amount that will be guaranteed by a government-sponsored entity like Fannie Mae. Once a loan is made between from a bank to a home buyer, the loan is typically sold into the secondary market. The largest buyers of these loans in the secondary market are the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), both government-sponsored enterprises created to provide liquidity to banks. Fannie Mae and Freddie Mac follow guidelines for loan terms set by the Office of Federal Housing Enterprise Oversight OFHEO).
Junk fees appear in mortgage closing documents and usually benefit the loan originator or the lender. Let's say John and Jane Doe buy a house and receive the Truth in Lending Act statement at closing.
Just compensation is the fair market value that a federal or local government must pay to a property owner in order to seize that private property for public use. Let's say John Doe lives in a house on one acre next to Highway 47.
Key money is money paid to a landlord or property owner in order to reserve a spot as a tenant on the property. Let's say Company XYZ is a restaurant firm that wants to open a location in the new ABC outdoor mall.
A land contract is a contract in which the buyer of a property agrees to pay the seller in scheduled installments. A land contract allows the buyer of a property to use it while the seller continues to retain the deed.
A land flip is an act of fraud whereby a group of people buy a piece of land and then profits by continually reselling to each other for more than its actual value. In a land flip, several buyers purchase land for a given price.
A land lease option is a section of a lease contract that allows a renter to lengthen his or her use of a piece of land beyond the term specified in the contract. An individual who intends to rent a piece of property may ask the owner to include a land lease option as part of the lease contract.
Land rehabilitation is the practice of returning a piece of land to the natural state it was in prior to human interference or damage from natural disasters. Land rehabilitation reclaims the natural state of a piece of land by removing buildings and other artificial structures, cleaning up and disposing of nonessential material and toxic chemicals and reintroducing vegetation once the soil has been nutrient fortified.
A land trust is a trust comprised exclusively of real estate assets. A land trust holds one or more properties for the benefit of a designated group or organization (beneficiary).
Land value is the overall value of a piece of property. The value of a piece of property includes a number of variables including location, the distance of from commercial and health amenities (for example, shopping centers, hospitals and restaurants), the quality of the school district and enhancements to the property itself.
Landlocked is a term describing a piece of property that has no direct access. Landlocked property is separated from major access ways including streets, canals and public roads.
A landlord is an individual who owns real estate that he or she leases to renters. Landlords may own either residential or commercial properties.
A landominium is a housing community in which residents own the housing units as well as the land on which they are built. Typically developed as retirement communities, landominiums are usually multiple single-family homes surrounded by a plethora of amenities, including gardens, parks, golf courses and recreation facilities.
Leasehold improvements make assets more useable and, in many cases, more marketable.Sometimes, landlords will pay for leasehold improvements in order to entice a tenant to rent a space for a long period of time.
Like-kind property is property that, for tax purposes, is similar in nature to property being sold.Like-kind property is a key component of Section 1031 exchanges, which are real estate transactions in which the buyer and seller effectively swap properties in order to avoid paying capital gains tax on the sale.
In the tax world, a main home is where a taxpayer has lived for most of the tax year or is the only home the taxpayer owns. For example, let's assume John Doe buys a house in Austin, Texas, for $150,000.
A maintenance bond is a surety bond for construction projects. For example, let's say Company XYZ is a contracting company hired to build the new ABC office building.
Making Home Affordable is a government program designed to help homeowners avoid foreclosure. The Making Home Affordable program is actually a collection of several programs: Home Affordable Modification Program (HAMP) Principal Reduction Alternative SM (PRA) Second Lien Modification Program (2MP) FHA Home Affordable Modification Program (FHA-HAMP) USDA’s Special Loan Servicing Veterans Affairs Home Affordable Modification (VA-HAMP) Home Affordable Foreclosure Alternatives Program (HAFA) Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP) Home Affordable Refinance Program (HARP) FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance) Home Affordable Unemployment Program (UP) Hardest Hit Fund (HHF) These programs have a variety of qualification guidelines and requirements, but in general they seek to lower homeowners' monthly loan payments, lower the interest rate on homeowners' mortgages, and help homeowners adjust the principal balances on their mortgages if necessary.
This term is a play on the word "McDonalds," which is a global fast-food restaurant chain whose food is usually so consistent that an item from one restaurant is indistinguishable from the same item made in another restaurant.In turn, McMansion implies that a home is fancy but has a generic, mass-produced quality about it.
Minimum lease payments are the lowest total amount that a renter can expect to pay during the term of a lease. When a landlord contracts a renter, the renter agrees to pay the landlord a specific periodic amount, or lease rate, for a predetermined amount of time (usually one year).
