Common Mortgage/Real Estate Terms
Paying Points
Money paid upfront to lower the interest rate. Rule of thumb - breakeven
point is (where monthly savings meets/exceeds money paid upfront) usually
around 60 payments or 5 years. This means that in many cases paying points
will pay off as long as you do not sell or refinance your loan before
the breakeven point. (actual breakeven point may vary, please talk to
us about your exact situation) Some niche programs and products may require
points to be paid.
Piggy Back
A second mortgage closed at the same time as a first mortgage. Usually
purpose is to avoid mortgage insurance, jumbo pricing, or for future needs.
PITI
Monthly payment. Stands for Principal, Interest, Tax escrow, Insurance
(both hazard and mortgage) escrow
Pre-Approval
Based on documented income, assets, and credit.
Pre-paids
Group of items paid at closing including monies to set up the escrow account
and to pay prepaid or odd days interest.
Pre-Qualification
Based on stated income, assets and debt. Information not verified, not
as useful or informative as a Pre-Approval.
Pre Payment Penalty
An option on certain loan types. A benefit in that the rate is lower on
these products compared to other similar products.
Property Taxes
Amount of tax due on a property. Usually is collected as part of the escrow
portion of the monthly payment, with the lender being responsible to forward
the escrowed money as the bills come due on May 15 and Oct 15.
Purchase Agreement
Contract between buyer and seller outlining the terms of the agreement.
Rate vs. Price
Rate refers to the interest rate. Price refers to points. It is easy to
become confused as both rate and points are usually referred to in 1/8
percent increments. A good rule of thumb is that often a 1/8% change in
interest rate reflects a 1/2% change in points (actual rate and points
may vary slightly)
Single Family Residence
Standard, one unit home, as opposed to a Condo/Town Home with a homeowners
association
Title Company
Company that prepares title work and is where the closing is held
Title Insurance
Policy provided by the title company on their title work guaranteeing
the accuracy and completion. Lenders Policy is required and only protects
the Lender from loss, Owners Policy is available at buyers discretion
and protects the owner
Title Work
Document prepared by title company which outlines the ownership of the
property and other various details
Trans Union Information Services
PO Box 1000
Chester, PA 79022
(800) 916-8800
Underwriting
Act of approving a loan application. Underwriters are bound by guidelines
set forth by Fannie Mae, Freddie Mac, FHA or VA as applicable
VA Financing
Government backed financing available only for service veterans, characterized
by no down payment, no mortgage insurance, but with a funding fee
Source: www.suwoodard.com
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Aimee Ghimire
Equal Housing Lender
BKBR-0105292
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