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epf 5
| Question | Answer |
|---|---|
| Apartment lease | a legal document that defines the rental agreement between tenant and landlord; this should be thoroughly read as it should also list consequences, fees, penalties, etc. that you are responsible for if you do not meet the terms of the lease |
| Security deposit | amount of money paid to the owner of the property by a tenant to guard any financial loss of damage the tenant might cause; it must be returned when the tenant moves out, minus any charges to repair damages or unpaid rent |
| Home equity | the value of a home minus the amount owed on any outstanding loans. |
| Application fees | both leases and mortgages often charge this fee when considering potential renters/loans. |
| Mortgage loan | a long-term loan extended to someone buying property |
| Collateral | something pledged as security for repayment of a loan, to be forfeited in the event of a default. |
| Earnest money | a deposit a buyer makes on a home they want to purchase; a contract is written up during the exchange of the earnest money that outlines the conditions for refunding the amount; deposits can be anywhere from 1–10% of sales price |
| Due diligence | a buyer's investigation of the various aspects of a property, either before making an offer or (more often) within a specific timeframe between entering into the contract and closing. |
| Inspections | different loans and types of properties require different inspection; buyers pay for these services and in North Carolina these must occur during the due diligence period. |
| Appraisals | these are required by nearly all conventional mortgages to determine the current market value of a house. |
| Mortgage points | extra charges that must be paid by the buyer to the lender in order to get a lower interest rate; some institution will discount this or waive this if you have a relationship with the bank; this costs more upfront in your closing costs |
| Private mortgage insurance | a special policy that protects the lender in case the buyer cannot make payments or cannot make them on time; this is required for any mortgage without a 20% down payment. |
| Down payment | a payment that reduces your mortgages costs; 20% is considered a standard minimum down payment. |
| Loan term | this is usually 10, 20, or 30 years; most conventional mortgages are 30 years. |
| Amortization | the reduction of a loan balance through payments you make over time; reductions in this table will be smaller earlier in the term of the loan and larger toward the end of the loan. |
| Title insurance | a type of insurance that protects the buyer if problems with the title are found later. |
| Concessions | these are special agreements between the buyer and seller of a home; these can be made considering findings during an inspection to speed up the sale. |
| Real Estate Agent | sellers often use agents to sell their home; agents should disclose to all sellers and buyers their agency; in North Carolina sellers must give permission for their agent to act on behalf of any other party involved in a sale. |
| Closing | the final step in the home buying process where documents are signed, details are settled, and money is paid (including closing costs) |
| Fixed-rate mortgage | a conventional mortgage with a fixed interest rate and fixed payments over the term of the loan; an interest rate is determined at the start of the loan and generally “locked in” as a part of the application process. |
| Variable-rate mortgage | often referred to as an adjustable-rate mortgage; the interest rate changes during the term of the loan depending on economic indicators that impact interest rate trends |
| Conventional mortgage | any mortgage that is not insured or guaranteed by the government. |
| Second mortgage | a loan made in addition to the homeowner’s primary mortgage, such as a home equity line of credit (HELOC). |
| Government-insured mortgages | these will offer lower interest rates with lower down payments than conventional mortgages to buyers who meet certain criteria. |
| New construction loan | a short-term loan that provides funds to cover the cost of building or rehabilitating a home. In general, construction loans have higher interest rates than longer-term mortgage loans used to purchase homes. |
| Interest only mortgage | a type of mortgage in which the borrower is required to pay only the interest on the loan for a certain period. |
| Jumbo mortgage | a home loan for an amount that exceeds the "conforming loan limit" set on mortgages eligible for purchase by Fannie Mae and Freddie Mac. |
| Balloon mortgage | a type of loan that does not fully amortize over its term. Since it is not fully amortized, payment is required at the end of the term to repay the remaining principal balance of the loan. can be attractive to short-term borrowers because they typically |
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deissyg
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