A mortgage accelerator is a type of checking account that allows a borrower to repay a mortgage more quickly using the balance of monthly paychecks as opposed to recurring monthly payments. Common in the United Kingdom and Australia, a mortgage accelerator is a checking account connected directly to a mortgage account.
Mortgage allocations refer to the specific mortgage information given to an MBS buyer by an MBS seller. Mortgage-backed securities (MBS) trade in the secondary market as to-be-announced trades.
A mortgage application is a document that a prospective property buyer submits to a lender to secure a mortgage.The lender must approve the application before any money is lent.
A mortgage banker is a person or entity who lends mortgages. A mortgage banker may be a sole agent or larger institution that originates mortgages to property buyers in exchange for a commission.
The Mortgage Bankers Association (MBA) is a professional organization that represents the property finance industry in the United States. The Mortgage Bankers Association facilitates communication among mortgage bankers and provides ethical standards to ensure transparent and fair mortgage lending throughout the industry.
A mortgage broker is an agent who connects property buyers with mortgage lenders. A mortgage broker acts as a professional intermediary on a property buyer's behalf.
A mortgage equity withdrawal (MEW) is a loan that uses the value of a mortgaged property as collateral. When a property is worth more than is owed on it, it has positive equity.
Mortgage excess servicing is the percentage remainder of the annual yield on a mortgage-backed security (MBS) once it has been allocated between the holder, the servicer, and the underwriter. The annual yield on an MBS is divided into three components: interest and principal for the holders and fees for the servicer and underwriter.
Mortgage fallout is the percentage of an originator's mortgages that fail to close. A mortgage originator maintains a number of clients for whom it secures mortgages at competitive rates.
Mortgage interest is the compensation a borrower pays a lender for money used to purchase property. Mortgage interest is the percentage charged on a mortgage that must be paid in addition to the principal.
A mortgage originator is an individual or institution that collaborates with the borrower to complete a mortgage transaction. Mortgage originators facilitate the mortgage application process from the time a prospective borrower expresses interest until the mortgage loan itself has been disbursed.
Mortgage points (also called interest rate points or discount points) are fees you can pay to a lender at closing to lower your mortgage's interest rate -- or annual percentage rate (APR).The cost of each point is equal to one percent of the loan amount.
A mortgage pool is a group of mortgages in a mortgage-backed security (MBS). Once a lender completes a mortgage transaction, it generally sells the mortgage to another entity.
A mortgage rate is the rate of interest a borrower pays on his or her mortgage. Mortgage rates can be either fixed or variable.
A mortgage rate lock is the term in a mortgage contract that stipulates the rate the borrower will pay for the entire duration of the mortgage. When a mortgage originator finds a competitive rate for a borrower, the rate is based on current interest rates.
A mortgage rate lock deposit is a sum of money that a borrower must pay the lender to lock in a specific interest rate until a borrower's mortgage is approved and given out. When a mortgage originator finds a mortgage rate for a borrower, the offering lender often charges the borrower a fee to hold that rate until his mortgage application has been approved.
A mortgage rate lock float down is a provision that allows a borrower to obtain a lower rate if interest rates decline during the process of applying for a mortgage. Lenders usually allow those applying for a mortgage to lock in a specific mortgage rate using a mortgage rate lock.
Mortgage real estate investment trusts (mREITs) invest in residential mortgages that have been bundled together into securities called mortgage-backed securities (MBS) Unlike a regular real estate investment trust (REIT) that own real estate properties such as shopping centers or medical office buildings, mortgage REITs own no physical property.There are two types of mREITs: non-agency and agency.
Mortgage servicing rights (MSR) is an arrangement by which a third party promises to collect and disseminate mortgage payments in exchange for a fee. Mortgage payments are processed continually over the entire term of a mortgage.
A mortgage short sale is the sale of a mortgaged property for less than the remaining value of the mortgage itself. In a weak housing market, it is common for the outstanding mortgage balance on a property to exceed the market value of the property itself.
The National Association of Mortgage Brokers (NAMB) is an industry trade group representing mortgage brokers. Founded in 1973, the NAMB's primary objective is to promote ethics and professionalism among mortgage brokers.
The National Association of REALTORS (NAR) is a trade association for real estate professionals. The NAR has 1 million members in the United States.
For mortgages, negative points are a strategy for qualified borrowers to decrease the amount of cash they need upfront to finance their home.A mortgage company will pay fees and closing costs on the borrower’s behalf (in the form of points) in exchange for a higher interest rate on the mortgage. Negative points are also known as rebates, yield spread premiums, or no-cost mortgages.
