Sale-Leaseback
A technique in
which a seller deeds property to a buyer for a consideration, and the
buyer simultaneously leases the property back to the seller.
Savings and Loans
Among the
customers of Savings and Loans (S&Ls) are individual savers and
residential and commercial property mortgage borrowers. Their traditional
role for savings and loans is to accept deposits and make mortgage loans,
but it has expanded recently to a focus on one- to four-family residential
mortgages, multifamily mortgages and commercial mortgages.
These
institutions are growing bigger, and the lines between S&Ls and commercial
banks are not as defined as in the past.
Deposit
insurance is provided through the Savings Association Insurance Fund, a
subsidiary of the Federal Deposit Insurance Corporation.
Second Mortgage
A mortgage
that has a lien position subordinate to the first mortgage.
Secondary Mortgage Market
The buying
and selling of existing mortgages.
Secured Loan
A loan that
is backed by collateral.
Security
The
property that will be pledged as collateral for a loan.
Seller Take-Back
An
agreement in which the owner of a property provides financing, often in
combination with an assumable mortgage.
Seller Versus Buyer Closing Costs
Buyers and
sellers often negotiate who will pay certain closing costs, and the
results vary depending on the negotiated deal. In fact, it's not uncommon
for a sales agreement to state that either the buyer or seller pays all
closing costs. The agreement that you and the seller reach must be
specified in the sales contract.
Your
negotiations could depend on a variety of factors, including the quality
of the home, how long the home has been on the market, whether there are
any other interested buyers, and how motivated the seller is to sell the
home.
Servicer
An
organization that collects principal and interest payments from borrowers
and manages borrowers' escrow accounts. The servicer often services
mortgages that have been purchased by an investor in the secondary
mortgage market.
Servicing
The
collection of mortgage payments from borrowers and related
responsibilities of a loan servicer.
The final
step before you get the keys to your home is a formal meeting called the
closing. It is at this meeting in which ownership of the home is
transferred from the seller to the buyer.
Also called
a settlement in some parts of the country, the meeting is typically
attended by the buyer(s), the seller(s), their attorneys if they have
them, both real estate sales professionals, a representative of the
lender, and the closing agent. The purpose is to make sure the property is
physically and legally ready to be transferred to you.
Several
closing costs will be paid at this meeting. These expenses are over and
above the price of the property and are incurred when ownership of a
property is transferred. Closing costs generally include a loan
origination fee, an attorney's fee, taxes, an amount placed in escrow, and
charges for obtaining title insurance, and a survey. Closing costs vary
according to the area of the country.
When
working with an approved lender who uses Desktop Underwriter® -- our
advanced automated underwriting system -- a number of costs associated
with your closing may be reduced, including mortgage insurance, appraisal
fees, and credit report fees.
Also see "Closing"
entry
Settlement Sheet
The HUD-1
Settlement Statement itemizes the amounts to be paid by the buyer and the
seller at closing. The (blank) form is published by the U.S. Department of
Housing and Urban Development (HUD).
Items on
the statement include:
-- real
estate commissions,
-- loan fees,
-- points, and
-- escrow amounts.
The form is
filled out by your closing agent and must be signed by the buyer and the
seller. The buyer should be allowed to review the HUD-1 Settlement
Statement on the business day before the closing meeting to know the
closing costs in advance.
The HUD-1
Settlement Statement is also known as the "closing statement" or
"settlement sheet."
Single-Family Properties
One- to
four-unit properties including detached homes, townhomes, condominiums,
and cooperatives.
Single-Family Properties
One- to
four-unit properties including detached homes, townhomes, condominiums,
and cooperatives.
Six-Month Adjustable-Rate Mortgage
This
adjustable-rate mortgage (ARM) offers a low initial interest rate for the
first six months with an interest rate that adjusts every six months
thereafter. The rate caps per adjustment can be 1 percent or 2 percent;
the lifetime adjustment caps can be 4 percent, 5 percent, or 6 percent.
This type of mortgage may be right for you if you anticipate a rapid
increase in income over the first few years of your mortgage. That's
because it lets you maximize your purchasing power immediately. It may
also be the right mortgage for you if you plan to live in your home for
only a few years.
The
interest rate is tied to a published financial index. When comparing ARMs
that have different indexes, look at how the index has performed recently.
Your an approved lender can provide information on how to track a specific
index and how to review a 15-year history of the index.
Advantages:
--
Maximizes your buying power immediately, especially if you expect your
income to rise quickly in the next few years.
-- Lets you select an index that meets your financial needs.
-- Easier to qualify for due to a low interest rate and a 1 or 2 percent
annual rate cap.
Some
six-month ARMs let you convert to a fixed-rate loan at certain adjustment
intervals. Ask your Fannie Mae approved lender which of their six-month
ARMs include this option. Your lender can also provide further specifics
about this mortgage option.
Details:
-- You
can get a six-month ARM with a term of 10 to 30 years. Typically, they
are 10, 15, or 30 years.
-- Can be used to buy one- to four-family, owner-occupied principal
residences including second homes, investment properties, and condos,
co-ops and planned unit developments.
-- Manufactured homes are also eligible. (Manufactured housing units
must be built on a permanent chassis at a factory and then transported
to a permanent site and attached to a foundation.)
Special Deposit Account
An account
that is established for rehabilitation mortgages to hold the funds needed
for the rehabilitation work so they can be disbursed from time to time as
particular portions of the work are completed.
Standard Payment Calculation
The method
used to determine the monthly payment required to repay the remaining
balance of a mortgage in substantially equal installments over the
remaining term of the mortgage at the current interest rate.
Step-Rate Mortgage
A mortgage
that allows for the interest rate to increase according to a specified
schedule (i.e., seven years), resulting in increased payments as well. At
the end of the specified period, the rate and payments will remain
constant for the remainder of the loan.
Subdivision
A housing
development that is created by dividing a tract of land into individual
lots for sale or lease.
Subordinate Financing
Any
mortgage or other lien that has a priority that is lower than that of the
first mortgage.
Subsidized Second Mortgage
An
alternative financing option known as the Community Seconds® mortgage for
low- and moderate-income households. An investor purchases a first
mortgage that has a subsidized second mortgage behind it. The second
mortgage may be issued by a state, county, or local housing agency,
foundation, or nonprofit corporation. Payment on the second mortgage is
often deferred and carries a very low interest rate (or no interest rate).
Part of the debt may be forgiven incrementally for each year the buyer
remains in the home.
Survey
A drawing
or map showing the precise legal boundaries of a property, the location of
improvements, easements, rights of way, encroachments, and other physical
features.
Your lender
may require you to have a survey of the property performed. This process
confirms that the property's boundaries are correctly described in the
purchase and sale agreement.
Also called
a plot plan, the survey may show a neighbor's fence is located on the
seller's property or more serious violations may be discovered. These
violations must be addressed before the lender will proceed.
The buyer
usually pays to have the survey done, but some cost savings may be found
by requesting an "update" from the company that previously surveyed the
property.
Sweat Equity
Contribution to the construction or rehabilitation of a property in the
form of labor or services rather than cash.
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