Mortgage Glossary

by Shashank ShekharJuly 13, 2015

Do You Understand the Home Search Lingo?

glossary

4B/2B:

Refers to the number of bedrooms and bathrooms. The first (4B) being the number of bedrooms and the last (2B) being the number of bathrooms. This term can be modified to the number of bed/baths in any home. For example, if there is a home with 5 bedrooms and 4 bathrooms, you would call it a 5B/4B

Annual Percentage Rate (APR):

The yearly cost of a mortgage including interest and other expenses or charges such as private mortgage insurance and points expressed as a percentage.

Appraisal:

A written estimate of a property’s current market value.

By-Laws

By-laws are the rules by which the cooperative corporation or condominium operates, including those regulating elections, officers, and authorizations.

Certificate of Occupancy (C of O)

The Certificate of Occupancy is a certificate issued by a local governmental entity that a structure complies with the codes, ordinances and regulations of that governmental entity and that they may be occupied

Closing Costs:

This is the entire package of miscellaneous expenses paid by the buyer and the seller when the real estate deal closes. These costs include the brokerage commission, mortgage-related fees, escrow or attorney’s settlement charges, transfer taxes, recording fees, title insurance and so on. Closing costs are generally paid through escrow.

CMA (Competitive market analysis):

A CMA is a report that shows prices of homes that are comparable to a subject home and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.

Comparable: (also referred to as “COMPS”)

Properties that are substantially equivalent to a subject property; usually in an appraisal.

Contingency:

A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met.

Earnest Money:

Deposit made by a buyer toward the down payment to show good faith when the purchase agreement is signed.

FHA Loan:

Fixed- or adjustable-rate loan insured by the Federal Housing Administration. FHA loans are designed to make housing more affordable, particularly for first-time home buyers.

Fixed-Rate Mortgages:

Mortgage with an interest rate and a payment that don’t change over the term of the loan. Should the current market interest rate fall below your fixed rate, contact your mortgage expert right away to discuss the benefits of refinancing.

Good Faith Estimate:

Written estimate of the closing costs the borrower will likely have to pay to obtain the loan. Will be phased out as of August 1st, 2015 in favor of the (allegedly) easier to understand “LOAN DISCLOSURE” document.

Listing:

A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met.

Lock Box:

A locked key-holding device affixed to a for-sale home so real estate professionals can gain entry into the home after obtaining permission from the listing agent

Lock or Lock-In:

A lender’s guarantee of an interest rate for a set period of time. The lock-in protects you against rate increases during that time.

Pre-Approval:

We break the most important part of the entire purchase process down in detail right over here.

Private Mortgage Insurance (PMI):

Insurance to protect the lender in case the borrower defaults on the loan. With conventional loans, PMI is typically not required with a down payment of 20% or more of the home’s purchase price..

Title Search:

Examination of municipal records to ensure that the seller is the legal owner of a property and that there are no liens or other claims against the property.

Repair Escrow:

Monies held in escrow to complete basic repairs that are required for full loan approval. Sometimes added by the appraiser and also as part of the inspection process.

Short Sale:

A process that is often used by homeowners who are trying to avoid getting caught up in a foreclosure.

Short sales are an option homeowners use when the bank, credit union or other types of lenders they have borrowed from provides them with the option of selling their home to a third party at a price that is much lower than what they actually still owe on the note of their home loan.

About The Author
Shashank Shekhar
Amazon.com Best-selling author, Shashank Shekhar (NMLS 8176) is a mortgage lender with Arcus Lending, offering loans for home purchase and refinance. Shashank has been featured as a mortgage expert on Yahoo! News, ABC, CBS, NBC and FOX. He has been named "Top 40 under 40" most influential mortgage professionals in the country.

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