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amortization
The process of
paying the principal and interest on a loan through regularly scheduled
installments. Initially, most of each payment is applied toward interest
owed, and later in the loan term increasingly applied toward principal.
appraisal
An opinion of the value of a property at a given point in time.
closing
The final procedure in which documents are signed and recorded and the property is transferred.
comparative market analysis
An estimate
of the value of a property based on an analysis of sales of properties with similar characteristics.
credit report
A detailed account of an individual's credit, employment, and residence history. A lender uses this report to determine a loan applicant's
creditworthiness.The three largest credit bureaus are Trans Union Corp.,
Equifax, and Experian (formerly TRW).
disclosure
A statement to a
potential buyer listing information relevant to a piece of property,
such as the presence of radon or lead paint.
escrow
A neutral third party
holds documents and money for a real estate transaction and ensures that
all conditions of a sale are met. Also refers to a special account that
a lender uses to hold a borrower's monthly payments on property taxes
and insurance.
home inspection
An examination of a
home's construction, condition, and internal systems by an inspector or
contractor prior to purchase.
homeowner's insurance
This insurance includes hazard coverage for any damages that may affect
the value of a house, in addition to personal liability and theft
coverage.
interest rate
The fee,
expressed as a percentage, charged for a loan. The interest rate also
helps determine the monthly payment. For adjustable-rate loans, the
interest rate may change from its initial level.
mortgage
In casual use, a sum
of money borrowed to purchase a home at a certain interest rate using
the property as collateral. In formal use, a mortgage is the legal
document that pledges property as collateral for a loan.
multiple listing service (MLS)
A service that combines listings of all available homes in an area
into one directory or database, with the exception of For Sale By Owner
(FSBO) properties.
point
An amount equal to 1 percent of the loan amount. Points may be paid
by the borrower at the time the loan is made to get a lower interest
rate. Lenders offer various rate/point combinations.
prequalification
A lender's
preliminary assessment of a buyer's ability to pay for a home, and an
estimate of how much the buyer may borrow.
property tax
Tax paid on privately owned property. Property taxes are usually paid semiannually, or monthly
if the lender requires. The amount is based on local tax rates and
assessed property value.
purchase agreement
A document that details the purchase price and conditions of the transaction.
refinancing
The process of
replacing an older mortgage with a new mortgage that has better terms.
title
The legal document conferring ownership of a piece of real estate.
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