Net payoff is the profit or loss on the sale of a good or service after all the costs of producing and selling that good or service have been subtracted. Let's assume investor X wants to sell his house for $700,000.
New Home Sales is an economic indicator released monthly by the United States Census Bureau.The data reflect the number of newly constructed homes purchased in the previous month.
A judicial foreclosure occurs when a court allows a lender to seize and sell a borrower's collateral when the borrower has failed to repay the lender.The term is most often associated with real estate.
Occupancy rate is the ratio of rental units rented versus the total number in the building, city, state, etc. The formula for occupancy rate is: Occupancy Rate = Units Rented Out / Total Units For example, let's assume that Company XYZ owns an apartment building that has 300 units.
Odd days interest refers to interest earned on loans that close on any day other than the standard day the lender requires interest and principal payments. For example, let's assume that John obtains a mortgage from his bank, and the monthly interest and principal payments will be $2,500.
The Office of Federal Housing Enterprise Oversight (OFHEO) is a defunct regulatory body that ensured the financial safety of Freddie Mac and Fannie Mae. Started in 1922 after the passage of the Federal Housing Enterprises Financial Safety and Soundness Act, the OFHEO became part of the Federal Housing Finance Agency (FHFA) in 2008 when President Barack Obama signed the Housing and Economic Recovery Act of 2008.
Owner financing is when a seller, usually of a property or a business, provides financing for the purchase directly to the buyer under a for sale by owner situation. Owner financing is also referred to as seller financing or creative financing.[Related: 5 Seller Financing Options for Homebuyers] When arranged under a for sale by owner situation, the sale typically requires a form of down payment (often a percentage of the sales price) and the transaction is facilitated and recorded by a promissory note.
Private mortgage insurance (PMI), also called mortgage insurance, is what borrowers must pay on each mortgage payment if they didn't make a 20 percent down payment toward their home loan.The insurance protects the lender financially in case the borrower fails to repay.
A price level adjusted mortgage (PLAM) is a mortgage with a fixed interest rate but an adjustable principal balance. For example, let's assume you take out a traditional 30-year, $100,000 mortgage at 7%.
A property lien is a lender's claim against a piece of real estate that may be legally sold should the borrower fail to repay a loan. When someone takes out a sizeable loan, such as a home mortgage, the lender often requires an asset that can be held as collateral against the loan.
Property tax is a tax on property -- usually real estate -- as determined by an assessor. Let's assume you own a house.
A qualified acquisition cost refers to the cost of buying, building, or rebuilding a home.Investors can often withdraw qualified acquisition costs from their IRAs without paying early withdrawal penalties.
Quiet title is the name of a legal action intended to ensure that the owner of a property is in fact the real owner and that the property has no other ownership claims on it.To do this is known as quieting the title.
Quiet title action is the name of a legal action intended to ensure that the owner of a property is in fact the real owner and that the property has no other ownership claims on it.To do this is called quieting the title.
A quitclaim deed is a document that transfers interest in a property to another person. For example, let's say John Doe and Jane Doe are married and live in a house that they own together.
A rate and term refinance occurs when a borrower replaces one mortgage with another mortgage that has a different maturity and interest rate. For example, let's say John Doe bought a house 10 years ago for $250,000.
A real asset is a tangible, touchable asset that has value. For example, Company XYZ's factory is a real asset, its fleet of cars are real assets and even its cubicles are real assets.
Real estate refers to land, as well as any physical property or improvements affixed to the land, including houses, buildings, landscaping, fencing, wells, etc. Vacant land and residential lots, plus the houses, outbuildings, decks, trees sewers and fixtures within the boundaries of the property are examples of real estate.
A real estate agent, working on behalf of a licensed real estate broker, is a licensed professional who works on behalf of the buyer and seller of real estate during a sales transaction. A real estate agent, working on behalf of a real estate broker, acts as an intermediary between sellers and buyers.
A real estate investment trust (REIT) is a closed-end investment company that owns assets related to real estate such as buildings, land and real estate securities.REITs sell on the major stock market exchanges just like common stock.
Real estate owned (REO) is a term describing real estate owned by lenders, usually because the lender has foreclosed on the property. Let's say John Doe falls behind on his house payments, and his lender, Bank XYZ, forecloses on the house.
A real estate short sale is the sale of property that is worth less than what is owed on it. For example, let's say John Doe buys a house for $500,000.
Real property is anything that is attached to land. For example, Company XYZ's factory, the five-acre lot on which the factory sits and whatever oil, gas or mineral rights that are attached to the land are real property.
A realtor is a professional designation for a real estate broker who has membership in the National Association of Realtors (or NAR). Real estate agents must be certified members of the NAR in order to bear the title "realtor." Realtors work for real estate agencies affiliated with the NAR and act in a brokerage capacity, bringing together buyers and sellers in the real estate market.
A recapture occurs when a person or entity takes back an asset from a buyer under certain conditions. Taxing authorities can implement tax recaptures in which the taxing authority requires a taxpayer to pay taxes on previous years of income (usually when the taxpayer took a deduction or tax credit that the taxing authority decides was inappropriate).
A recapture clause is language in a contract that allows a person or entity to take back an asset under certain conditions. Let's say John Doe owns the ABC Shopping Center.
A recording fee is the cost of making a public record of a real estate transaction. Let's say John Doe buys a house from Jane Smith for $300,000 on October 1.
A reverse mortgage is an arrangement whereby a homeowner borrows against his or her home equity and receives regular payments from the lender until the total payments reach a predetermined limit. To qualify for a reverse mortgage, a prospective borrower must be at least 62 years old and own his or her residence.
In investing, a short sale occurs when an investor sells a stock they don’t own yet.They borrow the stock from a broker-dealer and ideally sell it at a high price.
Short selling is a trading strategy that seeks to capitalize on an anticipated decline in the price of a security. Essentially, a short seller is trying to sell high and buy low. Short selling involves a three-step process.
A short squeeze is a situation in which a stock's price increase triggers a rush of buying activity among short sellers. Short sellers must buy stock to close out their short positions and cut their losses, which results in a further increase in stock prices, which compel still more short sellers to cover their positions. A short sale reverses the normal buy first/sell second sequence as a way to profit from an anticipated future fall in price.
A tax lien certificate is written proof that a taxing authority has placed a lien on a piece of property for unpaid property taxes. Let's assume that John owns a house in the country and the annual property taxes are $4,000.
A tax lien foreclosure occurs when a taxing authority seizes a piece of property after the property owner has failed to pay property taxes due. Let's assume that John owns a house in the country and the annual property taxes are $4,000.
A tax service fee is paid by mortgage borrowers to mortgage lenders to ensure that a mortgaged property's property taxes are paid on time. For example, let's assume that John buys a house.
Tenancy at will is a legal term describing an arrangement whereby a tenant occupies a piece of property with the permission of the property owner. Let's say John Doe is a bachelor trying to make it in Hollywood.
Tenants in common (TIC) describes an ownership status that applies when a property is severally owned by two parties. If two co-owners of a property are tenants in common, they own the property independent of one another.
Title insurance is a type of insurance policy that protects property owners and their lenders against losses resulting from problems with a property title.It provides coverage for financial costs caused by pre-existing or future property ownership issues.
The Troubled Asset Relief Program (TARP) is a U.S.government program created in an attempt to mitigate the fallout from the subprime mortgage crisis of 2007-2008. The subprime mortgage crisis came to the forefront of the U.S.
Vacancy rate is the ratio of rental units not rented versus the total number in the building, city, state, etc. The formula for vacancy rate is: Vacancy rate = Units not rented out / Total units For example, let's assume that Company XYZ owns an apartment building that has 300 units.
A vacation home is a house that the owner uses only a few days or weeks per year. Let's say John Doe lives in Minneapolis.
A viager is a French method of real estate sale whereby the buyer makes a down payment and agrees to make a series of payments for the rest of the seller's life. Let's say John Doe wants to buy a $700,000 house in Paris.
Warehouse lending is credit provided to a mortgage lender to fund mortgages until the lender sells them in the secondary market. Let's say John Doe goes to Bank XYZ to borrow $200,000 to buy a house.
A warranty deed is a real estate document which states that the owner owns the purchased property free and clear of any outstanding mortgages, liens, or other types of encumbrances against it. A general warranty deed legally transfers property from one individual or business to another (in most cases for real estate).They’re usually put in place when a grantee is looking to secure financing for mortgage or title insurance. Grantor vs.
Yield maintenance is a kind of prepayment fee that borrowers pay to banks to reimburse them for the loss of interest resulting from the prepayment of a loan. The formula for the yield maintenance premium is: Yield Maintenance = Present Value of Remaining Payments on the Mortgage x (Interest Rate - Treasury Rate) note that the Treasury rate should be for bonds of the same duration as the mortgage in question.Let's assume John takes out a $1,000,000 mortgage from ABC Bank at 7%.
Also known as negative points, yield-spread premiums are rebates lenders pay to mortgage brokers or borrowers.Yield-spread premiums are a percentage of the principal.